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Mediclinic News : Health and basic services to feel pain of R40bn spending cut

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Health and basic services to feel pain of R40bn spending cut

Date

2016-10-27

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News Description

BUSINESS DAY The effect of R40bn in spending cuts will be felt most in the public health system, the provision of free basic services, the roads network, and in the limitations placed on water and electricity provision in rural areas, Treasury documents show. Michael Sachs, head of the budget office, said the top concern was the health budget, which although still growing in real terms — there is a 8.2% increase over the three-year period — was under acute pressure. This was because of fast-rising costs for items such as medicines, brought about mainly by the rand exchange rate. "We would have liked to allocate more money to health, but we are unable to do that now," he said. The local equitable share to municipalities, which provides funds to subsidise free electricity and water for the poor, would be "more thinly stretched" and "is not growing as fast as utility prices or the growth in the number of households", Sachs said. Unit costs to extend services to rural areas were also increasing, making it more difficult to meet targets. The government proposes to reduce the operating budgets of all national departments by 1.1%, which will place personnel budgets under pressure. Reductions of R6.4bn will be made to large conditional grants to provinces and local governments and R1.6bn will be shaved off provincial equitable shares over the three years. Finance Minister Pravin Gordhan announced that the Treasury and provincial finance MECs had agreed on a joint plan for fiscal consolidation. This would aim at containing expenditure on administrative personnel, improving revenue collection and rationalising and closing redundant and underperforming programmes and entities. Regulations would be issued soon to enforce the cost-saving measures for municipalities that the Treasury issued in March, including savings on travel, consultants, catering, office furniture and events. The R40bn in spending cuts will be made up of R16.7bn taken from the 2017-18 budget and R23.2bn in 2018-19. "A drawdown on the contingency reserve [R15bn between 2016-17 and 2018-19] will contribute to these requirements, and a number of provisional allocations made in the previous budget will be rescinded," the medium-term budget policy statement said. A portion of the resources allocated to support university students will be found elsewhere from within the postschool education system.
Created at 2016/10/31 09:04 AM by Mediclinic
Last modified at 2016/10/31 09:04 AM by Mediclinic