I.M.F. tranche withdrawn

Press, 20 June 1984, Page 31

I.M.F. tranche withdrawn

New Zealand has withdrawn about $45.5M from the International Monetary Fund, a sum equivalent in overseas currencies to the value of a reserve tranche (deposit) it held with the fund.

The withdrawal was promptly seen by financiers as a move to shore up the nation’s foreign reserves position against the recent run on the currency.

It was also seen to have political overtones in that as a result of the move any future early approaches to the I.M.F. for fundds would lead to detailed talks on how the money would be spent, a delicate situation should Labour become the Government.

The $45.5M taken up in cash by the Government represents a conversion of.a part of official reserves into useable currency. It did not represent a loan because the sum was classified by the I.M.F. as a special drawing rights owned by New Zealand.

Announcing the decision to draw the cash, the Prime Minister (Sir Robert Mui-

doon) said the transaction adjusted the constitution of New Zealand’s reserves, but did not affect their level.

It required the assumption of responsibilities or commitments in the field of economic management by New Zealand. At the end of March, New Zealand’s total official overseas reserves stood at $1131.6M and when overseas assets of foreign exchange dealers were included, the figure rose to $1304.9M. Economists said they believed the move had become essential after the recent run on the New Zealand dollar because of the announcement of the snap election.

They also predicted that the run on the currency would make a further resort to the international loan market virtually certain within the next three months, because of the low level of reserves.