BUDGET MAY BE ‘TOUGH’

Press, Volume CVI, Issue 31084, 13 June 1966, Page 8

BUDGET MAY BE ‘TOUGH’

Correspondent’s Prediction (Special Crspdt. N.Z.P.A.) LONDON, June 12. Political observers are predicting that New Zealand’s 1966 Budget will be tougher than was thought, according to the Wellington correspondent of the “Financial Times.” This is because of the effect of the British seamen’s strike on the British-oriented New Zealand economy and, perhaps tb a greater extent, the investment curbs of the British Budget. The correspondent says the British investment inhibitions could check the inflow of private capital by as much as £lO million. He adds that rather than see national development slowed the Government was expected to borrow abroad: at a time when the long-predicted international liquidity problem was asserting itself. The Eurodollar market, to which New Zealand had twice had recourse recently, had begun to dry up and competition for such funds was Intense. Further borrowing from the International Monetary Fund was not expected, since it would probably involve a degree of domestic economic correction which the Government did not favour in an election year. “It has been suggested that New Zealand may renew an appeal to the United States for a waiver on the 1 per cent federal equalisation tax on foreign borrowings granted last year to Japan and some other countries, but not to New Zealand. Japan itself, Europe and even Australia are being suggested as other possible sources.”