asked the Taoiseach the reasons for the serious growth in the adverse trade balance this year; if he contemplates taking any action in the matter; and, if so, what action.
Ceisteanna—Questions. Oral Answers. - Adverse Trade Balance.
3.
The increase in the import excess in the first six months of 1969 is mainly the result of a substantial rise in imports. Exports continued to expand and would have been larger but for the effects of the maintenance craftsmen's dispute earlier in the year.
A preliminary analysis of the trade returns for the first half of 1969 suggests that the rise in imports is attributable largely to increased investment rather than consumer spending. Of the total increase of £54 million in the period, purchases abroad of machinery and equipment and other capital goods accounted for about two-fifths or £22 million. Another factor which has added to the import bill is the continued upward trend in import prices, reflecting the delayed effects of devaluation.
In regard to the remainder of the Deputy's question I would refer him to the statement of the Minister for Finance on the 17th July in reply to a question by Deputy Corish.
In view of the expected increase in exports and in invisible receipts in the second half of the year, the deficit in the overall balance of payments on current account for the year 1969 as a whole is unlikely to diverge significantly from the original estimate of £55 million. Furthermore, the capital inflow continues to be buoyant and has cushioned the effect of the increased import excess on external reserves. It is necessary, however, to issue a warning that the expected deficit is not sustainable for long and that the need for restraint and moderation is paramount. This applies particularly to increases in income.
The Government are keeping the situation under constant review and further remedial measures will be taken if they are needed.
The Taoiseach talks about the delayed effects of devaluation. I am not in disagreement with the Taoiseach but the Central Bank said in its annual report that the effects of devaluation were over by the spring of 1968.
The Central Bank is not the Government.
May I ask the Taoiseach can be guarantee that there is not a credit squeeze in the offing?
I do not know anything about a credit squeeze.