Credit-Squeeze Budget

The Merely Desirable Regretfully Aside

Fiji Government Presents

The “credit squeeze” that has made difficulties for Aust rahan commerce for the past year, has now spread to Fffi where bank credit months > been much talk about restricted

THE Financial Secretary of Fiji (Mr. H. W. Davidson) had „ something to say about both the squeeze ’ and public reaction thereto when he made his Budget speech in the Legislative Council on November 23.

Fiji, he said, has for the past three years been financing her imports at least in part—by temporary financial accommodation from the Banks which in turn had to call on the sterling holdings of their head offices. This, naturally could not be permitted to continue and, although some individuals would be hurt, restrictions were an inevitable corrective.

He said that the Colony’s adverse trade balances of the last three years and the “credit squeeze” were related phenomena— Fiji had been getting bank credit

to finance imports far in excess of export earnings.

In those three years, Fiji bank advances have risen from £2,153,000 to nearly £s,ooo,ooo—and at the same time there had been spec tacular changes in the overseas position of the banks themselves.

Ten years ago. £2,000,000 were usually due from banks abroad; now the position was exactly reversed, and there was a liability of that amount to the overseas-banking system. The banks were therefore seeking to replenish overseas funds.

In presenting his Budget, Mr.

Davidson said that there will be a deficit of about £300,000- £400,000 this year; but that in 1957 he had budgeted for a surplus of about £36,000. Over £6£ million is the estimated expenditure for next year.

No increase in income taxation was announced and the Budget was described (by the Governor) as “conservative and cautious.”

Mr. Davidson said that the draft estimates for 1957 suggested that Fiji could afford the services now supplied but only just. “Until there is a really appreciable increase in the national income, increases in expenditure will have to be confined to the essentials, leaving the merely desirable regretfully aside.”

And, apparently as a warning, he added: • “This is a test which should he applied to any proposals for the revision of salaries, which may arise from the forthcoming re view of the salaries of senior posts Mr. Davidson said that the Government planned to raise loans at home and overseas to finance development work. Notice has been given to the Colonial Office of a desire to borrow a “considerable sum” in London in 1958; and to float another loan in Fiji about mid-1957. The last Fiji Government loan was floated successfully in 1952.

Mr. and Mrs. C. H. V. Hodgess, who have extensive plantation interests in the Solomons, arrived in Sydney in November and have settled permanently in the Gosford District of New South Wales.