Embed Size (px)
Citation preview
The new Keynesian world and the MTBPS
A presentation by Dawie Roodt
2
STEP 1: RE-FOCUS?
Dawie Roodt 04/21/23
What went wrong?
The excuses:+ Insufficient regulation+ Greed+ SpeculatorsThe truth:+ Loose monetary policy+ Political interference
Dawie Roodt3 04/21/23
Its all about your approach
Dawie Roodt4 04/21/23
Fed Printing money
Dawie Roodt5 04/21/23
US Economy
US Fed
Buying Bonds / TB’s
Fund $
Some economic
activity
Resource prices ↑ Emerging Markets
The driving forces
1. Euro under threat: ↓ Euro2. Dollar under threat: ↓ $3. ↑Renminbi4. ↑ Commodity Prices5. Strong Rand (for now)
Dawie Roodt6 04/21/23
7
THE “NEW” ECONOMIC GROWTH PLAN
Dawie Roodt 04/21/23
The plans:
Dawie Roodt8 04/21/23
+ HOP - 1994+ GEAR - 1996+ Asgisa - 2006+ The new Growth Plan - 2010
↓Poverty & ↓Unemployment = ↑ Economic Growth
“Apartheid”Macro economic stability
Harvard group
New growth plan targets
Dawie Roodt9 04/21/23
+ Stringent Fiscal policy focused on savings+ Smaller Current Account deficit+ Lower interest rates+ Competitive currency+ Lower unemployment
Creating jobs according to NGP & MTBPS
Dawie Roodt10 04/21/23
+ Labour market strengthening & skills development
+ Further help from development finance institutions for infrastructure development
+ IPAP2+ Improve competitiveness+ Improve public service delivery & management
Will companies expand sufficiently?
Dawie Roodt11 04/21/23
Some limitations:
Dawie Roodt12 04/21/23
Dawie Roodt13
WHAT ABOUT OUR CURRENCY?
04/21/23
0
2
4
6
8
10
12
14
1977
/06/
0119
78/0
7/01
1979
/08/
0119
80/0
9/01
1981
/10/
0119
82/1
1/01
1984
/01/
0219
85/0
2/02
1986
/03/
0219
87/0
4/02
1988
/05/
0219
89/0
6/02
1990
/07/
0219
91/0
8/02
1992
/09/
0219
93/1
0/02
1994
/11/
0219
96/0
1/03
1997
/02/
0319
98/0
3/03
1999
/04/
0320
00/0
5/03
2001
/06/
0320
02/0
7/03
2003
/08/
0320
04/0
9/03
2005
/10/
0320
06/1
1/03
2008
/01/
0420
09/0
2/04
2010
/03/
0420
11/0
4/04
2012
/05/
0420
13/0
6/04
2014
/07/
0420
15/0
8/04
Rand R/$
R$ Forecast
The Rand since 1977
Dawie Roodt14 04/21/23
9/11
Financial crisis of
‘08
Source: I-net Bridge & Efficient Group forecast
The Rand & Relative PPP
Dawie Roodt15 04/21/23
0
2
4
6
8
10
12
14
1977
/06/
0119
78/0
7/01
1979
/08/
0119
80/0
9/01
1981
/10/
0119
82/1
1/01
1984
/01/
0219
85/0
2/02
1986
/03/
0219
87/0
4/02
1988
/05/
0219
89/0
6/02
1990
/07/
0219
91/0
8/02
1992
/09/
0219
93/1
0/02
1994
/11/
0219
96/0
1/03
1997
/02/
0319
98/0
3/03
1999
/04/
0320
00/0
5/03
2001
/06/
0320
02/0
7/03
2003
/08/
0320
04/0
9/03
2005
/10/
0320
06/1
1/03
2008
/01/
0420
09/0
2/04
2010
/03/
0420
11/0
4/04
2012
/05/
0420
13/0
6/04
2014
/07/
0420
15/0
8/04
Rand R/$ & Relative PPP
R$ Forecast 1980
Source: I-net Bridge & Efficient Group forecast using World bank PPP
The Rand & Relative PPP
Dawie Roodt16 04/21/23
0
2
4
6
8
10
12
14
1977
/06/
0119
78/0
7/01
1979
/08/
0119
80/0
9/01
1981
/10/
0119
82/1
1/01
1984
/01/
0219
85/0
2/02
1986
/03/
0219
87/0
4/02
1988
/05/
0219
89/0
6/02
1990
/07/
0219
91/0
8/02
1992
/09/
0219
93/1
0/02
1994
/11/
0219
96/0
1/03
1997
/02/
0319
98/0
3/03
1999
/04/
0320
00/0
5/03
2001
/06/
0320
02/0
7/03
2003
/08/
0320
04/0
9/03
2005
/10/
0320
06/1
1/03
2008
/01/
0420
09/0
2/04
2010
/03/
0420
11/0
4/04
2012
/05/
0420
13/0
6/04
2014
/07/
0420
15/0
8/04
Rand R/$ and Relative PPP
R$ Forecast 1980 1990
Source: I-net Bridge & Efficient Group forecast using World bank PPP
The Rand & Relative PPP
Dawie Roodt17 04/21/23
0
2
4
6
8
10
12
14
16
1977
/06/
0119
78/0
7/01
1979
/08/
0119
80/0
9/01
1981
/10/
0119
82/1
1/01
1984
/01/
0219
85/0
2/02
1986
/03/
0219
87/0
4/02
1988
/05/
0219
89/0
6/02
1990
/07/
0219
91/0
8/02
1992
/09/
0219
93/1
0/02
1994
/11/
0219
96/0
1/03
1997
/02/
0319
98/0
3/03
1999
/04/
0320
00/0
5/03
2001
/06/
0320
02/0
7/03
2003
/08/
0320
04/0
9/03
2005
/10/
0320
06/1
1/03
2008
/01/
0420
09/0
2/04
2010
/03/
0420
11/0
4/04
2012
/05/
0420
13/0
6/04
2014
/07/
0420
15/0
8/04
Rand R/$ and Relative PPP
R$ Forecast 1980 1990 2000
Source: I-net Bridge & Efficient Group forecast using World bank PPP
The Rand & Relative PPP
Dawie Roodt18 04/21/23
0
2
4
6
8
10
12
14
16
1977
/06/
0119
78/0
7/01
1979
/08/
0119
80/0
9/01
1981
/10/
0119
82/1
1/01
1984
/01/
0219
85/0
2/02
1986
/03/
0219
87/0
4/02
1988
/05/
0219
89/0
6/02
1990
/07/
0219
91/0
8/02
1992
/09/
0219
93/1
0/02
1994
/11/
0219
96/0
1/03
1997
/02/
0319
98/0
3/03
1999
/04/
0320
00/0
5/03
2001
/06/
0320
02/0
7/03
2003
/08/
0320
04/0
9/03
2005
/10/
0320
06/1
1/03
2008
/01/
0420
09/0
2/04
2010
/03/
0420
11/0
4/04
2012
/05/
0420
13/0
6/04
2014
/07/
0420
15/0
8/04
Rand R/$ and Relative PPP
R$ Forecast 1980 1990 2000 2008
Source: I-net Bridge & Efficient Group forecast using World bank PPP
The Rand & Absolute PPP
Dawie Roodt19 04/21/23
0
2
4
6
8
10
12
14
16
1977
/06/
0119
78/0
7/01
1979
/08/
0119
80/0
9/01
1981
/10/
0119
82/1
1/01
1984
/01/
0219
85/0
2/02
1986
/03/
0219
87/0
4/02
1988
/05/
0219
89/0
6/02
1990
/07/
0219
91/0
8/02
1992
/09/
0219
93/1
0/02
1994
/11/
0219
96/0
1/03
1997
/02/
0319
98/0
3/03
1999
/04/
0320
00/0
5/03
2001
/06/
0320
02/0
7/03
2003
/08/
0320
04/0
9/03
2005
/10/
0320
06/1
1/03
2008
/01/
0420
09/0
2/04
2010
/03/
0420
11/0
4/04
2012
/05/
0420
13/0
6/04
2014
/07/
0420
15/0
8/04
Rand R/$ & Absolute PPP
R$ Forecast 1980 1990 2000 2008 PPP
Source: I-net Bridge & Efficient Group forecast using World bank PPP
The Rand & Absolute PPP
Dawie Roodt20 04/21/23
0
2
4
6
8
10
12
14
1977
/06/
0119
78/0
7/01
1979
/08/
0119
80/0
9/01
1981
/10/
0119
82/1
1/01
1984
/01/
0219
85/0
2/02
1986
/03/
0219
87/0
4/02
1988
/05/
0219
89/0
6/02
1990
/07/
0219
91/0
8/02
1992
/09/
0219
93/1
0/02
1994
/11/
0219
96/0
1/03
1997
/02/
0319
98/0
3/03
1999
/04/
0320
00/0
5/03
2001
/06/
0320
02/0
7/03
2003
/08/
0320
04/0
9/03
2005
/10/
0320
06/1
1/03
2008
/01/
0420
09/0
2/04
2010
/03/
0420
11/0
4/04
2012
/05/
0420
13/0
6/04
2014
/07/
0420
15/0
8/04
Rand R/$ & Absolute PPP
R$ Forecast PPP
R7.13
R5.03
Source: I-net Bridge & Efficient Group forecast using World bank PPP
The Rand & Absolute PPP
Dawie Roodt21 04/21/23
-300%
-250%
-200%
-150%
-100%
-50%
0%
1980
/12/
0119
81/1
1/01
1982
/10/
0119
83/0
9/01
1984
/08/
0119
85/0
7/01
1986
/06/
0119
87/0
5/01
1988
/04/
0119
89/0
3/01
1990
/02/
0119
91/0
1/01
1991
/12/
0119
92/1
1/01
1993
/10/
0119
94/0
9/01
1995
/08/
0119
96/0
7/01
1997
/06/
0119
98/0
5/01
1999
/04/
0120
00/0
3/01
2001
/02/
0120
02/0
1/01
2002
/12/
0120
03/1
1/01
2004
/10/
0120
05/0
9/01
2006
/08/
0120
07/0
7/01
2008
/06/
0120
09/0
5/01
2010
/04/
0120
11/0
3/01
2012
/02/
0120
13/0
1/01
2013
/12/
0120
14/1
1/01
2015
/10/
01
Under valuation of the Rand
Valuation Forecast Poly. (Valuation)
Source: I-net Bridge & Efficient Group forecast
0
2
4
6
8
10
12
14
-30.0
-25.0
-20.0
-15.0
-10.0
-5.0
0.0
5.0
10.0
15.0
1985
/01
1985
/04
1986
/03
1987
/02
1988
/01
1988
/04
1989
/03
1990
/02
1991
/01
1991
/04
1992
/03
1993
/02
1994
/01
1994
/04
1995
/03
1996
/02
1997
/01
1997
/04
1998
/03
1999
/02
2000
/01
2000
/04
2001
/03
2002
/02
2003
/01
2003
/04
2004
/03
2005
/02
2006
/01
2006
/04
2007
/03
2008
/02
2009
/01
2009
/04
Rand% Net Portfolio Inflows VS R/$
Portfolio flows:GDP R/$
The Rand & Portfolio inflows since 1985
Dawie Roodt22 04/21/23
Large outflows →
Weakening of the Rand
Source: SARB
So…what can be done?
Dawie Roodt23 04/21/23
SA’s solution
Dawie Roodt24 04/21/23
SA EconomySARB
Buying $$$
Rands
TB’s & Debentures
So…what can be done?
Dawie Roodt25 04/21/23
Another solution
Dawie Roodt26 04/21/23
SA EconomySARB
Buying $$$
Rands
Excess revenue & cash deposits Treasury
SARB owes R135bn!!
27
STEP 2: RE-EVALUATE?
Dawie Roodt 04/21/23
Is the PIT burden shifting? YES!
Dawie Roodt28 04/21/23
Source: Tax statistics 2008/09, National Treasury & Efficient Group est. for 2010
R400 001+
10%
15%
20%
25%
30%
35%
40%
45%
0% 20% 40% 60% 80%
Tax
asse
ssed
# Tax payers
Tax payers' burden - 2005
R150 001 - R400 000
0 - R150 000
R400 001+
10%
15%
20%
25%
30%
35%
40%
45%
0% 20% 40% 60% 80%
Tax
asse
ssed
# Tax payers
Tax payers' burden - 2006
R150 001 - R400 000
0 - R150 000
R400 001+
10%
15%
20%
25%
30%
35%
40%
45%
50%
0% 20% 40% 60% 80%
Tax
asse
ssed
# Tax payers
Tax payers' burden - 2007
R150 001 - R400 000
0 - R150 000
R400 001+
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
0% 20% 40% 60% 80%
Tax
asse
ssed
# Tax payers
Tax payers' burden - 2008
R150 001 - R400 000
0 - R150 000
R400 001+
10%
15%
20%
25%
30%
35%
40%
45%
50%
55%
0% 20% 40% 60% 80%
Tax
asse
ssed
# Tax payers
Tax payers' burden - 2010 estimation
R150 001 - R400 000
0 - R150 000
Income distribution
Dawie Roodt29 04/21/23
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Income Distribution in South Africa
SA’s Gini = 57.8
Cum
ulati
ve s
hare
of i
ncom
e
Cumulative share of populationSource: SA Survey, Employment & income 2009 & Efficient Group graph, World HDI report 2009.
Income distribution
Dawie Roodt30 04/21/23
0
10
20
30
40
50
60
70
80
GIN
I
Income distribution
Source: World HDI report 2009.
Income distribution reloaded
Dawie Roodt31 04/21/23
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Cum
ulati
ve sh
are
of in
com
e
Cumulative share of population
Lorenz Curve A
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Cum
ulati
ve s
hare
of i
ncom
e
Cumulative share of population
Lorenz Curve B
Source: Efficient Reseach
Who pays and who receives?
Dawie Roodt32 04/21/23
Source: SA Survey 2008/09, Employment and Income & Efficient Group est.
How do we spend?
Dawie Roodt33 04/21/23
Social services =
44.2%
Source: www.budget.gov & Feb. 2010 National Budget
How do we compare?
Dawie Roodt34 04/21/23
0%
20%
40%
60%
80%
100%
120%
140%
Spain Greece Ireland Portugal Italy UK USA South Africa
Fiscal debt : GDP
2010
Well
done
SA!
Is our state saving?Is our state saving?
Dawie Roodt35 04/21/23
NO!
-150
-100
-50
0
50
100
2008 2009 2010 2011
R bn
Source: Feb. 2010 National Budget – Consolidated budget data, Efficient Research calculation
How do we spend on capital?
Dawie Roodt36 04/21/23
0%
1%
2%
3%
4%
5%
6%
7%
8%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
25%
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
Cap Stock %GFCF %Capital Stock vs GFCF
GFCF % Change ToTal Cap Stock % Change
FIFA PREP
Source: SARB
37
STEP 3: RE-THINK?
Dawie Roodt 04/21/23
The main numbers…
Dawie Roodt38 04/21/23
Source: Feb. 2010 Budget & Efficient Research
MTBPS summary
Dawie Roodt39 04/21/23
+ 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
Will the NHI really work ?
Dawie Roodt40 04/21/23
300
350
400
450
500
550
600
650
700
Turkey South Africa Mexico Brazil Argentina
$ Per Capita spending on Health
2005 2006 2007
Source: World Bank development indicators 2009
Will the NHI really work ?
Dawie Roodt41 04/21/23
Source: World Bank development indicators 2009* Efficient Group estimates
400
450
500
550
600
650
700
750
800
850
2005 2006 2007 2008* 2009* 2010*
$/Capita SA vs Peers
South Africa Peers
$164 p/c = R52Bn p/y
Is this really necessary?
Dawie Roodt42 04/21/23
Source: Efficient Research
Our problems…
Dawie Roodt43 04/21/23
+ Unemployment+ Poverty+ Collusion+ Greed+ “Do more”+ Too many cars
The solution
Dawie Roodt44 04/21/23
Economic growth
Employment
Poverty alleviation
Better income redistribution
Creating wealth
45
QUESTIONS?
Dawie Roodt 04/21/23
Contact us on
012 460 6950
www.efgroup.co.za
This Report is confidential and for the information of clients only. Information and sources in this document are from sources believed to be reliable, but cannot be guaranteed due to the nature thereof. Information contained in the report should not be construed as financial advice. Professional financial advice should be sought before any course of action is pursued. Efficient Group (Pty) Ltd shall not be responsible and disclaims all liability for any loss, liability, damage (whether directly or consequential) or expense of any nature whatsoever which may be suffered as a result of or which may be attributable, directly or indirectly, to the use or of reliance upon any information contained in this report. The company, directors and staff may from time to time have interests in the shares mentioned in this report.
Authorised Financial Services Provider • FSP No: 859
Dawie Roodt46 04/21/23
