The 1954-55 Improvement in Japan's Balance of Payments

Abstract

ESPITE THE WEAKNESS caused by structural and other reasons, Japan had a surplus in its over-all balance of payments' in every year from 1947 through 1952. The year 1953, however, was conspicuously different and attracted special attention. The exceptional nature of this year was heightened by the fact that special government receipts, which had enabled Japan to accumulate reserves since 1950,2 despite large deficits in other balance of payments items, were then at a peak. In 1951 and 1952, when special government receipts averaged $706 million a year, Japan had an average annual payments surplus of about $281 million. During 1953, on the other hand, when such receipts totaled $803 million, there was a payments deficit of $227 million. The payments difficulties in 1953 were dramatized by the fact that they were in the form of a sterling crisis. The decrease in exchange assets was all in sterling assets, which reached critically low levels by the middle of 1953. An increased use of import usance (i.e., time) bills facilities made available by London banks helped Japan husband its meager sterling resources. Japan also entered into swap arrangements with these banks, buying sterling for dollars and undertaking to resell it, after a specified period, for dollars. Furthermore, in a total of four transactions between September 8 and December 21, 1953, Japan purchased the sterling equivalent of $124 million from the International Monetary Fund.3 However, this symptom of the problem-the sterling crisis-will not be emphasized in this paper, since, basically, the disequilibrium enveloped the whole range of Japanese payments. It showed up specifically as a sterling problem because Japanese efforts to conserve dollars by buying more from the sterling (and other non-