There is still no relief provided in the budget to soften the blow of US President Donald Trump’s abrupt termination of grants to HIV/Aids organisations in SA, as the health department has yet to finalise its analysis of the resources required, the Treasury said on Wednesday.
“We need to understand what we are dealing with. The health department has contracted [an audit firm] to do some work, because there are allegations of corruption, abuse and inefficiencies,” said the Treasury’s acting deputy director-general for public finance, Rendani Randela.
Trump’s administration has thrown organisations supported by US foreign aid into disarray worldwide, first with a shock announcement all funding was paused pending a 90-day review and then the abrupt termination of grants issued by the US Agency for International Development (USAID).
For the past two decades, SA has been a primary recipient of support by the US President’s Programme for Emergency Aids Relief (Pepfar) which channels grants through several agencies including USAID.
Shortly before the cabinet rejected his proposed budget on February 19 over his plan to raise VAT from 15% to 17%, Godongwana said work was under way to determine the resources needed should the worst-case scenario arise and all US aid to SA’s HIV/Aids efforts end. SA has the world’s biggest HIV/Aids burden, with an estimated 7.8-million people living with the disease and 5.7-million on treatment.
Three weeks later, that work is still incomplete and the spending plans for the public health sector set out by the Treasury in the Budget Review and estimates of national expenditure remained unchanged.
The only move so far in response to Trump’s aid cuts is that the national health department will appoint the staff working in its central chronic medicines dispensing and distribution programme, whose salaries were previously covered by donor funding, as set out in the February documents. The health department will reprioritise R21m from its existing budget over the medium-term expenditure framework to fund that personnel.
The Treasury has provisionally allocated an extra R29.9bn to health’s baseline over the medium term to cover wage increases, hire 800 unemployed post-community service doctors, and pay for goods and services. Extra money set aside for several departments, including health, correctional services and education is provisional because it will only be made available when they demonstrate readiness or meet specific conditions, the Treasury said.
The health budget is set to increase by an average of 5.9% over the medium term, the first real increase since 2020. The Treasury estimates that inflation will average 4.4% over the period.
Consolidated government expenditure on health is set to rise from an adjusted estimate of R227bn in 2024/25 to R299bn in 2025/26 and then increase to R314bn in 2026/27 and R323bn in the outer year.
Medical tax credits have been frozen with no adjustment for inflation.
The Treasury has maintained its stance on the health promotion levy despite pressure from public health advocates lobbying for an increase. The government proposed cancelling the inflationary increase due to come in on April 1, “to allow the sugar industry more time to restructure in response to regional competition”, it said in the Budget Review.
The health promotion levy was introduced by the government in 2018 to curb the consumption of sugary drinks and help counter SA’s growing prevalence of obesity and related diseases. It currently stands at 2.1c for each gram of sugar above a 4g threshold per 100ml, and is limited to sugar-sweetened beverages.
Health activists have called for the sugar tax to be hiked from an effective tax rate of 8% to 20%, and expanded to fruit juice.
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