Besides the arms deal inquiry, government owes the country a detailed breakdown of the projected future cost of the multibillion-rand arms deal. It seems incomprehensible why the models and projections used in assessing the risk of the deal should be kept so tightly under wraps.

When the joint investigating team tabled its report in Parliament last month, government argued: "As we have said before, it is profoundly unhelpful to speculate on the aggregate payments that will be made over a number of years, given the vagaries of factors that need to be taken into account. As with any loan the critical matter is affordability of the instalments".

But what about the affordability of the instalments when circumstances change and the rand plummets and economic growth rates fall? And even though it might be "affordable", the question as to whether it is a priority for taxpayers remains.

So far Finance Minister Trevor Manuel has insisted that the only true assessment of the cost of the deal is the price set in December 1999, that is R30,3bn, excluding financing costs and all considerations of exchange rates.

However, he has promised to provide an updated estimate of the projected cost in February when he tables the 2002-03 annual budget.

In the 2001 estimates of expenditure, the total nominal cost of the package over a 12-year period was R43,8bn. But this still excludes financing costs of an estimated R22,9bn over 23 years including them puts the price of the deal at an estimated R66,7bn.

The investigators noted that the model used to assess the affordability of the package did not include all relevant costs such as price escalations and the cost of negative foreign exchange movements. A single exchange rate was used in the calculation of the price of the package.

Further evidence of costs came from Manuel in a written reply to a parliamentary question by Democratic Alliance public accounts spokeswoman Raenette Taljaard when he said that, of the projected R43,8bn, R32,5bn would be financed through export credit facilities which form part of the state's projected financing of the budget deficit. "These loans have an average duration of 20 years and the final payments are scheduled for 2021. Interest charges are currently projected to total R22,915bn over the period 2000-01 to 2021-22."

Manuel has refused to divulge details of the model produced by Warburg Dillon Read on which the projections are based.

This week national treasury deputy director-general Andrew Donaldson downplayed the significance of the model, saying it was an arithmetical tool to assist in making projections and did not itself contain projections.

Earlier this year the Mail & Guardian disclosed details of the affordability study submitted to the cabinet by the national treasury which highlighted the risks the package posed to macroeconomic stability.

The study warned of the significant effect the arms acquisition deal could have on the budget deficit and on SA's ability to borrow money, and projected a rand-dollar exchange rate of 26:1 by 2018, after dropping to about R14,9:1 by 2010.

The affordability study included elements of the Warburg Dillon Read model which predicted a decline in the rand-dollar exchange rate from R9,60 in 2003-4, to R18,50 by 2013-4 and R22,80 by 2016-17. Currently the decline in the rand has far exceeded these expectations.

The affordability study said the calculations by Warburg Dillon Read showed that "for every R1 depreciation in the dollar exchange rate the cost of servicing foreign debt will increase by R2,5bn and principal repayments will increase by R4,8bn."

One area where the concerns over the unpredictability of future exchange and economic growth rates did affect the structure of the deal, however, was the decision to purchase the package in tranches so that the affordability question could be revisited again at a later stage if things turned out worse than expected. The first comes up in April next year and the next in April 2004.

While the model did not suggest purchases would have a severe effect on domestic financial markets, it did conclude that the foreign borrowings required would significantly intensify government's exposure to foreign exchange risks. Looking at the effect on government's debt service capacity, the model concluded that two key indicators interest payments as a percentage of government revenue and public debt as a percentage of gross domestic product would both deteriorate as the expenditure levels and risks increased. In fact the advisers believed that only a package of R16,5bn would fall within internationally recognised safety levels.

Government has insisted that ultimately the decision to buy the arms was its prerogative. True. But it is accountable to the people footing the bill and if it has nothing to hide why not make public the models used to determine that the risk was, and will be, manageable?

Manuel has refused to divulge details of the model on which the projections are based.

Ensor is Business Day's Parliamentary Correspondent.