SARB stability review highlights risk

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IOL pic apr24 gill marcus blue Independent Newspapers South African Reserve Bank Governor Gill Marcus. Picture: Simphiwe Mbokazi

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.

Africa's most advanced economy relies heavily on foreign portfolio inflows to finance the gap, which narrowed to 5.1 percent of gross domestic product in the fourth quarter of 2013, from 6.4 percent 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 South Africa's key mining sector - whose exports accounted for about 60 percent of export revenue in 2013 - had not only hit production but also hampered debt repayment by both companies and individuals in the industry. - Reuters

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