Minister of Finance Pravin Gordhan has announced the easing of exchange controls in a bid to devalue the strong rand.
Further measures mean that South Africans sending money abroad will now be able to send R4-million a year, as opposed to R4-million during their lifetimes. Permission can be sought to exceed this amount, too.
Emigrants will also be smiling, since the 10% tax imposed on blocked assets will now be scrapped. Emigrants will be able to transfer up to R8-million offshore. Blocked assets currently run into billions.
In addition, private clients can now move up to R1-million each calendar year out of South Africa, on a travel allowance. This has been increased from R750 000.
Gordhan has also taken steps to make South Africa more attractive to foreign companies, saying that international companies can now raise and deploy capital offshore without exchange-control approval, with effect from January 1 2011.
The mid-term budget policy statement demonstrates that the government is committed to weakening an overvalued rand. But some economists have commented that exchange controls could have been scrapped, not merely lifted, and the measures do not go far enough.
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