Pretoria - Cancelling loans secured for financing the 1999 arms deal would hurt the South African economy, former finance minister Trevor Manuel said on Wednesday.
“I would like to give this commission (Seriti inquiry) my view on the impact of the loans. In a nutshell, not only would South Africa' credit rating be impacted, but all credit facilities obtained in the global credit markets,” he said.
“Credit markets everywhere are determined by trustworthiness in the ability to pay.”
The ripple effect of such a cancellation would extremely hit the country's poor who rely on public services.
“We would not be able to raise any deficit financing in the country. The consequences of the cancellation would have an effect on the perceptions of constitutional continuity,” Manuel said.
“I am not a minister any longer, but I believe that Constitutional continuity is of the essence,:”
He said a failed litigation process by arms deal critics, brought against him as finance minister, proved that the courts were satisfied that acquisition was necessary.
“I believe that the selected package was affordable and within government's fiscal envelope. It is important that as finance minister I was part of a collective,” said Manuel.
“I wasn't part to deciding on the selection of the equipment. Treasury doesn't decide on pharmaceuticals to be dispensed at clinics, neither do we decide the curriculum content in education.”
Earlier, Manuel said a mandate by former president Nelson Mandela to his Cabinet to properly equip the defence force resulted in the controversial arms deal.
Manuel will be cross-examined at the Seriti inquiry on Thursday.
Zuma appointed the commission in 2011 to investigate alleged corruption in the multi-billion rand deal.
Government acquired, among other hardware, 26 Gripen fighter aircraft and 24 Hawk lead-in fighter trainer aircraft for the air force, and frigates and submarines for the navy.