RETUFRN RETURN-O -RE S T R I CT E D REPORTS DESKR W 'ITJIN R e po rt No. E.A.91a ONE WEEK r XW Public Disclosure Authorized This report was prepared for use within the Bank. In making it available to others, the Bank assumes no responsibility to them for the accuracy or completeness of the information contained herein.

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Public Disclosure Authorized THE ECONOMY OF

December 19, 1958. Public Disclosure Authorized Public Disclosure Authorized

Department of Operations - Europe, Africa and Australasia. CONVERSION RATES FOR DANISH

U.S. $1 - Danish Kroner 6.907 1 - U.S. $0.145 Danish Kroner 1,000,000 - U.S. $145,000 Pound Sterling 1 - Danish Kroner 19.4 TABIE OF CONTENTS

Page No.

BASIC DATA

MAP

I. THE SETTING ...... 1

A. Historical and Political Background . . . , . . . a 1 B. Economic Background ...... a . . 2

II. STRIJCTURE OF ECONOvY ...... 3

A. Agriculture ...... 3 Importance of Agriculture in Danish Economy . . . 3 Character of Danish Agriculture ...... 3 Land Tenure and the System . . . . . 4 Postwar Developments ...... 5 Agricultural lolicy , ...... 6 B. Industry and Employment ...... 7 Postwar Developments ...... 8 Employment and Unemployment ...... 8 C. Transportation; ...... 9 D. Financial Structure ...... 10 1. IMIoney and Banking ...... 10 2. Public Finances ...... 12 Prospects ...... 13 3. Prices and ...... 13 E. National Income, and Investment ...... 14

III. FOREIGN TRkDR, AND THE BAL101CE OF PAY-NTS ...... 16

Recent Developments ...... 19 External Debt and Other Foreign Investments . . . 19

IV. IMPACT OF PLANS FOR, EUROPEAN ECONO0'EC UNIFICATION . . 20

V. PROSPECTS...... 20

STATISTICAL APPENDIX ...... 22 BASIC DATA

Population (1957) - 4.5 million

Area - 16,600 square miles

Gross National Product 1956 - 30 billion ($4.3 billion equivalent)

% of G.N.P. (1956)

Gross Investment 18

Exports of Goods and Services 35

Government Current Expenditure 13

Money Supply 25

Per Capita G.N.P. (1956) - 6,750 Kr. ($975)

1957 (In millions of dollars equivalent)

Current Account Capital Account

Exports (f.o.b.) 1,179 Amortization of Imports (f.o.b.) 1 246 public debt -34 Trade balance :77 IvF drawing 34 Net shipping receipts 80 Other 10 Other (including errors and omissions) 41 Balance 10

Balance 54

Increase in Foreign Exchange Reserves ( and commercial banks) 64

Public External Debt, March 31, 1958

Million $ equivalent

U. S. Dollars 87.7 Pounds sterling 28.8 EPU consolidated 52.1 Other 59.7

Total 228.3

Foreign Exchange Reserves

Central Bank (September 30, 1958) Gold 31 Foreign exchange 192

Total 223

Commercial banks (net assets, August 31, 1958) 53 To Sison., To B.Og. To Oslo To OIlo

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DECEMBER1958 To100. , To 8.010 To 8#0ril To 6.0110 IBRO534 THE ECONOOMY OF DENMARK

I. THE SETTING

A. Historical and Political Background

1. In earlier times the Kingdom of Dermark comprised a much larger area than at present. Defeat in the Thirty Yearst 1War (1618-1648) and in subsequent wars with caused serious losses of territory and the general impoverishment of the country. These disasters, however, enabled the King, backed by the middle classes and by the peasants, to curtail the excessive powers wielded by the nobility and establish an absolute monarchy which, under the influence of 18th century "enlightenment," introduced far- reaching reforms and thus laid the foundations of Denmark's future advances in the economic and social fields. Progress was interrupted by the NaDoleonic wars. Since the middle of the 19th century, and especially since the loss of Schleswig and Holstein to Prussia in 1864, land reform and the reclamation of Jutland became major national objectives. The defeat of the Conservatives in the 1901 elections ushered in a period of far-reaching political, social and economic reforms which reshaped Denmark into one of the most progressive States in Europe.

2. Denmark remained neutral during the first Wlorld liar. A plebiscite held after the war resulted in the transfer to Denmark of the northern part of Schleswig, involving an area of 1,500 square miles and a population of 163,000. Denmark again proclaimed its neutrality during the War but the country was occupied by German troops in April 1940.

3. The constitution of 1953 provides for a single House with 179 members. Election is by proportional representation. There are four principal political parties. The Social Democrats, the largest Danish party, have accounted for 40 per cent of the popular vote in the last four electiors. They represent the interests of labor but are also supported by small-holders. The Agrarian Liberals represent the larger farmers as well as other corservative opinion. The Conservatives have become a middle-of-the-road party not differing much from the Agrarian Liberals. The Radical Liberals, sunported by small-holders and town intellectuals, are a numerically small party but wield considerable influence. With the exception of a three-year period of Liberal-Conservative rule (October 1950 to September 1953), postwar governments have been formed by the Social Democrats with the reluctant support of the Radicals. The elections of May 1957 yielded the first postwar majority government consisting of a coali- tior of Social-Democrats, Radicals and Single Party.

4. At the beginning of the 20th century the Danish overseas possessions consisted of , , the Faeroe Islands and the Virgin Islands. In 1917 the Virgin Islands were sold to the . In 1918 Iceland -2- was declared an independent state under the Danish King, but Denmark remained in charge of its foreign relations. In 1944 Iceland becarne a completely independent republic, following a national plebiscite. Greenland, largely uninhabited (population 22,000), was made an integral part of Denmark by the 1953 Constitution and is represented in the Danish parliament by two deputies. The Faeroes, with a population of 37,000, are a group of islands in the North Atlantic enjoying a large measure of local autonomy and represented in the Danish parliament by two deputies.

B. Economic Background 5. Denmark covers an area of 16,600 square miles and has a population of 4,450,000. The density of population is about the same as in but only half that of Germany and one-third that of the and . The Jutland peninsula (see accompanying map) has 45 percent of the total population, the two large islands of and account for 52 percent of the population. The surface of the country is uniformly low, the highest ground not exceeding 600 feet above sea level.

6. Zealand, Funen and East Jutland, where undulating clay formations predominate, are the most fertile parts of the country while West Jutland is largely a plain of poor sandy soils. Climate has been described as Denmark's major asset. Due to the maritime influence, it is milder and more uniform than that of most countries in the same latitude. Denmark has few other natural assets. It is almost wholly deprived of fuel, has no important metallic minerals, no hydroelectric potential and only limited timber resources.

7. Until the middle of the last century Denmark was an economic;1ly backward agricultural nation,producing mainly grain for export to neighboring countries. The land reforms of the second half of the 19th century, coupled with the rapid spread of education, are generally credited with transforming the unprogressive peasants into highly eff'icient farmers, eager to adopt the most up-to-date methods and techniques and capable of developing the world's most successful cooperative system. In the same period large tracts of unpro- ductive land were reclaimed for agriculture through marling, draining, planting of trees and irrigation, mostly through private initiative. Simi- larly,extensive areas in the West, which for centuries had been subjected to heavy damage by drifting sand, were protected through planting and securing of the sand dunes. The advent of cheap overseas grain, far from ruining Danish agriculture, caused a highly profitable change-over to dairy farming. Industrial development f'ollowed closely in the wake of agricultural expansion. The impetus came from the rising incomes and needs of farmers, the tigh stand- ards of education of the population and the proximity of important markets and sources of supply. The same factors account for the rapid growth of the ship- ping and fishing industries during this period. Between 1880 and 1914 the output of agriculture doubled and exports of livestock products increased ten- fold, while industrial expansion was even more rapid. The real national in- come trebled during that period, implying a rate of growth of 3 1/2 percent per annum. -3-

8. The attempt after lWorld War I to restore the currency to its prewar parity subjected the country to a severe deflation which was accompanied by industrial stagnation and unemployment. Buoyant exports helped to revive the economy after 1926 but this was brought to an abrupt end by the world depres- sion. Like most countries, Denmark adjusted to the disruption of world trade during the 1930's by stimulating production for the home market through im- port restrictions and exchange controls. As a result, industrial production increased by 30 percent during this period while agricultural production remained virtually unchanged. As in many other countries this represented a shift from a more efficient to a less efficient utilization of national re- sources. Moreover, the increase in industrial production did not prove suf- ficient to solve the country's most serious problem, unemployment.

9. Although the German occupation left the Danish economic capacity largely intact, production and trade were seriously affected. Industrial output had regained the 1939 level by the end of 1946 but agriculture and exports did not reach their prewar volume until 1950. Moreover, this recovery necessitated large outside assistance and Denmark became self-supporting only in 1953 when industrial production had increased 50 percent over prewar, agri- cultural production 12 percent and exports 36 percent. However, the external position remained vulnerable and the country has experienced several foreign exchange crises in the last five years in spite of a large increase in indus- trial exports. This has been due mainly to the restricted marlcets and low prices for Danish agricultural products and the low level of Danish foreign exchange reserves. The external weakness has in turn been reflected in tight monetary and credit conditions which have been largely responsible for the slowing down of industrial growth in recent years. Denmark, like most other countries, has also been struggling with the problem of . The striking improvement in the external position which has taken place since the middle of 1957 and the slowing down of internal price increases may, however, represent a turning point in Danish economic fortunes.

II. STRUCTURE OF ECONOIMY

A. Agriculture

Importance of Agriculture in Danish Economy

10. Agricultural land accounts for 75 percent of the total area. During 1953-57 19 percent of the gross national product was derived from agri- culture and 63 percent of total exports consisted of farm products. In 1950, the latest census year, 22.6 percent of the population derived its income from agriculture.

Character of Danish Agriculture

11. Danish agriculture has won world fame for its high yields and the quality of its products, which have been achieved through intensive and -4- heavily capitalized farming and the application of the most up-to-date methods and techniques. Permanent pastures, the most extensive form of farm- ing, account for only 12 percent of the agricultural area and even these receive considerable applications of labor and capital. The remaining agri- cultural area is tilled in rotation but the crops obtained are largely devoted to the feeding of livestock. In 1955-56 85 percent of the tilled area was under feed crops. Thus Denmark differs from the other major livestock pro- ducers like , New 2,ealand and Ireland in that it is a crop-growing, not a pastoral country.

12. The Danish soil supplies 90 percent of the feedingstuffs needed by the livestock economy. Imports, however, are of greater significance than this relationship indicates. The high yields and high quality of Danish pro- ducts can be achieved only iNith optimum concentration and optimum protein con- tent in feedingstuffs. Danish farming depends on imports for nearly 30 per- cent of its needs in concentrated feed and for some 22 percent of its needs in protein feed.

13. Danish livestock production is built around the dairy cow. Pigs and poultry, the other two important types of livestock raised in Denmark, are the means whereby the large amounts of skim milk left over from butter production and the considerable amount of labor needed in dairying are economically utilized. The cow-pig-poultry economy of the typical farm not only makes pos- sible the full utilization of farm resources and by-products but also a consid- erab'e flexibility in production to meet shifts in demand and hence ensures greater stability in income than could otherwiise have been expected in an industry heavily dependent on exports.

14. Danish agricultural production is predominantly for export. Over 60 percent of the total output is sold abroad. At the same time Denmark has achieved a considerable degree of self-sufficiency in foodstuffs at a high dietary level. Food imports normally account for less than 10 percent of total imports. The principal commociities imported are wheat, rye, fruits and coffee, accounting for 80 percent of' total food imports. The Danish soil and climate are not favorable to iheat growing and the varieties produced are too soft for milling and are largely f'ed to livestock. A unique feature of the consumption pattern is the heavy reliance on margarine for meeting fat require- ments. This represents an extremely economical use of resources not only because it frees butter for export but also because it makes available large quantities of oil cake needed by the dairy industry.

Land Tenure and the Cooperative System

15. The high efficiency of Danish agriculture is all the more remarkable in view of the fact that the predominant type of farm is the isolated small holding vorked by the farmer and his family. As a result of the far-reaching land reforms of the last 100 years, nearly all Danish farms are owner-occupied. Half of these are small farms under 25 acres and only 2 percent are over 148 acres. While, however, small farms predominate, they account for only 16 percent of the agricultural area. Their owners have been able to attain their -5- high living standards only through the most intensive and intelligent use of their land and labor and through the most efficient processing and marketing of their products. This they would not have been able to do in isolation. Cooperation is the key to Danish success.

16. The have enabled fanrers to cormbine the advantages of small-scale intensive farming by owner-operators with those of large-scale production and have thus ensured the success of land reform not only as a social but also as an economic experiment. Cooperative associations sprang up spontaneously among the farmers and reached their high state of develop- ment exclusively through the voluntary action of members without any assist- ance from the State. The network of these associations is so extensive that it covers practically every aspect, direct and indirect, of the farmerst activities.

Postwar Developments

17. The first postwar years were a period of great difficulties for Danish agriculture. British rationing and bulk buying and the disappearance of the German market meant low prices for Danish products while the shortage of grain and oilseeds meant high prices for feedingstuffs. Conditions im- proved after 1950 as a result of increased British purchases at better prices, the revival of German demand, sales to ~Dastern Europe and loiwer prices of feedingstuffs. Danish farmers responded by expanding output and at present agricultural production is estimated to be nearly 30 percent above prewar. The most important increases have been in cheese, bacon and pork, beef and eggs. Butter production, on the other hand, which before the war accounted for 30 percent of total agricultural output, is below prewar.

18. These shifts in production reflect the changes which have taken place in foreign demand for Danish products. British imports of butter are below prewar and so are imports of butter from Denmark. German imports of butter are only half of prewar while imports from Denmark have declined by nearly two-thirds. British imports of bacon are not greater than before the war due to larger, sub- sidized, home production but Denmark has increased its share of the British mar- ket. Exports of eggs to the United Kingdomwhich before the war accounted for 70 percent of total Danish exports of eggs, are less than one-tenth of prewar due to increased, subsidized, British production. The loss of the British mar- ket has been made good by greatly increased sales to Germany and to the U.S. Army but there has been only a small overall increase since before the war. On the other hand, Denmark has been highly successful in expanding its sales of meat and cheese in British, German and other European markets. As a result of these changes, the volume of agricultural products exported has increased by 40 percent since 1938. In addition, exports of canned meat and milk, which before the war were negligible, have become of major importance. In view of the restricted opportunities on the British market and of the trade barriers erected in most countries against imports of livestock products, such an increase in exports demonstrates the continued competitive strength and flexibility of Danish farming. It should, however, be noted that the shift from butter to beef has been possible only because beef prices have been high in relation to other pricc -6-

19. W,,hile the relationship between prices of animal products and prices of feedingstuffs has greatly improved since 1952 it is still less favorable than during the 1930's, when it was far from favorable to Danish agriculture. Similarly prices of Danish farm products have risen less than the general price level. Moreover in the last three years Danish farmers have had to con- tend with great price instability and erratic conditions in the butter, bacon and egg markets resulting from changes in the world supply situation, large- scale subsidization by exporting countries and changes in the policies of im- porting countries. Finally, in spite of determined efforts to take advantage of any opportunities that arose for expanding sales of individual commodities, the overall volume of Danish agricultural exports has remained stationary since 1954. Danish resourcefulness has been able to make up losses in one product through increased sales of another but this has not been sufficient to raise the total volume of exports.

20. In spite of these difficulties Danish farmers have succeeded in improving considerably their real incomes. This they have achieved through very large increases in productivity. The extensive postwar mechanization of farms and more efficient use of labor have reduced man-hours in agriculture by 33 percent. Increased use of fertilizers and further advances in farm tech- niques have substantially increased crop yields. More economical use of feed- ingstuffs and the greatly increased use of ensilage have drastically reduced production costs. As a result of these gains, per capita incomes in agri- culture have increased more than in the other sectors of the economy. Conse- quently, there has been no tendency for the number of farm units to decline, as has been happening in other countries.

Agricultural Policy

21. Until recently Danish agriculture was probably unique in the com- plete absence of any form of subsidy, price control or price support. During the summer of 1958, two measures were adopted which may have changed this somewhat but it is too early to evaluate their significance. The first measure establishes minimum prices for wheat and rye (above current market prices) and makes the use of domestic wheat and rye for milling comipulsory up to 70 and 90 percent respectively of the flour produced. The legislation applies only to the current year and its effects will be studied before it is re- newed. The second measure authorizes the Minister of Agriculture to regu- late the marketing of products and impose charges on sales of agricultural products. The purpose of the legislation is merely to assist the establish- ment of competent export organizations for the new export products similar to those existing for traditional exports and to raise funds for the financing of export promotion and market research. It seems unlikely that either measure will be allowred to have any serious unfavorable repercussions on the economy. -7-

B. Industry and Employment

22. Most Danish industries have grown up around seaports where access to imported raw materials and fuel is easy. There are no large industrial areas. Industrial concerns are generally small, specializing in the produc- tion of quality goods. The two largest groups of manufacturing industries are the metal and food industries, accounting for more than half of total output. Next in importance are textiles, chemicals and paper.

23. Shipbuilding is the most important of the metal industries and has ion -world fame in the production of ocean-going motor ships. It is closely linked with the production of diesel engines in uhich Denmark leads the world. The production of steel plates and marine refrigeration equipment is another industrial activity closely associated with shipbuilding. Other important products are dairy machinery, food processing machinery, cement machinery, electric motors, cables, accumulators, batteries, etc. All these products enjoy good uorld markets.

24. The textile and clothing industry is small and is handicapped by the narrowness of the domestic market. It is one of the most heavily pro- tected branches but meets less than two-thirds of local requirements. The chemical industries include a highly efficient pharmaceutical industry using waste agricultural materials (glands, etc.) and producing such specialized items as insulin, penicillin, hormones, vitamins, etc., largely for export. The most prominent of the other Danish industries is the highly competitive cement industry which exports over one-quarter of its output.

25. It may be estimated that in 1956 over a quarter of Danish manufac- turing output was exported (in terms of net ). Exports absorbed 46 percent of metal manufactures, 38 percent of chemicals and 25 percent of food products.

26. Imports of manufactures are large, accounting for hO percent of total imports. Denmark depends on imports for most of its requirements in tractors, industrial machinery, parts for bicycles and cars, fertilizers other than phosphates, rayon goods and for two-thirds of its requirements in steel.

27. The limited industrialization is also shown by the relatively low level of power consumption. Although power generation has trebled since the war, per capita consumption is well below industrial Europe and only one- quarter of the United States. Finally, manufacturing accounts for only 18 percent of the national product and only 13.5 percent of employment compared with some 10 percent of the national product and employment accounted for by "handicrafts". 1/

1/ Handicrafts are defined in Danish statistics to include not only manufac- turing in establishments employing 5 workers or less (total employment 53,000 in 194 8) but also such activities as the operation of garages, re- pair shops, butchers' and bakerst shops, slaughterhouses, dairies, dress- making, laundering and cleaning, which in other countries are classified as services. Postwar Developments

28. Danish industry recovered rapidly from the effects of the war and by 1950 manufacturing output had reached a level 50 percent higher than in 1938, compared with an increase of only 23 percent for the OEEC countries combined. Since then, however, ind'ist`jial growth has been slow, corresponding to only 2 percent per annum, coc;.lpared with an increase of 6 percent per annum in OEEC countries combined.

29. The principal factors in the slow expansion of industry have been the absence of growth in t-:;tiLes and building materials and the small growth in food processing which reflect the slow rise in incomes during this period as well as, in the case of textiles, the effects of import liberalization. The metal and engineering industries, on the other hand, which are largely export industries, experienced an increase in output of 35 percent during this period.

30. It may be estimated that nearly half of the increase in industrial production achieved during 1951-56 was due to increased exports. As a result, the proportion of industrial output exported increased from 22 percent in 1951 to 27.5 percent in 1956.

31. During the five yrears 1952-57 the volume of industrial exports in- creased by 85 percent and, while metal manufactures and chemicals accounted for two-thirds of this increase, spectacular gains were made by a wide range of secondary products, like furniture, special textiles, etc. Even in 1958, a period of recession for world trade, Danish industrial exports continued to increase.

32. Danish manufactures are sold all over the world and no single country accounts for more than 15 percent of the total. aestern Europe as a whole absorbs 65 percent of the total and the United States another 10 percent.

33. The steady rise of industrial exports demonstrates Denmarkts com- petitive strength and its ability to produce for world markets. On the other hand, the slow growth in domestic demand and the tight credit situation, which balance of payments difficulties have forced on the country, have undoubtedly hampered industrial development. Thus the strengthening of the external posi- tion seems to be a necessary condition for a more rapid industrial growth.

Employment and Unemployment

34. Employment in manufacturing increased by 45 percent between 1937-39 and 1955 and was a major factor in the reduction in unemployment which took place during this period. In 1937-39 20 percent of the insured population was unemployed. The rate of unemployment declined to less than 9 percent during the first postwar years but has risen since then. In 1956 it was 11.1 percent and in 1957 10.2 percent of the insured population. 'While this - 9- appears to be a considerably higher level than in most industrial countries it is not particularly high under Danish conditions:

(a) The insured population is only 30 percent of the labor force and there is little unemployment among the non- insured groups. If unemployment were expressed as a percentage of the total labor force, as in the United States, the rate of unemployment in 1957 would have been less than 4 percent.

(b) Seasonal unemployment is unusually high for an indus- trial country. During December 1955-March 1956, for instance, the rate of unemployment was 20 percent of the insured population but it was only 5.5 percent during May-September 1956, which was equivalent to a rate of 2 percent in the United States. The size of seasonal unemployment is undoubtedly a serious econ- omic and social problem but it is a problem calling for long-term structural changes, not short-term remedies.

35. It should, however, be noted that the relatively satisfactory employ- ment situation which has obtained in the postwar period is due not only to the increased employment opportunities in industry but also to the smallness of the increase in population of working age. Thus, between 1940 and 1953 the economically active population increased by only 7 percent while the total population increased by 13 percent.

36. The unemployment problem is expected to become more serious in the next few years when the population of working age will increase sharply as a result of the high birth rates of the wartime period. It has been estimated that the population between 15 and 65 years of age, which increased by an average of only 12,500 per annum during the decade 1945-1955, will increase by 27,000 per annum during 1955-60. Agricultural employment will probably continue to decline (a decline of at least 2,000 per annum is anticipated) and services are not expected to absorb more than 35 to 40 percent of the in- crease in the labor force. Emigration has been rising in recent years but is viewed with disfavor. This means that a considerable industrial expansion will be needed if unemployment is to be kept at its present level.

C. Transportation

37. Denmark possesses a highly developed system of internal transport- ation and is also one of the important shipping nations of the world.

38. The rail network was built by State enterprise after the defeat of 1864 and consists of 2,554 km. of main lines operated by the Danish State Railways and of another 2,001 km. of subsidiary lines operated by "private" companies, in which the State and the municipalities hold most of the shares. This network has a density comparable to that of the Swiss. The railroads convey a considerable volume of international transit traffic since Denmark represents a natural link between the countries of North-Western Europe and . -10-

39. During the prewar decade the railroads carried out a thorough pro- gram of modernization which amounted to a virtual reconstruction of the system. The railroads suffered considerable losses during the war but these were made good in the postwar period. The railroads have normally been incur- ring losses in their operations, met through Budget appropriations, but this has been considered as the justifiable cost of maintaining socially desirable services. In recent years the earning power of the railroads has been affected by road competition. Diese'lization, vhich is under way, is expected to re- ciuce costs considerably.

40. Denmark is well provided with harbors around 'iahich most of the towns have grown. The fact that no part of the country is more than 25 miles from the sea makes for easy and cheap transportation. handles one- third of the total tonnage loaded and unloaded in Danish ports.

41. The road network is extensive and of high quality. As in most countries, there has been a great increase in road transport since the war. In 1957 road transport accounted for 67 percent of total goods transport (including short hauls) as compared a;ith 28 percent for rail transport and 5 percent for coastal shipping.

42. The merchant fleet, consisting almost wholly of motorships, is engaged primarily in . Net foreign exchange receipts during 1955-1957, at $110 million per annum, corresponded to 10 percent of exports. Nearly half the earnings are obtained from liner service and over 20 percent from time charters.

43. The size of the fleet has grown steadily in the postwar period and at present the total fleet of some 2 million gross registered tons is double the 1939 tonnage and is one of the most modern and efficient in the world, with 75 percent of the total consisting of ships built during the last ten years.

44. Denmark has a 30 percent participation in the Scandinavian Airlines System, one of the leading world airlines. SAS is at present carrying out a large program of reequipment which will greatly increase its capacity. The airport of Copenhagen is a major international airport and is in process of expansion to accommodate jet airliners.

D. Financial Structure

1. Money and Banking

45. Denmark has a highly developed banking system which handles a large part of the country's financial resources. In 1957 sight and time deposits correspondeed to 40 percent of the gross national product compared with 38 and 30 percent respectively in the United States and the United Kingdom.

46. A special feature of the Danish financial structure are the Mutual Credit and Mortgage Associations which are cooperatives of borrowers issuing -U- first and second mortgage bonds secured by the property of their members and sold in the open market by the borrower. During 1953-57 these bonds accounted for 63 percent of total new issues.

47. The financing of the German occupation by Denmark took the form of advances from the National Bank and of increases in the German clearing debt, not of occupation costs levied on the country. The sums thus paid to the Gerrmians reached 7.5 billion kroner. In spite, however, of the huge expendi- tures which these sums implied the Danish authorities succeeded in restricting the increase in note circulation to only 800 million Kr. and in preventing sharp rises in prices. The principal measures adopted were the blocking of large parts of the banks' funds, the sale of Government bonds and bills to the public and blocking of the proceeds and an effective rationing and price control system. In May 1945 over 5 btllion kroner were tied up in Government bonds and in blocked bank funds. Thus Denmark emerged from the war with its financial structure strained but still in good working order.

48. The major problem facing the monetary authorities at the time of liberation was to reduce the excessive liquidity of the banking system which represented a serious threat of inflation once wartime controls had been re- laxed. The German clearing and ':ehrmacht accounts with the National Bank were converted into a Government debt whose gradual repayment became the principal means of restoring normal monetary conditions in the country. Thus during December 1945-December 1951 3.7 billion kroner, representing the proceeds of exceptional levies (war profits tax, property tax, confiscations, exchange of notes, etc.) and of sales of goods obtained under foreign loans and grants, were applied to the reduction of this debt.

49. The stabilizing effects of these measures were, however, partly off- set by the considerable credit expansion which took place during this period. The high reserve requirements introduced during the occupation were halved in 1947 and were completely eliminated at the end of 1949. During 1946-1950 commercial bank lending increased by 150 percent, lending by the major savings banks by 85 percent and lending by the credit and mortgage associations by 19 percent. Commercial bank deposits declined fractionally in this period wihich means that the whole of the expansion in bank credit was due to the shift of bank resources from cash and bonds into loans.

50. In addition to the great liquidity of the banking system and the absence of reserve requirements, low interest rates and easy credit policies on the part of the National Bank contributed to this expansion. In 1946 the official discount rate, which had been maintained at 4 percent throughout the occupation, was reduced to 31 percent, an extremely low rate for Denmark. Similarly in 1948 the National Bank undertook to rediscount building loans made by the commercial banks, thereby encouraging this form of lending. How- ever, the increase in National Bank advances and purchases of securities during this period was negligible, reflecting the unusual degree of independ- ence gained by the commercial banks as a result of the wartime accumulation of funds. -12-

51. In 1950 a foreign exchange crisis forced the adoption of a stricter credit policy which, however, was relaxed in 1952-53 following the improve- ment in the external position. A new and more serious external deterioration in 1954 led once more to the tightening up of credit policy which was main- tained until recently. In June 1954 the discount rate was raised to 521 per- cent, which has meant interest rates of 6 to 7-1 percent for bank loans, yields of over 7 percent on Government and mortgage bonds and rates of 4 per- cent on 3-month deposits. Loans and holdings of bonds by the National Bank were reduced and the commercial banks were urged to refrain from expanding the volume of credit and were permitted to make one-month interest-bearing deposits with the National Bank. More decisive, howTever, than these measures was the effect on bank deposits of the external deficit and of tighter fiscal policies. During the five-year period, 1953-1957, commercial bank deposits increased by only 2L[ percent or 4.5 percent per annum and commercial bank lending increased in almost exactly the same proportion.

52. In recent months the external improvement which began in the middle of 1957 has brought about a considerable easing of credit conditions. An expansion of 15 percent in commercial bank deposits between June 1957 and June 1955 and the lowjering of interest rates have made bank credit more plentiful and cheaper than it has been for many years and at the same time the demand for credit also eased due to the slackening of economic activity in the first half of 1958. There can, howiever, be no doubt that bank credit will resume its expansion as soon as business activity improves. This is one of the reasons why the recent external surpluses are unlikely to continue for long.

53. The discount rate was reduced to 5 percent in April and to 4' percent in August 1958. Interest rates on bank loans are at present 5 to 62 percent, yields on Government and mortgage bonds 5.4 to 5.8 percent and rates on 3-month deposits 321 percent.

2. Public Finances

54. Before the war Danish levels of taxation were relatively low and there was a high degree of fiscal decentralization. This is no longer so. In 1956-57 the share of Central Government revenue in the gross national product, at 17 percent, had nearly doubled but the share of local governments had re- mained unchanged at 5.5 percent of the gross national product.

55. As already stated, the immediate postwar years saw a determined fis- cal effort to absorb part of the excessive liquidity created by the occupation, but the subsequent improvement in the external position led to a considerable relaxation of fiscal discipline. As a result of tax reductions and large increases in public capital expenditures, mostly for the financing of housing construction, Government borrowing amounted to 824 million Kr. in 1952-53 and 613 million Kr. in 1953-54. The worsening of the external position in 1954 gradually forced the adoption of stricter fiscal policies, including new , cuts in subsidies and reductions in capital expenditures which reduced Govern- ment borrowing to slightly less than 400 million kroner per annum in 1954-55, 1955-56 and 1956-57. The position improved further in the past as -13- a result of the adoption of a compulsory savings scheme, of new increases in indirect taxes and of cuts in housing loans, which reduced Government borrowing to 250 million kroner during 1957-58 and will probably keep it at an even lower level in 1958-59. (See Statistical Appendix, Table 8.)

56. Government borrowing has been exclusively for the financing oI housing construction. This has been a new activity for the Government which was undertaken under the Housing Subsidy Act of 1946 but which began to gather momentum in 1949. The Act provided for direct Government loans on very easy terms to societies and individuals and was intended to stimulate housing construction which rent control and high building costs were dis- couraging.

Prospects.

57. The decline in the Government's borrowing needs during 1957-58 and 1958-59 is largely due to the compulsory savings scheme which will bring in 400 million kroner in these two years. W;ith the expiration of the scheme in March 1959 a return to larger Government borrowing can be avoided only through a further considerable decline in housing loans. The Government has been studying ways of replacing direct loans with guarantees and is envisaging a greater concentration of housing policy on subsidies to lower income groups. In view of the fact that no substantial decline in housing construction is envisaged for the coming years, this shift from Government to private fin- ancing will not reduce the claims of housing construction on national savings. However, the Government's disengagement from this field is likely to restore greater flexibility to the capital market.

58. A five-year program prepared within the Administration envisages an increase of 17 percent in investment in transportation facilities. Larger expenditures are also planned on educational facilities. Thus overall Govern- ment spending is likely to increase somewhat in the coming years.

59. Tax rates are considered high in Denmark and there will be pressure for concessions. The Government is fully aware that the overriding need of the economy is for increased investment, not increased consumption, and has stated its determination to resist demands for tax reductions which would result in an increase in public borrowing.

3. Prices and Wages

60. The increases which have taken place in the Danish price level dur- ing the postwar period reflect in part the world-wide rise in prices, in part the easier credit and fiscal policies pursued in years of external strength, and in part the steady rise in wages resulting from the strong position of labor in the economy.

61. A comparison of postwar price developments in Denmark and in major countries, after taking account of the 1949 , indicates that Denmark has held its own on the price front (see Statistical Appendix, Table 10). The Danish price increases of the last few years, like those which have been taking place elsewhere, have been due largely to steady increases in wages which have exceeded what was justified by gains in productivity. WA1age contracts have been negotiated every two years but rates have been tied to a cost of living index, based on a "typical" Danish budget including both direct and most indirect taxes, and have been automatically raised whenever the cost of living index rose by a certain number of points. The inclusion of taxes is a practice wshich weakens the effectiveness of fiscal policy, thereby depriving the Government of a major weapon against inflation. In the summer of 1957 the Government succeeded in persuading Trade UJnions to accept the exclusion oI the increases in indirect t&mns imade at that time from the cost of living computations.

62. Recent wage negotiations indicate that Trade Unions are alert to the danger that wage increases which are reflected in higher prices for Danish goods wovld weaken the econofty without conferring permanont benefits to the ree&pients. These negotiations nave resulted in three-year contracts whict, provide only for a gradual reduction of working hours from 48 to 45 per week (without loss of pay). Thus a remarkable degree of wage and price stability seems to be assured for the next three years.

E. National Income, Savings and Investment

63. As a result of the rapid economic growth attained during the half century preceding the War, the once poverty-stricken were able to reach living standards which compared favorably with those of the most advanced Western countries.

64. During 1938-1955 the per capita gross national product increased by 20 percent in Denmark as compared with 26 percent for the OEEC countries com- bined and between 1955 and 1957 the increase in national product was 6 percent for Denmark and 8 percent for the OPEC countries combined. In spite of this relatively slower growth, Danish living standards are still among the highest in the world.

65. In the past, Danish rate of has been low. This reflected the small-scale character of Danish enterprise, the considerable equality in in- come distribution and the fact that Danish economic progress was based on skills, intelligence and industriousness rather than on massive investments. The large current budgetary surpluses and larger retained business earnings of the post- war period raised the rate of saving to 17 percent of the gross national product in 1955 and 1956, implying a rate of net saving of 11 percent of the national product. This is below the postwar European average but similar to U.S. and U.K. rates of saving. Personal saving accounted for 50 percent of total net saving, the government current surplus for 38 percent and retained profits for only 12 percent. -15-

66. The composition of Danish investment suggests that the available resources have been used as productively as in any other country. Thus the share of housing, at 17 percent of thetotal, has been less than in most other European couhtries while the share of machinery and equipment, at 58 percent of the total, has been among the highest.

67. Until 1914 some 20 percent of gross fixed investment and probably one-third of new investment was financed through external borrowing. The importance of foreign financing decreased to only 6 percent of gross invest- ment in 1921-29 and became negative in 1931-39 as a result of debt repayment. During 1947-52 foreign financing accounted for 10 percent of Lross fixed investment but since then its share in total investment has been negligible.

68. In spite of the increase in investment which has taken place in the postwar period it is generally felt in Denmark that the strengthening of the external position and the more rapid economic growth desired require a higher rate of investment than has obtained in recent years. Concern is especially expressed for what is considered as a serious lag in industrial investment. It is pointed out that while industrial expansion is the only answer to the stagnation of agricultural exports and to rising unemployment, industrial investment has been kept down by tight credit conditions, high interest rates and lack of financing facilities. Industrial bonds and shares have never been popular in Denmark but they have become even less so in the postwar period when the capital market has been monopolized by Government and mortgage bonds. A recent estimate shows that during 1950-1956 new investment by joint-stock companies, i.e. exclusive of investment financed out of depre- ciation allowances, was financed as follows:

Percent of total

Retained earnings 26 Issue of shares 15 Issue of bonds and other long-term borrowing 3 Short-term debt 56

100

69. A detailed survey of the investment needs of industry which has just been completed has shown that the volume of investment will have to increase by 30 to 40 percent in the coming years if Danish industry is to take advantage of its export opportunities as well as meet the increasing competition that will result from the European integration movement. The measures taken to stimulate industrial investment include larger tax-free depreciation allowances, tax incentives for the building up of investment funds, liberalization of legislation to permit the acquisition of shares by insurance companies, the creation of new types of industrial bonds, the setting-up by the National Bank and the commercial banks of an industrial investment institution, the easing of conditions for the repatriation of foreign capital and a publicity campaign to attract foreign capital. It is hoped that these measures, together with the easier credit conditions which have resulted from the external improvement, will bring about the needed increase in industrial investment. -16-

70. Somewhat larger investment needs also exist in agriculture and, as already stated, it is planned to increase investment in transportation by 17 percent in the next five years. On the other hand, investment in power and housing is not expected to increase significantly. On the basis of present prospects and policies it may be estimated that overall fixed investment may increase by some 15 percent in the next five years.

71. The rate of saving is already high by Danish standards and there is no reason to expect that it will increase significantly on its own. The import content of Danish investment, especially industrial investment, is high, estimated by the Danes at some 50 percent. Even if we assume an im- port content, direct and indirect, of only 30 percent, the increased expend- itures planned would involve additional imports of some $30 million per annum in the next five years. This compares with a foreign exchange reserve which only recently reached p223 million. Thus the higher volume of investment contemplated is likely to have a substantial impact on the external position.

72. These considerations lead to the conclusion that it vould be appro- priate for Denmark to resort to foreign borrowing in order to supplement domestic savings and offset part of the foreign exchange cost of the expected increase in investment.

III. FOREIGN TRADE jND THE BALANCE OF PAYMENTS

73. The high degree of specialization on which Danish economic develop- ment has been based has meant a heavy dependence on foreign trade. In 1955- 56 exports corresponded to 31.5 percent of the net national product.

74. Between 1937-38 and 1957 the overall volume of exports increased by some 80 percent but industrial exports increased by nearly 150 percent. The changes in the composition of exports are shoin in the folloving table: Percent of Total 159 I Ij97 Butter 23 8 Bacon 23 13 Other agricultural products 24 29 Canned milk and meat 2 7 Machinery 4 13 Other industrial products 20 23 Other 4 7

100 100

75. Imports have also increased substantially, but less than exports. The largest increases in import volume have been in machinery, transportation equipment and fuel, especially oil. Imports of food (including feedingstuffs and oilseeds) are virtually unchanged while imports of textile manufactures have increased only moderately. The changes in the relative importance of the major categories of imports are shown in the following table: -17-

Percent of total 1937 1956 1957

Food, including feedingstuffs, oilseeds and fats 29 19 15 Fuel 16 19 18 Machinery and transportation equipment 8 17 18 Textile manufactures 9 7 7 Other 38 38 42

100 100 100

76. Before the war the United Kingdom was Denmarkts major market and major supplier, with Germany next in importance. In the postwar period the British share in Danish exports has been sharply reduced, from 53 to 27 per- cent, the German share is virtually unchanged at some 20 percent and the share of the rest of the world has doubled. On the import side the most striking changes have been the very large increase in the share of EFU countries other than the U.K. and Germany and the decline in the U.K. share. (See Statistical Appendix, Table 11.) The ability to penetrate new markets demonstrates the competitive strength of Danish products, but there has also been a loss of traditional markets and an increased dependence on exchanges with occasional buyers of Danish exports like France, , Easteorn Europe, etc.

77. Before the war exports more than paid for the cost of imports, ex- clusive of freight (imports, however, were held down by restrictions). The trade surplus, together with a surplus on transportation account, was more than sufficient to meet the servicing of the external public debt.

78. In the first six postwar years Denmark ran a large deficit arising from accumulated needs for imports, especially from the dollar area, reduced export capacity, unfavorable markets and prices for export products and inability to convert foreign exchange earnings into dollars. During 1946-51 the total deficit wias of the order of $450 million. The principal means of financing were U.S. Government grants and loans totalling around $300 million, an International Bank loan of 40 million, a United Kingdom credit of some $70 million and an EPU debit balance of about $40 million. M[oreover, the amortization of dollar debt, which had been suspended during the war, was not resumed until 1950 and arrears of over "30 million had accumulated which required clearing up.

79. Since 1952 increased exports, improved price relationships, larger import availabilities in non-dollar areas and higher shipping earningshave brought about a great improvement in the Danish external position, which has made possible a massive repayment of debt, a very considerable liberalization of foreign exchange transactions and the virtual disappearance of the dollar problem. During 1952-1957 the prewar debt was reduced by $105 million of which 84 million was accounted for by retirements of U.S. dollar bonds. The strict bilateralism and severe import restrictions of the early postwar years have been relaxed to the point where foreign exchange transactions are freer than they were before the war. -18-

80. In spite, however, of the progress made, the country has experienced periodic foreign exchange crises. The underlying causes of the persisting difficulties have been the sharp deterioration in the terms of trade as com- pared with prewar and the smallness of the foreign exchange reserves. During the five years 1953-1957 the trade deficit has averaged $60 million per annum compared with a surplus of $13 million in 1938 (imports valued f.o.b.). It may be estimated that during 1953-57 export prices were some 10 percent lower than import prices as compared with prewar, a development reflecting the low prices of dairy products in the postwar period../ Thus, prices of butter had increased 13 percent less than overall import prices, prices of bacon 32 per- cent less and prices of eggs 5.5 percent less.

81. The deterioration in the trade balance has been largely offset by a considerable improvement in invisibles, which is the result of larger earnings from shipping, travel and miscellaneous transactions and of rel- atively smaller payments for investment income. lIet invisibles, which in 1938 showed a surplus of only some $9 million, have averaged $70 million per annum during 1953-57. Thus, for the period as a whole there has been a sur- plus of $10 million per annum on current account. The external difficulties experienced during this period are explained as follows: first, the current account surplus has not been sufficient to meet amortization payments on the external debt which have averaged some $35 million per annum, second, the overall deficit has repeatedly been considerably larger than this average, and, third, the seriousness of these difficulties has been magnified by the smallness of the reserves. (See Statistical Appendix, Table 12.)

82. w,ihile the gold and foreign exchange assets of the National Bank re- mained virtually unchanged, at some h0 million, between the beginning and the end of the period under consideration, they repeatedly underwent sharp declines within the period, thus transforming temporary external difficulties into serious foreign exchange crises. There can be no doubt that a foreign exchange reserve of the size held by Denmark in the postwar period has been too small to support a volume of current transactions which during 1953-57 has averaged $11,350 million per annum. In 1938 the foreign exchange reserve at $70 million supported current payments of only '1$420 million.

83. Regionally, while in the earlier years the bulk of the deficit had been with the dollar area, during 1953-57 there were very large deficits with the Continental E?U area, offset by surpluses with the sterling area and non- European countries. The EPU deficit is due to large import surpluses from four countries, Germany, the , Belgium and Sweden, reflecting the effects of geographic proximity and availability of industrial products required by the Danish economy. Transactions with the dollar area have been in reasonable balance in the last five years.

1/ A comparison based on import and export price indexes shows the deterior- ation to have been much greater (16.6 percent instead of 10 percent) but these indexes do not take sufficiently into account the change in the composition of exports and hence tend to exaggerate the deterioration. -19-

Recent Developments

84. Since the middle of 1957 a striking improvement has taken place in the external position which, although due in large part to temporary factors, may also represent a permanent strengthening of the external position. During the first half of 1958 there was a trade surplus of jp30 million and a sur- plus on invisibles of t46 million, which after amortization payments of p35 million, made possible an increase in the foreign exchange holdings of the National Bank and the commercial banks of some $23 million and a repayment of j025.5 million to IMF (there were also miscellaneous capital receipts of 07.5 million). The principal factors in this improvement have been an increase in exports of 422 million (3.5 percent) over the half-year average for 1957 and a decrease in imports of $42 million (6.7 percent). Net ship- ping earnings were fairly well maintained in spite of the slump in freight rates.

85. The increase in exports was due equally to agricultural and indus- trial exports. Prices of agricultural products declined by 7 percent but their volume increased by 12 percent. The decrease in imports was due in part to lower prices and in part to lower volume. The decline was concen- trated in fuel, metals, mainly steel, and textiles.

86. The fall in import prices was the result of changes in world conditions but the decrease in volume was due mainly to internal develop- ments and especially to the tight monetary situation created by the external deficit and the financial measures adopted in the summer of 1957.

87. A vigorous expansion in world trade is likely to raise import prices while a resumption of Danish industrial expansion is certain to raise the volume of Danish imports. On the other hand,some of the decline in import prices may prove more permanent while an improvement in export prices is also a possibility. Moreover, amortization payments on the external debt will decline sharply after 1960. Thus, while the recent large surpluses are unlikely to continue, a stronger external position than in the past might be maintained in the coming years, barring an undue relaxation of domestic policies.

88. At the end of September 1958 the gold and foreign exchange holdings 22 of the National Bank stood at p 3 million and the net foreign exchange holdings of the commercial banks at another 4$50 million. This corresponds to 2 months' payments on goods and services as compared with holdings equivalent to only one month's payments in June 1957.

External Debt and Other Foreign Investments

89. Before the war the public debt amounted to $320 million, a large part of which consisted of U.S. dollar bonds. On Narch 31, 1958 this debt had been reduced to o68 million, of which only $10 million was dollar debt. Borrowing in the postwar period, mainly in the form of U.S. Government loans, IBRD loan, Swedish credits and EPU debt, had added another q160 million by Piarch 31, 1958. The total of 4228 million is thus considerably less than before the war and interest payments, due to the low rates on governmental loans, ball require only $5.9 million in 1958. Amortization payments, as already noted, are larger, but will decline to 425.3 million in 1959, $21 -20- million in 1960, $14.4 million in 1961 and $9.2 million in 1962 due mainly to the repayment of EPU debt. Thus, the service of the existing foreign debt, which corresponds to 2.5 percent of current foreign exchange earnings, is likely to decline to about 1 percent of present foreign ecchange earnings by 1961.

90. Private foreign investment was estimated at $200 million at the end of 1956, nearly half of it in the form of direct investment, wshile Danish private foreign long-term assets totalled $113 million, half of them direct investments.

IV. IMPACT OF PLU-IS FOR EIROPrAN ECONOMIC UNIFICATION

91. The various plans for European economic unification under discussion will have an important bearing on Danish prospects. As the lowest-tariff country in Europe Denmark would experience little economic dislocation as a result of joining the groupings proposed and would greatly benefit from a lowering of European trade barriers. However, the exclusion of agriculture, as presently contemplated in these projects, would deprive Denmark of the most important benefit that European unification could bring to its economy.

92. Another difficult problem facing Denmark in relation to these projects is that while, in the absence of a Free Trade Area, the operation of the Common Market among the six would adversely affect Danish agricultural exports, par- ticipation in the Common Yiarket would require undesirable adjustments in the Danish economy such as the raising of tariffs and the reorientation of trade.

93. The blordic Customs Union, which has been under discussion for some time, would be compatible with participation in a Free Trade Area, but not in the Common ivMarket, but in view of the relatively limited scope of trade with other Scandinavian countries it could not, in itself, make much difference to the Danish economy.

V. PROSPECTS

94. Danish prospects in the coming years will largely depend on the domestic monetary and fiscal policy pursued and on developments in foreign trade.

95. The CGovernment appears determined not to increase the scale of its borrowings, the National Bank may be relied upon to follow conservativre policies and take all the measures in its powrer to restrain any undue expansion in bank credit while recent wage agreements should ensure three years of labor peace and price stability. Thus, prospects on the financial front appear good and there is no reason to doubt that Danish products will retain their competitiveness in world markets.

96. Economic growth, on the other hand, depends mainly on the prospects of export expansion. In a small domestic market like the Danish the scope for increases in industrial and agricultural production based on increases in domestic demand or on import substitution is limited. Increased protection, which has been advocated in some quarters as a means of stimulating industrial growth, would raise domestic costs and thereby reduce the competitiveness of Danish exports. -21-

97. The Danes expect little improvement in agricultural exports. They point out that the principal obstacle to greater sales is agricultural pro- tectionism, which shows no signs of weakening, while increases in European food consumption will be small due to the slow rate of population grolfth.

98. Prospects for industrial exports are viewfed with greater optimism, assuming that world economic activity will continue to grow. During 1950-55 Danish industrial exports doubled in volume as compared with increases of 69 percent for the Netherlands, 42 percent for Belgium, 39 percent for Sweden and 32 percent for the IJnited Kingdom. A rate of increase of 15 percent per annum is unlikely to be maintained but the demand for capital goods, of which the bulk of Danish industrial exports consists, should continue to rise. The high quality and diversity of Danish products should enable the country to re- tain, if not increase, its share of the world market.

99. Given sufficient opportunities for expansion of exports there should be little difficulty in increasing industrial and agricultural production. The measures taken or contemplated for the financing of larger industrial invest- ment would remove the major domestic obstacle to such an expansion. The Govern- ment realizes that the planned increase in investment could have a serious im- pact on the external position and has concluded that a certain amount of foreign borrowing was necessary to safeguard the hard-won external stability. Such borrowing would be well within the country's capacity to undertake. External debt service burden now is not large at around 2.5 percent of current foreign exchange earnings and should decline to about 1 percent on present debt by 1961. Denmark's debt record is very good and her credit standing is high in the private market. Her people are competent and have showvn an ability to adapt their production to changing world conditions. Aside from the normal risks inherent in any lending in the present world, there can be no question of Den- mark's ability to service her existing debt and the additional debt now under consideration. -22-

STATISTICAL APPENDIX

List of Tables

Number

External Public Debt ...... 1

National Income and Expenditures ...... 2

Composition of Gross Fixed Investment...... 3

Value of Agricultural Production ...... h

Manufacturing, Gross Value of Production, Value added and Employment 5

Rates of Unemployment...... 6

Central Government Budget Estimates 1957-58 and 1958-59...... 7

Central Government Main Sources of Taxation...... 8

Central Government Main Expenditures ...... 9

Prices and Wages ...... 10

C-eographic Distribution of Danish Foreign Trade ...... 11

Balance of Payments...... 12

Regional Balance of Payments ...... 13

Additional Statistical Tables are under separate cover and are available on request. Table 1: DE14 ARK - EXTERNAL PUBLIC DEBT OUTSTANDING MARCH 31, 1958

National, Government Guaranteed Debt, and Debt of Political Subdivisions

(In thousands)

Page 1 Debt outstanding March 31, 1958 Item In currency In U.S. of payment dollar equivalents TOTAL 228,15

NaTIONAL AND uOVERNMENT GUARANTEED DEBT 211,223

U.S. DOLLARS $ 87,701 87,701

Publicly-issued bonds 4p 7,348 7,348 455,000,0O0 Kingdom of Denmark Ext. 4270, 1928-1962 50;373 /1 5,373 45,300,000 Mtg. Bank of Denmark, Series IV 5%, 1927-1972 /7 $ 1,975 /1 1,975

Privately-placed debt $ 2,387 2,387 Portion sold without guarantee at 34% for 1955-1959 of ;p40,000,000 IBRD loan to Denmark 4Z4 1947-1972 $ 2,387 /2 2,387

Loan held by IBRD Portion of 4p4O,OOOOOO loan to Denmark )4%,1947-1972 $ 33,893 /2 33,893

U.S. government loans 6 44,073 44,073 Export-Import Bank W20,000,000 loan to Denmark 215b - 3-1, 1945-1966 $ 11t333 11,333

Other U.S. government loans $ 32,7hO 32,740 $31,000,000 ERP loan 21 , 1948/49-1983 $ 30,440 30,440 4jP2 ,300,000 MSA loan 2-Sc, 1952-1986 2,300 2,300

EPU UNITS OF ACCOUNT u/a 52,099 52,099 u/a 105,755,000 Consolidated debt 1954/56, various maturities /3 u/a 52,099 52,099

POUNDS STERLING £ 10,293 28,820

Publicly-issued bonds £ 6,260 17,528 £ 665,400 Kingdom of Denmark 3 ,% 1900-1960 £ 33 / A 93 £ 1,703,146 Kingdom of Denmark 30%, 1901 - no fixed maturity £ 1,703 A /4 4,769 £ 2,217,600 Kingdom of Denmark 3M%, 1909 - no fixed maturity £ 2,218 /1 /5 6,210 £ 774,900 Kingdom of Denmark 3-2, 1946-1972 £ 514 T 1,439 £ 1,099,989 Mtge.Bank of Denmark,2nd Series 4%,1908-68£ 434 T /6 1,215 £ 594,000 Mtge.Bank of Denmark, 3rd Series 4%,1912-73 £ 309 T 7Z 865 £ 1,500,000 Mtge. Bank of Denmark, Series XI 3i%, 1936-1962 Z 335 /1 938

See footnotes at end of table. Table 1: DENNARK - EXTZRMAL PUBLIC DEBT OUTSTANDING MARCH 31, 1958 (CONT.)

National, Government Guaranteed Debt, and Debt of Political Subdivisions

(In thousands)

Page 2 Debt outstanding March 31, 1958 Item In currency In U.S. of payment dollar equivalents FOUNDS STERLING (COMT.) Publicly-issued bonds (cont.) £ 1,900,000 Danish Consol. Municipal 4%, 1936-1959 £ 128 358 £ 700,000 Jutland Tel. Co. 3I%, 1922/25-1962 /7 £ 81 227 £ 6,659,152 Credit Assoc. of Proprietors of Small Landed Estates in Jutland 4% - 42% £ 437 /8 1,224 £ 2,974,000 Credit Assoc. of Proprietors of Small Landed Estates in the Islands of Denmark 4,%-42% £ 68 /8 190

EPU settlement with United Kingdom £ 4,033 11,292

SWEDISH ERONOR SKr 155,653 30,088

Publicly-issued bonds SKr 25,600 4,948 SKr 30,000,000 Kingdom of Denmark 32-A,1938-1958 SKr 2,522 /1 487 SKr 20,000,000 Kingdom of Denmark 4%, 1947-1967 SKr 11,937 2,307 SKr 309000,000 Mtge. Bank of Denmark, 10th Series 4i%, 1931-1971 SKr 11,141 /1 /9 2,154

Swedish government loan SKr 144,400,000 Swedish War Settlement Loan 3%, due 1983 SKr 130,053 25,140

SWISS FRANCS SwF 31,305 7,307

Publicly-issued bonds SwF 100,800,000 Kingdom of Denmark 4%, 1912-1971 SwF 23,184 A /10 5,412 SwF 25,000,000 Kingdom of Denmark 3,A 1938-1964 SwF 8,121 7 1,695

NETHERLANDS GUILDERS f. 19,789 5,208 Publicly-issued bonds f. 12,615,000 Kingdom of Denmark 4%, 1938-1968 f. 6,390 /1 1,681 f. 8,841,000 Danish State Housing Fund 4%, 1937-67 /7 f. 4,236 /1 1,115 f. 10,656,000 Danish State Housing Fund 4%, 1937-67 /7 f. 5,151 / 1,356 f. 11,500,000 Mtge.Bank of Denmark 42, 1937-1968 f. 4,012 7T 1,056

DEBT OF POLITICAL SUBDIVISIONS 17,092

SWEDISH KRONOR SKr 16,368 4,350

Publicly-issued bonds SKr 16,368 4,350 SKr 14,965,500 City of Copenhagen 32%, 1898-1959 SKr 582 /1 /9 113 SKr 30,000,000 City of Copenhagen 42i,o 1930-1°70 SKr 15,786 /1 A1 4,237 See footnotes at end of table. Table 1: DENAIRK - EXTERNjL PUBLIC DEBT OUTSTANDING M.RCH 31, 1958 (CONT.)

National, Government Guaranteed Debt, and Debt of Political Subdivisions

(In thousands)

Page 3 Debt outstanding March 31, 1958 Item In currency In U.S. of payment dollar equivalents SIwISS 1ThiNCS SwF 35,042 lb 0

Publicly-issued bonds SwF 35,042 8,180 SwF 55,440,000 City of Copenhagen 4A', 1910-1970 SwF 22,869 /1 /12 5,338 SwF 27,720,000 City of Copenhagen 4%, 1911-1971 SwF 12,173 71 /10 2,842

NETHERLANDS GUILDERS f. 17,337 4,562

Publicly-issued bonds f. 17,337 4,562 f. 26,620,000 City of Copenhagen 4%, 1908-1968 f. 10,243 /1 /13 2,695 f. 4,553,000 City of Copenhagen (I) 4%, 1938-1963 f. 1,298 342 f. 8,000,000 City of Copenhagen (II) 4%, 1938-1968 f. 4,056 1,067 f. 8,700,000 Copenhagen Tel. Co. 45% 1938-1963 f. 1,740 A 458

Exchange rates: The following exchange rates have been used unless otherwise indicated: Par values: £ 1 = 42.80; SKr 1 = t0.193304; f.1 = $0.26316 Other rates: SwF 1 = $0.23343 as of March 31,1958; EPU u/a 1 = $1.00

/1 Of the total amounts of bonds outstanding, the following portions were held internally as of March 31, 1958: Portion held internally In currency In U.S.dollar Issue of payment equivalents Total 10,684,501 U.S. dollars 674,000 Denmark 4z%, 1928-1962 $ 215,000 215,000 Mtge. Bank 5%, 1927-1972 $ 459,000 459,000

Pounds sterling 6 422,579 Denmark 32%, 1900-1960 £ 8,317 23,288 Denmark 341% 1901 £ 766,416 2,145,965 Denmark 3 % 1909 £ 997,920 2,794,176 Denmark 32%, 1946-1972 £ 19,300 54,040 Mtge.Bank 4%, 1908-1968 £ 213,107 596,700 MtgeoBank 4%, 1912-1973 £ 198,218 555,010 Mtge.Bank 32-7o, 1936-1962 £ 90,500 253,400

Swedish kronor 1,561,383 Denmark 3i%h 1938-1958 SKr 75,700 14,633 Mtge.Bank 42%, 1931-1971 SKrl,658,000 320,498 City of Copenhagen 3'%,1898-1959 SKr 136,050 26,299 City of Copenhagen 4i%,1930-70 SKr4,477,000 1,199,953 /a Table 1: DEN1ARK - EXTERNAL PUBLIC DEBT OUTSTANDING MARCH 31, 1958 (CONT.)

Page 4 /1 (Continued) Portion held internally In currency In U.S. dollar Issue of payment equivalents

Swiss francs 1,098,821 Denmark 4%, 1912-1971 SwF 1,622,880 37c,o29 Denmark 3-2, 1938-1964 SwF 325,000 75,865 City of Copenhagen 4X%,1910-70 SwF 2,012,976 469,889 City of Copenhagen 4%,1911-71 SwF 746,424 174,238

Netherlands guilders 927,718 Denmark 4 1938-1968 f. 703,000 l05,001 Danish State Housing 4 41937-67 f. 160,000 42,106 Danish State Housing 4%,1937-67 f. 224,000 58,948 Mtge. Bank 4 , 1937-1968 f. 527,000 138,685 City of Copenhagen 4 O,1908-68 f. 1,851,300 487,188 Copenhagen Tel.Co.454 1938-1963 f. 60,000 15,790

/a See footnote eleven for derivation of this U.S. dollar equivalent.

/2 The status of this loan as of March 31, 1958 wsas as follows:

Amount Total loan (all U.S. dollars) $ 40,000,000 Disbursed and still out- standing 36.25Q4Q0o Held by IBRD 33,893,000 Held by 3rd parties (non- guar. sales) 2,387,000 Repaid 3,720OO

/3 The consolidated EPU debt represents the following settlements:

Total debt Immediate Funded in Amount settled June 30 cash bilateral outstanding Country 1954-March 1958 repayments settlements/a March 31, 1958 (In thousands of u/a) Total 129,840 24,085 105,755 52 099 3,000 750 2,250 1,21 Sweden 7,000 1,750 5,250 2,415 Belgium 22,000 4,750 17,250 8,406 Germany 64,840 11,085 53,755 25,736 16,000 3,625 12,375 6,515 Netherlands 17,000 2,125 14,875 7,506

A These represent consolidation of many small notes, each carrying a different . Since the range of these rates is not known, no interest rates are shown on these tables. Table 1: DENNURK - EXTERNAL PUBLIC DEBT OUTSTANDING MARCH 31, 1958 (CONT.)

Page 5

/4 Payable in pounds sterling, Danish kroner or French francs at the rate of £ 1 = DKr 18.0342 = F 25.2479.

/5 Payable in pounds sterling, Danish kroner or French francs at the rate of £ 1 = DKr 18.1818 = F 25.2525.

/6 Payable in pounds sterling, Danish kroner, French francs or German marks at the rate of £1 = F 25.2525 = M 20.404 = DKr 18.1818.

/7 Government guaranteed.

/8 Includes only that part of the loan which is payable in sterling. The govern- ment guarantees the payment of interest only. The loan is payable in Danish kroner or the equivalent in pounds sterling.

/9 Payable in pounds sterling or Swedish kronor at the rate of SKr 1 = £ 0.0551.

/ Payable in Swiss francs, NetherLands guilders, Danish kroner or pounds sterling at the rate of SwF 1 = DKr. 0.7206 = £ 0.0397 = f. 0.48015.

/11 Payable in Swedish kronor or U.S. dollars. The dollar equivalent of this amount was derived as follows: a. The U.S. dollar equivalent outstanding reported by Denmark times 5.18 = the SKr equivalent actually due. b. The SKr equivalent actually due times 0.193304 = the dollar equivalent shown in Table 1.

/12 Payable in Danish kroner, pounds sterling or Swiss francs at the rate of SwF 1 = DKr 0.7206 = £ 0.0397.

/13 Payable in pounds sterling, Danish kroner or Netherlands guilders at the rate of f. 1 = £ 0.0826 = DKr 1.5008.

IBRD - Economic Staff September 24, 1955 Table 1-a: DENMARK - EXTERNAL PUBLIC DEBT OUTSTANDING MARCH 31, 1958

REPAYABLE IN LOCAL CURRENCY

National, Government Guaranteed Debt and Debt of Political Subdivisions

(In thousands of U.S. dollar equivalents)

Debt Outstanding March 31, 1958 Item In currency In U.S. dollar of payment equivalents

TOTAL DKr 88,528 12,817

U.S. DOLLARS OR DANISH KIONER DKr 16,000 2,316 U.S. government loan DKr 16,000 2,316 DKr 16,000,000 ICA loan to Kingdom of Denmark 3 6 1956-1970 /1 DKr 16,000 2,316

DANISH KRONER OR OTHER DKr 72,528 10,501 Publicly-issued bonds DKr 72,528 10,501 DKr 19,999,800 Mtgr. Bank of Denmark 32%, 1906-1966 /2 DKr 6,202 898 DKr 66,326,000 Kingdom of Denmark 3A, 1894 no fixed maturity /3 DKr 66,326 9,603

Note: Danish kroner has been converted at the rate of DKr.l = $0.144778 on this table.

/1 This loan is repayable in either U.S. dollars or Danish kroner at the option of Denmark.

/2 This bond is repayable in Danish kroner, French francs or Reichsmarks at the rate of DKr.l = F. 1.389 = Rm. 1.122. The option is with the bondholder. At the present, it is being repaid in Danish kroner.

/3 This bond is repayable in Danish kroner or French francs at the rate of DKr. 1= F. 1.4. The option is with the bondholder. ht the present, it is being repaid in Danish kroner.

IBRD - Economic Staff September 24, 1958 Table 1-b: DENMARK - PURCHkSES FROM INTEFNTATIONAL PONEThRY FUND

AND UNCONSOLIDATED EPU DEBT

(In thousands of U.S. dollar equivalents)

Item kmount

PNTPUiCHA$ES FROM THE INTERNATIONAL MOIiETihRY FUiqD

Net purchases as of August 31, 1958 8,500

Net Durchases as of March 31, 1958 24,000

Repurchase - June, 1958 (dollars) 15,000

UNCONSOLIDATED EPU DEBT AS OF MARCH 31, 1958 25,755

IERD - Economic Staff September 24, 1958 Table 2

National Income and Expenditures

Billion Kroner

Sources of Income 1955 1956 Expenditures 1955 1956

Agriculture 4,870 5,375 Consumption: Forestry, garden- Public 3,732 4,033 ing, fishing 611 619 Private, Mining 49 74 less motor Manufacturing 5,296 5,572 vehicles 19,391 20,836 Handicrafts 2,850 2,975 Motor Construction 1,935 2,020 vehicles 750 790 Public utilities l90 550 Shipping 862 1,114 Total Other transport- consumption23,873 25,659 ation 1,838 1,925 Commnerce 4,677 4,878 Gross invest- Public administra- ment 6,995* 7,745* tion 2,607 2,860 (includes Personal services 1,260 1,322 changes in Use of dwellings 1,157 1,226 inventories)

Gross domestic Total use of product at resources factor cost 28,502 30,510 internally30,868 33,404

Indirect taxes 2,575 2,804 Exports of goods and Gross domestic services 9,819 10,599 product at market prices 31,077 33,314 Total avail- able Imports of 'oods resources 40,687 44,003 and services 9.610 10,689 *Danish estimates of gross investment Total available include repairs and maintenance which resources 40X687 44,003 are not included under the U.N. system of . In discussing Danish investment in the report we have used the U.N. concept which requires a deduction of some 2,000 million kroner from Danish estimates of investment.

Source: Economic Survey of Denmark 1958 Table 3

Composition of Gross Fixed Investment

M,1illion Kroner

1955 1956 1956 Percent of total

Agriculture 305 350 6.8

Industry 600 540 10.4

Electricity, gas and water 200 205 4.o

Roads 225 270 5.2

Other transportation 720 860 16.6

Cormunication 150 165 3.2

Public buildings (schools, hospitals, etc.) 365 355 6.8

Dwellings 770 765 14.8 iNiiscellaneous and unallocated 1/ 1,580 1,665 32.2

Total 4,915 5,175 100.0

1/ This large unallocated item is the difference between total investment computed on the basis of production and imports of capital goods and esti- mates of capital expenditures by sectors based on special inquiries and public accounts. This difference is stated to represent in part invest- ments by small industrial and commercial undertakings, wIhich are very numerous in Denmark, in part investments in sectors like forestry, fishing, mining, construction, catering, for which no separate estimates can be made, and in part an underestimate of investment in the categories shown in the table.

Source: Danish Statistical Department data adjusted to conform to U.N. svs tem. Table 4

Value of Agricultural Production

Million Kroner

1935-39 annual average 1953 1954 1955 1956

Livestock Products

Milk and products 571 1,959 1,984 1,942 1,912

Live and slaughtered cattle 194 864 973 1,091 1,235

Live and slaughtered pigs 530 2,096 2,247 2,320 2,383

Eggs 133 520 502 551 534

Poultry meat 32 132 129 136 128

Other 19 65 77 61 68

Total 1,479 5,636 5,912 6,101 6,260

Crops (excluding crops used as feed)

Cereals 43 389 172 201 259

Potatoes 28 153 129 148 160 Sugar beets 34 180 107 153 222 Seed, industrial crops, etc. 17 107 114 105 117

Total 122 829 522 607 758

All agricultural production 1,601 6,465 6,434 6,708 7,018

Changesin inventories 13 90 27 - 156 221

Total value of production 1,614 6,555 6,461 6,552 7,239

Source: Landburgsstatistik 1956 Table 5

Manufacturing

Gross value of production, value added and employment

Percent of total

1939 1956

Gross Value Employ- Gross Value Employ- value added ment value added ment of pro- of pro- duction duction

Food industry 26 23 16 21 17 14

Textiles and clothing 17 16 24 13 12 18

Paper and paper products (inclu- ding printing industry) 7 8 9 9 10 9

Chemical industry 13 12 7 12 10 7

Stone, clay and glass industry 4 6 6 5 7

Metal and metal- working (inclu- ding engineering and transport equipment) 28 30 32 33 36 36

Other industries 5 5 6 7 8 10

Total 100 100 100 100 100 100

Source: Calculated for Bank Mission by Statistical Department of Kingdom of Denmark. Table 6

Rates of TIJnemployment

Total ordinary Total insured 1" insured unemploy- Total unemploy- unemployment as ment as percent ment as percent percent of insured of insured popu- of total labor population. lation. force.

1938 21.3 n.a. 6.0

1953 9.2 4.8 3.0

1954 8.0 3.9 2.7

1955 9.7 5.1 3.2

1956 11.1 6.3 3.6

1957 10.2 5.7 3.4

1/ Includes unemployment of less than 7 days and special types of unemployment Table 7

Central Government Budget Estimates

1957-58 and 1958-59

Million Kroner

1956-57 1957-58 1958-59 Current Account

Current revenue 5,178 5,505 5,725 Current expenditures 4,115 4,405 4,610

Surplus 1,063 1,100 1,115

Capital Account

Expenditures:

Civilian investment 402 450 515 Amortization: Internal Debt 342 300 275 External Debt 95 95 100 Loans to private sector 639 650 600 Other 47 - 10 20

Total expenditures 1,525 1,485 1,510

Receipts:

Miscellaneous 185 170 180 Compulsory savings - 135 215

Total 185 305 395

Net balance on capital account -1,340 -1,180 -1,115

Overall balance - 277 - 80 0

Changes in arrears, etc. - 95 n.a. n.a.

Borrowing requirements 372 n.a. n.a.

Source: Stats Finanserne i 1938-39 og arene efter krigen Maj 1955 0ko-nomisk Arsoversigt Marts 1958 Information supplied by Economic Secretariat, Kingdom of Denmark Table 8

Central Goverhrment Main Sources of Taxation

Million Kroner

1938-39 1956-57

Direct Taxation

Personal income taxes 136 1,676

Company taxes 60 366

Other 105 257

Total 301 2,299

Indirect Taxation

Customs 116 267

Tobacco 46 681

Alcoholic beverages 82 526

Motor vehicles 95 801

Other 72 631

Total 411 2,906

Grand Total 712 5,205

Source: Stats Finanserne i 1938-39 og arene efter krigen Maj 1955 Tkonomisk Arsoversigt Marts 1958 Table 9

Central Government

Main Expenditures

Million Kroner 1938-39 1956-57

Current Expenditures

Social Services 236 1,556 Defense 66 967 Interest on Public Debt 69 246 Deficit of State Enterprises 25 66 Other 305 1,592

Total 701 4,427

Capital Expenditures

Investment 63 402

Amortization of Public Debt Internal 80 342 External 37 95

Other 36 47

Loans to Private Sector 60 639

Total 276 1,526

Source: Stats Finanserne i 1938-39 og arene efter krigen Maj 1955 Okonomisk Arsoversigt Marts 1958 Table 10

Prices and Wages

1937 = 100

Wholesale Cost of Wages Prices Living

1950 246 181 242 1951 310 202 267 1952 306 208 291 1953 286 208 303 1954 286 208 315 1955 294 219 330 1956 303 229 354 1957 3Q3 237 375 1958 300 (Sept.) 244 (July) 379 (lst quarter)

1953 = 100

1954 100 100 104 1955 103 105 109 1956 106 110 117 1957 106 114 124 1958 105 (Sept.) 117 (July) 125 (lst quarter)

Comparisons with Other Countries

Prices expressed in U.S. Dollars 1957

1937 or 1938 = 100 1953 100

Wholesale Cost of Export Wholesale Cost of Export Prices Living Prices Prices Living Prices

Denmark 200 156 192 106 114 102 U.S. A. 232 1 210 107 105 107 U.K. 180 146 200 112 115 110 Germany 228 n.a* 221 105 106 104 Netherlands 175 141 210 107 114 105 Sweden 208 174 262 110 113 105 Switzerland 181 178 239 105 105 98

Source: International Financial Statistics Table 11

Geographic Distribution of Danish Foreign Trade

Percent of Total

Exports

1937 1957

United Kingdom 53 27

Germany 19 20

Other EPU 16 26

U.S.A. and Canada 2 8

Latin America 2 5

Other 8 14

Total 100 100

Imports

United Kingdom 38 24

Germany 24 19

Other EPU 19 32

U.S.A. and Canada 5 10

Latin America 4 5

Other 10 10

Total 100 100

Source: International Financial Statistics Table 12

Balance of Payments

Million U. S. Dollars lst half 1938 1953 1954 1955 1956 1957 1958

1. Merchandise Trade Exports + 353 + 897 + 963 +1058 +1114 +1179 + 611 Imports (f.o.b.) - 340 - 922 -1075 -1074 -1196 -1246 - 582 Net + 13 - *25 - 112 *-716 -. 2 -6T7 + 29

2. Transportation Shipping receipts + 49 + 138 + 137 + 162 + 203 + 240 + 103 Disbursements of foreign ships in Danish ports + 16 + 36 + 40 + 43 + 43 + 45 + 2 Freight on imports - 259 - 65 - 77 - 89 - 98 - 95 - 44 Expenditures of Danish ships in foreign ports - 18 - 71 - 71 - 82 - 96 - 110 - 5C Net + 22 + 38 + 29 + 34 +752 +*70 + 33

3. Investment Income Receipts + 3.2 + 8 + 8 + 7.6 + 10 + 8.6 + Payments -19.5 - 16 - 19 -18.0 - 17 -17.2 - 8.( Net -17.3 - -=11 -104 - 7 -T. -2.'

4. Travel Receipts + 7.6 +41.4 + 43 +46.5 +56.5 + 65 + 3C Payments -10.9 -41.4 - 43 -46.5 -49.3 - 55 - 23 Net -3 0 0 + 7.2 +10 7

5. Miscellaneous Transactions Receipts +11.5 + 33 + 42 + 45 + 48 + 56 + 28 Payments - 7.5 - 24 -23 - 28 - 35 - 36 - la Net + 4.0 - 9 + 19 + 17 + 13 + 20 + iG

6. Errors and omissions 2/+ 2.4 + 11 + 1.3 + 18 + 23 + 20 - 2

1/ The available estimates show a total of $20 million for freight paid to foreign ships but the Danish authorities consider that this is too low and that it is not comparable vwith the estimates for postwar years. We have increased the figure to 025 million (corresponding to the same proportion of total freight paid to foreign ships as in the postwar period) to improve the comparability of the estimates.

2 Errors and omissions are believed to represent largely underestimates of invisible receipts and especially shipping and have accordingly been added to the current account. A small part of this item, however, is known to have represented capital transactions in some of the years shown. Balance of Payments (continued) (2) Million U. S. Dollars

half 1_938 1953 1954 1955 1956 1957 1958

7. Net balance on goods and services +21.8 + 25 -73.7 +42.6 + 6.2 +54.4 +74.5

8. Amortization OEEC consolidated debt 19.50 - - 9 - 7 - 6 - 6 - 6 OEEC consolidated debt 1954-1957 Y - - - 3.3 -12.6 -16.9 -17.7 Other public debt - 10 - 30 -18 -21 -10 -16 Total - 10 - 39 -27-3 -W397 -32.9 -33.7 -373

9. Overall balance +11.8 - 14 -102.0 + 3.0 -26.7 +20.7 +40.0

10. Miscellaneous capital transactions (including changes in EPU debt and IMF position) + 44 + 82 + 4 +28.3 +43.3 - 17

11. Change in foreign ex- change holdings of National Bank and commercial banks ( increase - 30 + 20 - 7 - 1.6 -64.0 - 23

1/ In the Danish balance of payments this item is shown as a change in lia- bilities of the National Bank (under monetary movements)instead of as amortization

Source: IMF Balance of Payments Yearbook Statistical Department of Kingdom of Denmark Table 13

Regional Balance of Payments

Current Account

Million U. S. Dollars

1955 1956 1957

U. S. and Canada

Exports + 82 + 90 + 106 Imports - 83 - 115 - 120 Other net + 7 + 8 + 8 Total - - 6

Latin America

Exports + 47 + 50 + 55 Imports - 53 - 63 - 60 Other net + 14 + 15 + 18 Total + 2 + 13

Sterling area

Exports + 382 + 375 + 375 Imports - 290 - 310 - 320 Other net + 22 + 28 + 29 Total + 114 + 93 + S4

Continental EPU Exports + 456 + 507 + 555 Imports - 563 - 617 - 650 Other net - 21 - 13 + 17 Total - 128 - 123 -7

Other

Exports * 91 + 93 + 73 Imports - 85 - 90 - 98 Other net + 18 + 26 + 45 Total + 24 + 29 + 20

Overall Total + 24 - 16 + 33

Source: INF Balance of Payments Yearbook Statistical Department of Kingdom of Denmark