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Provincial budgets face AIDS drain
Business Day
2000-10-27

Health and welfare budgets are coming under considerable strain, in large part because of the HIV/AIDS epidemic, a government report into provincial finances has warned.

Health and welfare budgets are coming under considerable strain, in large part because of the HIV/AIDS epidemic, a government report into provincial finances has warned.

The latest Intergovernmental Fiscal Review, released on 20/10, says the epidemic has substantially increased demand for healthcare and has made the treatment of diseases like malaria and tuberculosis more expensive. It warns that the demands of the epidemic will crowd out spending that is needed on capital investment. 

The review says health budgets are already facing strain from having to provide free healthcare to pregnant women and children under six, build clinics and provide free access to primary healthcare. The eventual budgetary implications pose a significant risk to health budgets in the public sector, says the review. Given the current HIV infection rate of 13% for adults between the ages of 20 and 64, the number of infected people will reach 6-million by 2010. The document does not give specific figures on the expected effects of AIDS on budgets.

The nine provinces ran a surplus of R3bn in the 1999/2000 fiscal year, up on the R0,5bn in the 1998/99 year. The surpluses cannot be rolled over or remain unspent, but are used mainly to cover debt reduction. In the 1997/98 financial year the provinces overran their budgets by R5,5bn and national government had to give special assistance to Mpumalanga and the Free State. 

Although provincial own revenues from sources such as licences and hospital charges make up only 4% of the total, the report says their continuing fall is a concern. Provincial budgets have grown at 3,8% a year over the past four years, against the 6,4% average rate of consumer inflation. From this fiscal year until 2002/03, provincial spending is budgeted to rise at 6,2%. 

The introduction of child support grants, demands for old age pensions to catch up with inflation and the costs of compliance with the Basic Conditions of Employment Act will place further strain on provincial budgets. Increasing numbers of people are expected to apply for disability support and foster grants for orphans as the AIDS epidemic progresses. 
(Source: Business Day, 23?10/))

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