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21 Nov 2008 09:44
South Africa’s Treasury will play a more active role in raising foreign funds to finance a yawning current account gap and a large public sector capital investment programme, Business Day newspaper reported.
The growing current account deficit, which expanded to a near-four-decade record of 7,3% in 2007, has left South Africa vulnerable to a worsening global economic climate and waning foreign capital inflows.
This threatens a planned R600-billion programme to expand South Africa’s infrastructure over the next three years.
The central bank has previously said the current account shortfall was adequately financed by portfolio flows, but these are now declining given global financial turmoil.
On Friday Business Day quoted Treasury budget office chief Kuben Naidoo as saying the government would seek foreign funds to finance public sector investment and an anticipated budget deficit.
“Government will do absolutely everything in its power to ensure that public sector capital spending continues to grow and continues to grow quite rapidly,” Naidoo reportedly said at a business conference.
“We will support our state-owned enterprises in financing these investments and will try to ensure that there are no postponements of projects.”
Naidoo also suggested the budget deficit would be allowed to widen from the latest forecast of 1,6% of gross domestic product as economic growth slows and revenues fall, the paper added. - Reuters
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