News Column

'Cancelling loans will hurt SA'

June 12, 2014



Cancelling loans secured for financing the 1999 arms deal would hurt the South African economy, former finance minister Trevor Manuel said yesterday.

"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's 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 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 the selected package was affordable and within government's |fiscal envelope. As finance minister I was part of a collective," said Manuel.

"I wasn't party to deciding on the selection of the equipment. Treasury doesn't decide on pharmaceuticals to be dispensed at clinics, nor the curriculum content in education."

Earlier, Manuel said a mandate by former president Nelson Mandela to |his cabinet to equip the defence force |resulted in the controversial arms |deal.

He quoted two State of the Nation addresses by the former president.

After reading an extract, Manuel said: "The message was abundantly clear and I think we had a very clear mandate of re-equipping, about affordability, peace and security."

Manuel will be cross-examined at the Seriti inquiry today.

Zuma appointed the commission in 2011 to investigate alleged corruption in the multibillion-rand deal.

The government acquired, among other hardware, 26 fighter aircraft, 24 fighter trainer aircraft, frigates and submarines. - Sapa

Cape Argus


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Cape Argus (South Africa)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters