WITH the rand under continuing pressure against the US dollar, the controversial arms deal could end up costing SA as much as R60bn as opposed to an initial estimate of R29bn.

Tradek economist Mike Schussler said yesterday that if the rand devalued 25% in the next two years, the cost of the deal would soar beyond R60bn.

Last week it was reported that the deal was currently estimated at R50bn and not R43bn, as stated in this year's national budget. Parliament's standing committee on public accounts initially put the figure at R29bn.

Weekend reports said the finance department warned the cabinet in August 1999 that the arms deal could cause macroeconomic instability.

Finance Department official spokesman Moeti Kgamanyane said yesterday he was "not in a position to comment" over the cost escalation.

Schussler said R50bn was 6% of the country's gross domestic product, which was "a lot to spend on arms when the greatest threat to the country is not war but poverty".

Meanwhile, the Sunday Times reported yesterday that the European Aeronautic Defence and Space company (EADS), which won contracts to supply R420m worth of missiles and radar equipment in terms of the arms deal, ordered a third Mercedes-Benz for ANC chief whip Tony Yengeni.

The car is now being driven by Cape Town resident Wivine Ndlandu Kavidi, the wife of the former Zairean prime minister NGuza Karl-I-Bond. The first car, a green ML 320 4x4 is being driven by Yengeni himself, while the second, a Mercedes C180, is being driven by his wife.

With acknowledgment to Taryn Lamberti and Business Day.