Cheaper arms deal still 40% of defence spending

GOVERNMENT has lowered its overall cost estimate of SA's strategic arms acquisition package, largely due to the strengthening of the rand last year.

But the cost of the package remains well over the original figure in current rand terms, and if the currency weakens and contract prices change, the estimate could rise again.

The treasury's latest estimate presented in yesterday's budget is that the arms package will cost R48,7bn, against last year's estimate of about R53bn, and the original figure of R29,9bn for the seven fiscal years from 2000-01.

While the spending on the package will wind down over the remainder of this period, in the next fiscal year it will consume about 40% of defence spending, putting pressure on financing for operations and training.

The arms package, which includes Gripen fighter aircraft, Hawk jet trainers, corvette war ships, submarines and general purpose helicopters, is geared to the air force and navy.

There is no indication yet in the treasury's spending programme of any intention to replace the army's basic fighting vehicle, the Ratel, with new armoured vehicles.

In the next fiscal year there are plans to increase spending nearly 30% on upgrading locally made Rooivalk combat helicopter and Casspir armoured personnel carriers, investing in new portable ground to air missiles and improving competence generally.

The defence force will continue investing heavily in its secretive special forces maintaining the average annual increase at about 16%. It is expected this expenditure will go on specialised equipment and to introducing an incentive scheme to retain special forces operators.

As the payments for the arms programme wind down and costs are brought under control with gradual retrenchments, the rate of increase in defence spending will slow over the next three fiscal years to a just more than 4,1%.

I-Net Bridge