South Africa needs to ensure that its firms and people are more productive, more export orientated and have higher saving and investment rates, said Finance Minister Trevor Manuel.
This would help in curbing the effects of the global economic crisis
Addressing Members of Parliament in the National Assembly on Tuesday, Minister Manuel said South Africans needed to maintain a healthy growth rate in government spending, while keeping borrowing modest sustaining low long-term interest rates.
"Continuing focusing spending on capital and public infrastructure helps to keep savings up, as a result we have opted to continue to emphasise our public infrastructure commitments, including the expansion of energy production while ensuring readiness for the 2010 FIFA Wold Cup," Mr Manuel said.
These commitments would help raise the economic growth rate at present, as investment spending would be maintained, while in the future contribute to rising potential growth of the economy.
Mr Manuel added: "To close the gap between the 6 percent economic growth rates we aspire to, and the realities of slower growth we are now experiencing, this requires a renewed effort to reform our economy."
Government's focus on contributing to reducing the cost of economic activities and expanding infrastructure needed to be matched by investment and productivity growth in the private sector.
He said there was room for policy adjustments in a range of sectors which will facilitate investment in new businesses and growth in employment, increased income while lowering poverty.
"With the new power generation, expanding our access to advanced technologies and redevelopment of water and transport infrastructure, amongst others, will imply fertile ground for private and public partnership and new economic activities," said Mr Manuel.
With regards to reform of international institutions, the minister said the international financial and economic crisis was about the failures of national and cross-border regulatory regimes in assessing and managing risks building up in financial institutions and systems.
He said in his recent visit to the G20 Summit in Washington, the countries discussed on how to address these economic problem in a durable and credible way in the coming months.
"We have decided that each country will have to develop its national plan based on the common principles for reform. We will each have to assess to what extend both our fiscal and monetary policies support the internationally agreed principles."
The minister further said he will be convening a meeting of all financial regulators, the South African Reserve Bank and National Treasury, to ensure that South Africa gave effect to the common principles for reform.
He added that he will facilitate the country's full participation in global standard-setting institutions and the Financial Stability Forum. -BuaNews