RSS

Tag Archives: Pravin Gordhan

The budget Speech

Pravin Gordhan

Cape Town – Financial literacy education is very dear to me to an extent that I lead a team of volunteers at University that solely focuses on teaching high scholars about money and debt management and saving. The minister of finance, Pravin Gordhan announced in his 2012 budget speech that those who save will get a form of a tax break.

At this stage I am not at liberty of analyzing his speech, but he said many things that are heart warming, and not so heart-warming to smokers, drinkers and gamblers.Personally, I welcome his speech.

What I found profound is the following statement:

To encourage voluntary savings, consideration is being given to the introduction of tax-exempt short and medium-term savings products. The proposal is that individuals should be permitted to save up to R30 000 a year, with a lifetime limit of R500 000, in registered savings or investment products that would be free of tax on interest, dividends or capital gains.

In retrospect the minister is encouraging wealth creation and saving amongst South Africa citizens.

Be financially savvy!

Advertisements
 
2 Comments

Posted by on February 22, 2012 in Economics

 

Tags: , , , , , , , , , ,

Currency war: What is it and what are the crippling effect, thereof?

The South African Currency (R)

According to wikipedia, Currency war, also known as competitive devaluation, is a condition in international affairs where countries compete against each other to achieve a relatively low exchange rate for their home currency, so as to help their domestic industry.

Ahead of G20 conference that will be hosted in the Republic of Korea, it seems that the leading agenda will be about the currency war, the state emerging markets and the stimulus packages by central banks of major economies. We have seen how Central Banks of the various countries in this world announce their stimulus package, the popular one being Ben. S. Bernanke announcing that he will purchase up to $600 Billion Dollars of the US treasuries within the next eight months.  Economist from different parts of the world argues that Bernanke’s move can have a crippling effect on the emerging markets.

The outbreak of currency war in 2010 has not been warmly welcomed by many head of state. The president of South Africa Mr Jacob Zuma, commenting on the matter said “Leaders around the world must act to prevent the recent round of currency devaluations from turning into a global currency war. We must collectively find an effective solution in the short term.” (Timeslive,2010).  It seems that the president is late in his warning because the currency war has already started.

The following are the crippling effect of currency war:

  • It can lead to a reduction in citizen’s material standard of living.
  • It can push up inflation.
  • A strong currency is sometimes seen as a mark of prestige while devaluation is sometimes seen as a sign of a weak government.
  • For countries such as South Africa, An escalating currency war could make exchange rates highly volatile, sparking protectionism and reducing global trade flows.

The truth of the matter is that the developed economies are pursuing economic policies such as buying bonds as a measure to heal their ailing economies. Sadly, they do that at the expense of the emerging markets.

The so called currency war is as a result of  the effort to keep countries going, where each country tries to become competitive on the basis of the competitive currencies.

According to the South African Finance Minister Pravin Gordhan, currency war will lead to what he referred to as the trade war.

Currency war, the strength of the currency of the emerging markets and  the fight against economic crisis are new interesting topics for economics majors, and those students who will be writing mini thesis in the coming academic year.

Let’s hope that the current G20 meeting will yield positive results. Will the global economy be healed? That is an agenda which must be looked at by global Finance Ministers, Head of State and the Cental Bank governors.

Source: Fin24.com, Sunday Times, and Wikepedia.

 
5 Comments

Posted by on November 11, 2010 in Economics

 

Tags: , , , , ,