Arms deal cost R46bn, Treasury reveals

Comment on this story


IOL  rand notes

REUTERS

Johannesburg - The arms deal cost a total of R46.666 billion.

That is the official figure for the 1999 Strategic Defence Procurement Package (SDPP) from the Treasury.

“The total nominal expenditure (that is the total cash outlay) on the SDPP between 2000/01 and 2013/14 has been R46 666 million,” said Treasury deputy director-general Andrew Donaldson.

The deal was financed through loans from foreign banks: $2.5bn from Barclays Capital; e611.9m and e846.3m from Commerzbank; e188m from Societe Generale; and $199.8m from Medio Credito Centrale.

This loan debt peaked at R30.8bn in 2007/8, said Donaldson.

The loan costs total R51.3bn.

“The all-in costs of the loans (capital plus interest), actual and projections, as at March 31, 2014, amount to R38 203.2m (capital) and R12 838.2m (interest). Fees paid (management, commitment, legal fees etc) amount to R211.2m.”

About 68 percent of the total capital drawn has been repaid thus far.

Donaldson was at the Arms Procurement Commission public hearings in Pretoria on Wednesday to explain the Treasury’s role in the arms deal, the costs and the loans.

In 1999, the arms deal was expected to cost R30bn.

“The main reasons for the difference between the cabinet-approved estimated 1999 cost and the nominal total expenditure are inflation-related contract price adjustments and the depreciation of the rand against the SDPP supplier or contract currencies,” said Donaldson.

He said the increase was not due to increases in real costs or supply specifications.

“Discounting the total nominal expenditure of R46 666m by the GDP deflator index to 1999 prices yields an estimated cost of the SDPP in 1999 prices of R30.8bn. When compared to the cabinet-approved cost estimate in September 1999 of R29 992m, the real increase in the cost of the SDPP is under 3 percent. This is mainly a consequence of the depreciated value of the rand in 2002 and 2003.”

Confusion over the arms deal cost has been one of the key criticisms of the deal, with critics claiming the real cost was probably R70bn. Official figures from the government have been confusing.

Donaldson said the arms deal was in the defence budget and reflected in Budget documents tabled in Parliament from 2001 to 2008, which included each year’s full projected expenditure.

The projections are no longer in the Budget as the procurement is expected to be concluded in 2013/14, the fiscal year just ended.

For the foreign loans, the Treasury was the borrower, not the Defence Department.

Lawyers for Human Rights (LHR) on Wednesday complained to the commission that documents handed to them by evidence leaders were later removed.

On Monday, the commission provided LHR with Donaldson’s statement and annexures – a 532-page bundle – but on Wednesday asked for some documents back because they had not yet been declassified.

Some documents were then, anyway, referred to in the open hearings, said LHR.

Absa boss Maria Ramos, a former finance director-general, and the Treasury’s Lesetja Kganyago appeared briefly, but the evidence leaders decided that Donaldson’s evidence would be sufficient.

[email protected]

The Star


sign up
 
 

Comment Guidelines



  1. Please read our comment guidelines.
  2. Login and register, if you haven’ t already.
  3. Write your comment in the block below and click (Post As)
  4. Has a comment offended you? Hover your mouse over the comment and wait until a small triangle appears on the right-hand side. Click triangle () and select "Flag as inappropriate". Our moderators will take action if need be.

     

Join us on

IOL-Social networks IOL-Social networks IOL-Social networks IOL-Social networks

Business Directory