FINANCIAL CRISIS

Otago Daily Times, Issue 25299, 9 August 1943, Page 3

FINANCIAL CRISIS

ITALY’S VAST DEFICIT HEADED FOR INFLATION LONDON, Aug. 6. Italy is facing a financial crisis. The State accounts show a vast deficit and the Finance Minister, Signor Bartolini, has appointed a special commission, which had asked that severe steps be taken immediately to save the economic life of the country. The Rome radio, quoting a report by Signor Bartolini, said: “The Italian financial situation is very grave. The Treasury’s position is becoming constantly more serious. The enormous increase in recent war expenditure has assumed a dangerous character, and may lead to inflation and destruction of the lira, with unfavourable consequences. The Treasury in the last fiscal year has been forced to borrow heavily from the Banca d’ltalia. . It will be necessary to issue loans to curb inflation. The situation is grave, and has been made graver as in the last few years there has been no regular market for State funds. Even the official prices do not give a fair indication of the real trend of dealing. “It is imperative to exercise drastic retrenchments. Little improvement can be hoped from direct taxes, because the country is already crushed by over-heavy taxes. The Government for many years has not published any budget or return, so even the experts have not a clear idea of the economic situation of Italy. All this has been for the worst. I intend to make regular frank publications of all returns.” Signor Bartolini. besides the retrenchments, recommended the opening of the bourses and the winding-up of many State holdings in private concerns. The Minister said the savings of the man in the street were sacred, and would be defended to the last. Signor Bartolini placed the Italian deficit at £890.629,984, on a basis of •he pre-war value of the lira of 2id. He stated that the circulation of Italian banknotes on July 21 was 96,541,000.000 lire, compared with 25,344.000,000 lire in 1940.