U.K. BUDGET MAY AFFECT N.Z. ONE
(From Our Own Reporter) WELLINGTON, May 11. The United Kingdom Budget may lead to a tighter New Zealand budget next month.
Last year, the New Zealand budget was presented on June 10; this year’s favourite budget presentation dates are June 9 or 16.
The British decision could reduce the inflow of private capital into. New' Zealand by as much as £lO million. This would force the Government to choose between conducting retrenchments in national development and increasing its borrowing programme overseas.
counts as an inflow of capital in balance of payments calculations. Last financial year, subsidiaries and branches of British companies earned £17.2 million in New Zealand, but sent home only £7.3 million. The British Chancellor of the Exchequer (Mr Callaghan) has announced the programme as a voluntary one. Most authorities regard this as largely a figure of speech. A loss of up to £lO million
would jeopardise our programme of national development
Last financial year the overseas funds content of returns from exports was estimated at £27 million. Net overseas borrowing (all loans less money paid back) amounted to £9.1 million. More than 70 per cent of this money (about £25 million) was spent on goods, equipment or raw materials for use in national development.
There are rumours that New Zealand has already arranged an overseas loan, at what is said to be the highest rate of interest since the Second World War. These rumours are unconfirmed officially. Last year’s deficit on current account was financed by borrowing £35 million and by reducing overseas assets of the banking system by £22 million. Neither of these sources can be expected to produce similar sums this year. An objective of the British Budget was to restrict the flow of British capital to New Zealand and to encourage British firms to send home some of their profits. Private British capital coming into New Zealand, including money coming through the banking system, amounted to £15.8 million in 1964-65. The bulk of the money is in reinvested profits, but it
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Press, Volume CV, Issue 31057, 12 May 1966, Page 20
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342U.K. BUDGET MAY AFFECT N.Z. ONE Press, Volume CV, Issue 31057, 12 May 1966, Page 20
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