Credit Squeeze To Continue – Holt

Press, Volume C, Issue 29506, 6 May 1961, Page 13

Credit Squeeze To Continue - Holt

CANBERRA, May 4. The Federal Government intends to continue Australia’s credit squeeze until at least June next year.

The Treasurer (Mr Holt) revealed this to the House of Representatives today. He circulated copies of a statement Australia made in its application to the Infemational Monetary Fund for a loan of £A7B million. The statement said seasonal credit adjustment would be made but otherwise there would be no more than a moderate increase in the bank advances in the coming year. The effect of internal measures on reducing imports had been slow-acting and a continued fall in overseas reserves was expected to continue at least until September. The statement said the Government reaffirmed its intention not to reimpose restrictions on trade or currency payments, except m the event of a very serious balance of payments emergency requiring a major change in policy. Mr Holt said the International Monetary Fund “handsomely supported” Australia’s economic policies, aimed at promoting growth of the economy in an environment free from inflation. However, if circumstances dictated changed policies to reach the same objective of stability, they were likely to secure continued approbation of funds. A memorandum outlining the Australian policy which accompanied the application to the International Monetary Fund said Australia's monetary authorities intended to keep a firm control on the liquidity position during the year ended June, 1961. The memorandum said they wanted to keep level

bank advances to a total consistent with the maintenance of financial stability. It added that the monetary authorities had regard for a reasonable degree of flexibility in interest rates. But they did not intend any action directed to lowering the general level of these rates.