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Current account gap a threat to stability

Johannesburg -  South Africa's current account deficit, while shrinking, presents a marked risk to the stability of the country's financial system, the Reserve Bank said on Thursday.

The economy relies heavily on foreign portfolio inflows to finance the gap, which narrowed to 5.1% of gross domestic product in the fourth quarter of 2013, from 6.4% previously.

In its latest financial stability review, the bank said one of the more prominent risks to domestic financial stability was the impact of tapering of loose US monetary policy and the effect that potentially higher interest rates in advanced economies could have on emerging markets.

It said strikes in the key mining sector - whose exports accounted for about 60% of export revenue in 2013 - had not only hit production but also hampered debt repayment by both companies and individuals in the industry.
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