The Treasury had made no specific allocation to the proposed budget to accommodate a potential cut in US aid for SA’s HIV/Aids programmes, saying technical work was under way to determine the resources required should the worst-case scenario unfold.
Tabling of the budget was postponed to March 12, after cabinet failed to sign it off due to disagreements over Treasury’s plans to raise VAT from 15% to 17%.
US President Donald Trump’s administration has thrown HIV/Aids programmes funded by the President’s Emergency Plan for Aids Relief (Pepfar) into disarray.
Last month, Trump imposed a 90-day freeze on all foreign aid pending a review, followed by “stop-work” orders that brought HIV/Aids programmes worldwide to a standstill.
A partial waiver for life-saving and humanitarian aid subsequently signed by US secretary of state Marco Rubio has opened the way for some programmes supported by Pepfar to resume, but many remain shuttered.
While the Treasury funds the lion’s share of SA’s HIV/Aids expenditure, the scale of the country’s HIV burden means it relies heavily on donor support. Its biggest donor has historically been the US government, which provided 17% (R7.45bn) of SA’s total HIV/Aids expenditure of R44.4bn in 2023/24, according to the health department.
An estimated 7.8-million people are living with HIV in SA, with 5.7-million on treatment.
An audit firm is conducting an urgent review of the programmes supported by Pepfar, finance minister Enoch Godongwana said on Wednesday.
“There is a view that the US was heavy on administration and is too costly for us,” he said.
Treasury director-general Duncan Pieterse said the health department was preparing for the worst possible outcome. The Treasury’s plan to increase the health budget by R28bn over the medium term would help soften the blow, he said.
The draft budget put forward by Treasury on Wednesday proposed that health expenditure increase by an average of 5.9% over the medium-term expenditure framework, the first real increase to the health budget since 2020.
A proposed R28.9bn increase in the allocation to health was intended to accommodate unemployed doctors, address shortfalls in the wage bill and improve hospital infrastructure, the Treasury said.
It projected that inflation would average 4.5% over the medium term.
Consolidated government expenditure on health was 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.
When asked how the Treasury envisaged financing National Health Insurance (NHI), the ANC’s controversial plan for universal health coverage, Godongwana said health minister Aaron Motsoaledi had yet to provide details of how the scheme would be put into play.
“What we have agreed in government is minister Motsoaledi must submit a document saying how he is going to implement the rollout so all of us can engage and understand the full cost, over what period,” he said.
“We now are agreed that infrastructure has to be upgraded substantially in a number of hospitals to be compliant with NHI,” he said.
Medical tax credits remain unchanged, the second consecutive year that they have not been increased in line with inflation.
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