The current account is financed by capital inflows, including borrowing from overseas. Overseas borrowings increase the foreign debt. Hence there is a fairly close link between the CAD and Australia's foreign debt. The CAD is once again an issue in Australia. Recent figures suggest a large widening in the CAD that is once again the subject of public attention.
Some private forecasts are higher.
There has also been discussion from time to time about the sustainability of our foreign debt. At one stage there was a concern that Australia's foreign debt to GDP ratio would continue to increase apparently without limit. This possibility is examined further below. Generally the 1990s have seen foreign debt hover at or just above 40 per cent. We have perhaps even become complacent about the foreign debt position.