DEVELOPMENT PROGRAMMES OF MALAYA AND BORNEO

24. In the circumstances referred to in the preceding paragraphs, the Governments have thought it prudent to take a cautious view of the export prospects for rubber and tin over the period covered by the programmes. This, is reflected in their assessment of the funds which they can expect to raise locally from revenues, borrowing and other funds, namely £46 million. 25. If, in the event, the present high level of prices and demand were to persist through the greater part or the whole of six years, it would be possible to broaden the scope of the programme ; there are a number of additional projects, prepared to meet real and pressing needs, which could be brought forward into the programme. Alternatively, to the extent to which the continuance of the present favourable circumstances made possible an increased flow of internal funds, the external finance required by the present programmes could be reduced. In face of the limitations on the scope for raising internal finance, and having regard to the liability of their economies to sharp fluctuations, the Governments of the territories concluded that the execution of the development projects, on the scale and at the rate put forward in the programmes, will depend on a steady inflow of external finance, amounting in all over the six years to about £6l million. 26. A large part of this external finance is required to meet that portion of the domestic expenditure which cannot be met from the finance raised locally. The increase in the volume of developmental imports attributable to the programme is small in relation to the total programme. Table 17.—British Territories : Domestic and Foreign Exchange Expenditure for Programmes, 1951-57 £ million North Federation Singapore Borneo Sarawak Total Domestic expenditure 36 44 4 3 87 Foreign exchange expenditure* 9 9 1 1 20 Total 45 53 5 4 107 * Includes sterling. The estimates relate to expenditure on developmental goods for the programmes. As far as the balance of payments is concerned the uncertainties of forecasting have already been set out. In 1949 there was a surplus of just over £1,000,000. If the rate of development were to be maintained at about present levels, and assuming that the average price of rubber throughout the period is about the same as in 1949, then over the six-year period the payments might be expected to be roughly in balance, although with substantial swings either way. The effect of the accelerated rate of development proposed in the programmes would be to bring the balance of payments into deficit as a result of increased imports of both developmental goods and consumer goods. 27. It is the view of the Governments of the territories that, without the essential component of external finance, many projects would have to be deferred, with consequential damage to the territories' economies, and with all the social and political consequences of a failure to meet the urgent economic and social needs of their peoples. It would be impossible to achieve the fundamental objective of the programmes: this is to put the territories in a position in which, with a rising national income, increased taxable capacity, and expanding and more broadly based overseas trade, they could stand more firmly on their own feet. Having achieved the necessary economic basis for greater social and political stability, they could look forward, with confidence and a larger measure of self-reliance, to further progress in economic development and well-being.

10270

A 14

39