African countries are experiencing significant capital outflows as a result of the global economic downturn, South African Finance Minister Trevor Manuel said on Friday.
”African states are encountering significant fiscal pressures as our revenue sources dry up, as expenditures rise to meet the most elementary levels of service provision and as we battle to retain expenditure levels in the face of significantly reduced GDP growth,” Manuel said in a speech prepared for a conference of African finance ministers in Cape Town.
In November, Manuel told Parliament that South Africa was not facing a recession but said the global slowdown and falling commodity prices would cut exports and hurt the economy.
”We are witnessing that the export markets developed with enormous sacrifice are suddenly closed to imports from our countries, as a result of falling consumer demand and increased protectionism,” Manuel said in the speech.
He said African countries were experiencing intense liquidity pressures as the banking sector battled to secure on-lending finance, and he urged significant changes to financial regulation.
”We are living through intense liquidity pressures as our domestic banking sector battles to secure the finance to on-lend. Significant changes to financial regulation must be undertaken. Many countries are witnessing the drying up of remittance flows which have, over the past number of years, been a reliable source of finance which offsets impact to the skills drain,” he noted.
Manuel also made the point that the mainstays of recent developments in sectors such as tourism are already in decline as the numbers of tourists rapidly diminish.
And he pointed out that Africa has not yet recovered from the severe impact of high food and fuel prices that the continent has lived through over the past 15 months. – Reuters, I-Net Bridge