Heat 1 inch salted water (1 teaspoon salt to 1 cup water) to boiling.
Heat to boiling; reduce heat.
Cover and cook until tender, 20 to 25 minutes; drain.
Cook and stir margarine, sugar and salt in 10-inch skillet over medium heat until mixture starts to turn golden brown.
Remove from heat; cool slightly.
Stir in water until blended.
Cook over low heat, turning potatoes to coat with sugar mixture.