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The new Keynesian world and the MTBPS. A presentation by Dawie Roodt. Step 1: re-focus?. What went wrong? . The excuses: Insufficient regulation Greed Speculators The truth: Loose monetary policy Political interference. Its all about your approach . Fed Printing money. US Economy.
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The new Keynesian world and the MTBPS A presentation by Dawie Roodt
Step 1: re-focus? Dawie Roodt
What went wrong? The excuses: • Insufficient regulation • Greed • Speculators The truth: • Loose monetary policy • Political interference Dawie Roodt
Its all about your approach Dawie Roodt
Fed Printing money US Economy Buying Bonds / TB’s US Fed Some economic activity Fund $ Resource prices ↑ Emerging Markets Dawie Roodt
The driving forces • Euro under threat: ↓ Euro • Dollar under threat: ↓ $ • ↑Renminbi • ↑ Commodity Prices • Strong Rand (for now) Dawie Roodt
The “new” economic growth plan Dawie Roodt
The plans: • HOP - 1994 • GEAR - 1996 • Asgisa - 2006 • The new Growth Plan - 2010 “Apartheid” Macro economic stability Harvard group ↓Poverty & ↓Unemployment = ↑ Economic Growth Dawie Roodt
New growth plan targets • Stringent Fiscal policy focused on savings • Smaller Current Account deficit • Lower interest rates • Competitive currency • Lower unemployment Dawie Roodt
Creating jobs according to NGP & MTBPS • Labour market strengthening & skills development • Further help from development finance institutions for infrastructure development • IPAP2 • Improve competitiveness • Improve public service delivery & management Dawie Roodt
Will companies expand sufficiently? Dawie Roodt
Some limitations: Dawie Roodt
What about our currency? Dawie Roodt
The Rand since 1977 9/11 Financial crisis of ‘08 Source: I-net Bridge & Efficient Group forecast Dawie Roodt
The Rand & Relative PPP Source: I-net Bridge & Efficient Group forecast using World bank PPP Dawie Roodt
The Rand & Relative PPP Source: I-net Bridge & Efficient Group forecast using World bank PPP Dawie Roodt
The Rand & Relative PPP Source: I-net Bridge & Efficient Group forecast using World bank PPP Dawie Roodt
The Rand & Relative PPP Source: I-net Bridge & Efficient Group forecast using World bank PPP Dawie Roodt
The Rand & Absolute PPP Source: I-net Bridge & Efficient Group forecast using World bank PPP Dawie Roodt
The Rand & Absolute PPP R7.13 R5.03 Source: I-net Bridge & Efficient Group forecast using World bank PPP Dawie Roodt
The Rand & Absolute PPP Source: I-net Bridge & Efficient Group forecast Dawie Roodt
The Rand & Portfolio inflowssince 1985 Large outflows → Weakening of the Rand Source: SARB Dawie Roodt
So…what can be done? Dawie Roodt
SA’s solution SAEconomy Buying $$$ SARB Rands TB’s & Debentures Dawie Roodt
So…what can be done? Dawie Roodt
Another solution SAEconomy Buying $$$ SARB Rands Excess revenue & cash deposits Treasury SARB owes R135bn!! Dawie Roodt
Step 2: re-evaluate? Dawie Roodt
Is the PIT burden shifting? YES! Source: Tax statistics 2008/09, National Treasury & Efficient Group est. for 2010 Dawie Roodt
Income distribution SA’s Gini = 57.8 Cumulative share of income Cumulative share of population Source: SA Survey, Employment & income 2009 & Efficient Group graph, World HDI report 2009. Dawie Roodt
Income distribution Source: World HDI report 2009. Dawie Roodt
Income distribution reloaded Source: Efficient Reseach Dawie Roodt
Who pays and who receives? Source: SA Survey 2008/09, Employment and Income & Efficient Group est. Dawie Roodt
How do we spend? Social services = 44.2% Source: www.budget.gov & Feb. 2010 National Budget Dawie Roodt
How do we compare? Well done SA! Dawie Roodt
NO! Is our state saving? Source: Feb. 2010 National Budget – Consolidated budget data, Efficient Research calculation Dawie Roodt
How do we spend on capital? FIFA PREP Source: SARB Dawie Roodt
Step 3: re-think? Dawie Roodt
The main numbers… Source: Feb. 2010 Budget & Efficient Research Dawie Roodt
MTBPS summary • Synergy between growth plan & budget • Better economic growth outlook • Better revenue & expenditure than budgeted • Reinforcing infrastructure & investment growth – R811bn over MTEF • Forex control reforms • Regulatory reforms • NHI Dawie Roodt
Will the NHI really work ? Source: World Bank development indicators 2009 Dawie Roodt
Will the NHI really work ? $164 p/c = R52Bn p/y Source: World Bank development indicators 2009 * Efficient Group estimates Dawie Roodt
Is this really necessary? Source: Efficient Research Dawie Roodt
Our problems… • Unemployment • Poverty • Collusion • Greed • “Do more” • Too many cars Dawie Roodt
The solution Better income redistribution Employment Economic growth Poverty alleviation Creating wealth Dawie Roodt
Questions? Dawie Roodt
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