LAWSON SAYS LOUVRE CURRENCY ACCORD SATISFACTORY
  The Louvre agreement by the Group of Seven
  finance ministers and central bankers to stabilise currencies
  has worked well and needs no fundamental strengthening at the
  economic summit in Venice on June 8-10, U.K. Chancellor of the
  Exchequer Nigel Lawson said.
      Previewing the summit, which he expected would not produce
  any major new economic initiatives, Lawson told reporters work
  remained to be done on improving the conditions for lasting
  world economic growth.side measures to boost growth, he said.
  
      "I think it is possible that there may be scope for a
  further reduction in interest rates in Germany," he added, but
  stressed that he had had no indication that such a move was
  likely. He made no mention of Japanese interest rates.
      Lawson said the U.S. Should embark on "a gradual reduction
  of its fiscal deficits over the next two or three years."
      He said the February 22 Louvre accord had produced
  "satisfactory exchange rate stability," in part thanks to heavy
  coordinated intervention of Group of Seven central banks, and
  he was "content" with sterling's exchange rate.
      Pointing to the record 4.8 billion stg rise in U.K. May
  currency reserves announced today he said, "we have been playing
  a very full part ourselves ... We have been intervening to a
  very much greater extent than we had done hitherto."
      Lawson said there was a risk that the Louvre agreement may
  falter if member states did not implement the macro-economic
  commitments underlying the accord.
      "Certainly it would be more difficult to maintain exchange
  rate stability if countries are seen not to implement their
  commitments in Paris ... In this respect." He said the U.S.
  Budget deficit was "very important."
      Noting the 6,000 billion yen economic package announced by
  Japanese Prime Minister Yasuhiro Nakasone last week Lawson
  said, "what is really needed in Japan is an increase in
  merchandise imports. Supply side measures are critical."
      "There is a specific range of consumer and agricultural
  goods where they have an extremely restrictive regime which is
  wholly unjustified," he said.
      Lawson doubted that Tokyo's partners would indulge in "Japan
  bashing" at the summit especially after the economic stimulation
  package and the announcement of Nakasone's plans to increase
  Japanese development aid over the next three years.
      Japan's more flexible stance on Tokyo stock exchange
  membership would also help deflect criticism, he said.
      He said he thought West Germany would instead come under
  pressure at the summit to adopt similar stimulation measures to
  jack up faltering economic growth.
      In this respect Lawson said he hoped Bonn would bring
  forward to January 1988 part of its agreed package of tax cuts
  scheduled for 1990. He also called on Bonn to push ahead with
  the privatisation of German national industries.
      On debt, Lawson said he expected a three point British plan
  to alleviate the burden of the poorest sub-saharan countries to
  make progress in Venice.
      The plan, involving concessional rescheduling of sovereign
  debt in the Paris Club, was first proposed at the IMF and World
  Bank meetings in Washington earlier this year.
      Lawson said he would seek "to consolidate political backing
  for the plan at the Venice summit" and hoped the programme would
  be finalised at the Autumn meetings of the IMF and World Bank.
      He welcomed the recent moves by Citicorp and Chase
  Manhattan to increase sharply their Third World debt
  provisions.
      "First, it is a blow for realism. Second, because the market
  response has shown that banks have much less to fear from this
  sort of move than they felt before Citicorp," he said.
      U.K. Banks should follow Bank of England recommendations,
  strengthening their balance sheets and making more provisions.
  "They have done it to some extent, they need to do it more,"
  Lawson said, adding it was up to the banks themselves to
  determine the appropriate size of provisions.
      He also said the dismantling of farm subsidies would be
  discussed at the summit. "There is a consensus, which we have to
  push further."
  

