N.Z.’s debt rise incredible’

Press, 19 December 1985, Page 2

N.Z.’s debt rise incredible’

New Zealand’s overseas debt hangs like a massive sword over the head of the economy, the Deputy Leader of the Opposition, Mr Bolger, warned business leaders in Christchurch yesterday. He told a joint meeting of the Canterburj' Chamber of Commerce and Canterbury Manufacturers’ Association that the overseas debt had increased from $l6 billion in July, 1984, to $25 billion in September this year. He described the increase as incredible, because it occurred during a period of strong growth in the economy.

Industry had come though 1985 mainly on the strength of good profits from a period of high growth in the previous financial year, but 1986 would be tougher. Mr Bolger said one of the biggest problems had been the Government’s inability to keep its deficit within

budget forecasts., “Next year the deficit will be up by about $1 billion because of the promised tax cuts. The scale of Government intervention into the New Zealand loan market to cover that deficit has frightening implications for interest rates . . .” The Government seemed to show little interest in the impact its policies were having on productive sectors, said Mr Bolger. Financial manipulators were happy, but the producers of the nation’s wealth were being squeezed and their production was starting to decline. The removal of tariffs on items produced overseas would encourage further imports of luxury goods. “Unless the Government is prepared to help the productive sector be productive and increase exports, we are in trouble,” he said.