PARIS, June 15: US Treasury Secretary John Snow said on Wednesday that the United States saw the correction of global current account imbalances as a “shared responsibility” among the world’s leading economies but acknowledged the US has an obligation to reduce its budget shortfall.
“On the issue of the current account, we see it ... as a shared responsibility,” Snow told a news briefing following a meeting with French Finance Minister Thierry Breton.
“We have an obligation to bring our budget deficit down,” Snow added.
The United States is saddled with large current account and budget deficits that many economists fear could ultimately have a destabilizing effect on the global economy.
The current account is a broad measure that covers trade in goods and services as well as certain financial transactions. At present the gap in what the United States purchases from abroad and what it sells overseas has been largely financed by foreign investment in US assets.
But if foreign investors should lose their appetite for US assets, the dollar could weaken sharply, causing a growth-dampening rise in US interest rates.
Snow said current account imbalances reflected the gap in growth rates between the United States and other economies, which leads to an increase in investment opportunities in the United States and higher savings rates in other economies.
He said the United States needed to boost its savings rate, adding that the Bush administration was taking steps to bring that about.—AFP
