Cape Town – Government's controversial strategic arms deal is getting cheaper and cheaper as a result of the strong rand, last week's national budget documents show.

When the arms deal was signed in 2000, it was estimated to cost about R53bn. This figure skyrocketed when the value of the rand fell and some estimates indicated if the currency did not recover, the ships, aircraft and submarines could end up costing about R70bn.

National treasury director-general Lesetja Kganyago reported in the estimates of expenditure that "under the strategic arms procurement programme, four corvettes have already been delivered to SA and the delivery schedule for 2005 includes a submarine, as well as a substantial portion of the light utility helicopters and trainer aircraft order".

"The appreciation of the rand against major currencies in 2004 has resulted in a further downward adjustment of R3,1bn in the anticipated cost of the package from R48,7bn to R45,6bn."

Kganyago said that the special defence account, which funds weapons acquisitions for the South African National Defence Force, grew from R5,8bn in 2001-02 to R8bn in 2003-04, it then fell to R7bn in 2004-05. It is expected to increase again to R9bn in 2005-06 and then decline to R6,7bn in 2007-08.

The bulk of this expenditure will go on the strategic defence procurement subprogramme, which is expected to cost R45,6bn in total over 13 years, with the final payment due in 2011-12.

The new fiscal year emerges as being the most expensive in terms of repayments for the weapons already received.

Repayments began in 2000-01 at R2,9bn; were followed by R4,2bn in 2001-02; R6,342bn in 2002-03, R5,864bn in 2003-04; R4,503bn in the current budget and R6,571bn is due in 2005-06. In 2011-12 it drops to R1,1bn when the final payment is due. That is if the rand does not weaken.

With acknowledgements to Wyndham Hartley and the Business Day.