Finance Minister Trevor Manuel on Tuesday outlined the plans he will be drawing up to help South Africa play its part in combating the turmoil in global financial markets and its effects on the real economy.

Speaking to members of Parliament's finance committee, prior to giving a ministerial statement in the National Assembly, Manuel said that key principles for reform undertaken by the G20 group of countries at their summit in Washington at the weekend are to be supported by national plans.

Greater cooperation

Manuel, who has just returned from a flurry of international meetings in Sao Paulo, and Tunis as well as Washington, said that there has to be greater cooperation between financial regulators - the bank supervisor, the financial standards board, the national credit registrar, must all march in step.

National plans which he is working on prior to his annual Budget, which will be delivered on 11 February next year, will address "pro-cyclical regulatory policy" in financial market regulations and supervisory systems. He pointed out that the communiqué of the G20 summit agreed that financial institutions should have common accounting standards, and clear internal incentives to promote stability.

He also pointed out that the G20 demanded that national plans should avoid compensation schemes that reward excessive short-term returns or risk taking.

Doha round

Manuel said that the summit declared that the Doha development round of world trade negotiations cannot be left unfinished. The politicians at the summit have accordingly given the negotiators the political freedom to complete the round as quickly as possible.

He disclosed in reply to a question from an MP that one insurance company "which used to be listed on the JSE but which has moved its listing to London" has approached the Treasury and the bank to enquire about possible bailout, but he assured members that it was not for its operations in this country, but rather offshore.

"In fact," he said, "life offices in this country have ridden the wave quite well."

"Solid, solid, solid"

He also assured members that the Chinese involvement in our banking sector would only have beneficial effects it. The ICBC bank which invested in Standard Bank here is "solid, solid, solid". "It is so large," he said, "that even if there were issues they would be marginal issues."

Lesetja Kganyago, the treasury director general, told the committee that "the environment is not all doom and gloom in South Africa". He told members that the fiscal deficit supported consumption and investment even as both of them slow down, relative to recent years. He also pointed out that depreciation of the currency leads to better exports, and for a time at least to more income for exporters.

"In the long term," he said, "the country needs to be more productive, more export oriented with higher saving and investment, and with more rapid growth at a sustainable current account."