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Cape Town - Turmoil in global financial markets makes it difficult for South Africa to finance its current account deficit, Treasury Director-General Lesetja Kganyago said on Tuesday.
South Africa has a nagging shortfall on its current account,
which climbed to 7.3% in 2007 from 6.5% the previous year, reaching its highest level since 1971.
The central bank has previously said the gap was comfortably
financed by capital inflows.
"Today we still have a current account deficit, so it's not a new risk... The risk now is that there is this global financial turmoil and its becoming difficult to finance the current account deficit," Kganyago told a World Bank conference.
Kganyago said the gap was a manifestation of a savings imbalance, adding: "We are predicting over the medium term that
the current account deficit will remain high."
In April Finance Minister Trevor Manuel said South Africa
would be wise to increase household savings in the current
economic climate, saying the country's savings rate was not adequate at just under 14% of gross domestic product (GDP).
The South African Revenue Service said late last month a sharp rise in oil imports had pushed the trade balance to a R10bn shortfall in April, pointing to further pressure on the current account gap, and, in turn, the rand, which has weakened around 14% against the dollar this year.
- Reuters