Manuel: SA must stick to policies

Johannesburg - The global financial crisis hardens the case for South Africa sticking to its economic policies despite a change in leadership, Finance Minister Trevor Manuel was quoted as saying on Thursday.

South Africa's Business Day newspaper also quoted Manuel as saying some failed policies could be "rejigged".

Kgalema Motlanthe became president of Africa's richest country last month after Thabo Mbeki was forced to resign, and has sought to reassure investors by vowing not to veer from his predecessor's business-friendly policies.

He immediately reappointed Manuel, who has been applauded by investors and economists for steering South Africa through its longest period of economic growth.

Manuel also said South Africa's banks were well-equipped to deal with the global financial crisis but that they may be affected by restricted access to foreign exchange, Business Day said.

"If liquidity dries up, how do you finance cross-border deals - be it in trade, investment, or links into the global payments system? Raising foreign exchange will be very tough in an illiquid market," he was quoted as saying.

Manuel said a weak rand - which on Wednesday hit its lowest level against the dollar in almost 7 years - may boost the cost of South Africa's ambitious infrastructure plans and said spending on soccer stadiums and transport ahead of the 2010 World Cup should be contained.

"Building costs are a huge threat to what we want to do. I'm not too concerned but we need to be watching it," he was quoted as saying.

State-owned power utility Eskom may also struggle to raise finance to fund a 5-year programme to overhaul its infrastructure to meet demand for electricity after a wave of crippling power cuts earlier this year, he said.

Business Day said Manuel gave the interview shortly before leaving for the annual meetings of the World Bank and International Monetary Fund (IMF) in Washington.

Most economists and analysts believe South Africa's banks have been shielded from the worst of the credit crisis by strict exchange controls and a cautious approach to borrowing.