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Treasury's decision against windfall tax on synthetic fuel producers helps to bolster JSE

By unknown | Aug 07, 2007 | COMMENTS [ 0 ]

Zweli Mokgata

Zweli Mokgata

Finance Minister Trevor Manuel helped Sasol shares to jump over 8percent yesterday when he announced the treasury had decided against a windfall tax on synthetic fuel producers.

Sasol's rally helped to perk-up the JSE, but it continued Friday's plunge.

Manuel announced government's synfuel tax decision at the launch of the International Monetary Fund's (IMF's) country report on South Africa.

The IMF forecasts South Africa's growth rate will slow to 4,7percent from 5percent last year.

"We had to politely disagree with the IMF on that point," Manuel said. The treasury expects this year's growth to match last year's.

One of the reasons the IMF has lowered South Africa's growth rate prospects is that the current account deficit has widened from 6,5percent of gross domestic product in 2006 to 7percent this year.

"Our current account deficit is something to worry about, but the report shows that the IMF is comfortable with the way that people's lives will be affected," said Manual

"The rising levels of inflation were also a matter of concern. But the IMF is satisfied with the way the Reserve Bank has handled the issue," he added.

Although inflation has breached government's 6percent ceiling for the past three months, the Reserve Bank has addressed this issue by increasing interest rates.

"Government will contribute by raising its investment in infrastructure, thereby helping to alleviate capacity constraints and producer price inflation," he commented.


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