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War Economy

Overseas Assets rise by £53 million in 1944 and 1945

Overseas Assets rise by £53 million in 1944 and 1945

In 1944 Customs entries again showed an unfavourable trade balance, with imports exceeding exports. However, imports again included a substantial proportion of Lend-Lease supplies2 which did not have to be paid for in foreign currency, but were in effect offset by Reverse Lend-Lease supplies to United States forces. These supplies, running at about £25 million a year, were not being recorded as exports.

New Zealand foreign exchange earnings in 1944 were boosted up by the receipt of £19·9 million in lump sum payments from the United Kingdom Government and, in spite of a repayment of £3·7 million under the Memorandum of Security,3 foreign exchange receipts exceeded payments. The overseas assets of the banks increased by £11·1 million to reach £57·4 million in December 1944.

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In 1945 there was a substantial favourable trade balance and, with imports including Lend-Lease supplies, exchange transactions relating to trading were still more favourable. A further lump sum payment was received from the United Kingdom. Even after meeting a portion of New Zealand's commitments under the Memorandum of Security, £43·2 million remained in balance when all overseas commitments had been met. The overseas assets of the banking system moved up sharply to £99·3 million in December 1945.

This favourable conclusion to wartime overseas transactions was due to very low private importing throughout the war, assisted by the fact that export prices had risen 14 per cent between 1943 and 1945, bringing some relief from the comparatively unfavourable terms of trade experienced for most of the war. However, it was not until 1950 that the purchasing power of a given quantity of exports returned to the level experienced before the war.

Chart 67 shows changes in overseas assets of the banks.

chart of assets

Chart 67
NET OVERSEAS ASSETS OF THE BANKS

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Overseas Exchange Transactions £ (NZ) Million
  1939 1 1940 1941 1942 1943 1944 1945 1946 Total 1939–46
RECEIPTS                  
Export receipts 65·9 74·6 71·1 82·3 76·7 80·5 97·6 112·0 660·7
Lump-sum payments from United Kingdom Government2           19·9 5·0 5·0 29·9
Other receipts3 9·1 7·9 9·3 12·3 27·8 26·0 26·6 31·1 150·1
Total receipts 75·0 82·6 80·4 94·6 104·5 126·5 129·2 148·1 840·7
PAYMENTS                  
Payments for imports (excluding most Government imports) 48·9 52·1 43·1 36·4 31·2 32·8 33·6 62·4 340·5
Government and local body debt repayments4 19·8 22·8 17·6 7·9 21·8 8·5 1·3 52·8 124·05
Interest on Government and Local body debt     7·1 7·2 7·1 6·7 6·4 6·0 54·65
Other payments6 (including most payments for Government imports)     14·5 29·1 41·1 50·7 44·7 33·5 228·05
Total payments 68·7 74·9 82·2 80·6 101·3 98·8 86·0 154·7 747·2
Balance +6·3 +7·7 -1·9 +14·0 +3·2 +27·7 +43·2 -6·6 +93·5
Net overseas assets at end of year7 16·4 25·7 27·8 43·5 46·3 57·4 99·3 108·4  
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2 Imports of Lend-Lease goods were estimated at £21 million in 1944, but this figure did not include all goods supplied.

3 The arrangement by which New Zealand repaid the United Kingdom for costs incurred on account of New Zealand forces overseas. See also p. 270.

1 From 7 December 1938 to 31 December 1939. Other figures are for calendar years.

2 A final £5 million was received in 1947.

3 Part of the increase in later years was for pay and maintenance of United States authorities and personnel.

4 Estimates only. Memorandum of Security repayments are included here.

5 Approximate totals only. 1939 and 1940 figures not known.

5 Approximate totals only. 1939 and 1940 figures not known.

6 Payments on account of American authorities and personnel are included here.

5 Approximate totals only. 1939 and 1940 figures not known.

7 £6·8 million at beginning of 1939. Changes do not agree with overseas exchange balances because of exchange adjustments, changes in Government overseas investments, etc.