The South African National Treasury is reviewing critical funding requests from the Department of Health and the South African Medical Research Council (SAMRC). This is to mitigate the severe financial impact of cuts imposed by the US President Donald Trump's administration. The Treasury is weighing emergency funding to address these urgent needs. This consideration follows a significant blow to South Africa's vital HIV/Aids programmes, universities, and research organizations. In particular, the Treasury weighs emergency funding carefully to ensure a strategic and effective allocation of resources.
The Fallout from US Funding Reductions
Since President Trump assumed office, his administration has substantially cut US foreign aid, including the highly impactful US President's Emergency Plan for Aids Relief (PEPFAR). This has forced many non-governmental organisations (NGOs) previously funded by PEPFAR to cease operations. It led to the termination of services and the retrenchment of thousands of staff across South Africa. Consequently, as the Treasury weighs emergency funding, many patients who relied on specialised services from these organisations are now placing an increased burden on already stretched public healthcare facilities.
Treasury's Response to the Crisis
Finance Minister Enoch Godongwana confirmed that the Treasury is assessing these requests. The Department of Health has submitted a R1.3 billion budget request. This request is understood to include provincial plans to address the shortfalls. Mark Blecher, the Treasury’s chief director for health and social development, indicated that the process for disbursing these funds could involve "section 16 emergency allocations or through new allocations." Section 16 of the Public Finance Management Act (PFMA) allows the Treasury to make allocations outside the standard budget process. The government first used this mechanism during the COVID-19 pandemic, and the Treasury is now considering it again as an emergency funding option.
Health Minister Aaron Motsoaledi had anticipated R6.3 billion from PEPFAR for the 2025/26 fiscal year. However, the Health Department's current request is notably lower. Minister Godongwana speculated this discrepancy might be due to expected savings on salaries. PEPFAR's pay rates were reportedly higher than those set by the public service and administration department. In the 2023/24 fiscal year, a significant R4.64 billion of the R7.5 billion PEPFAR funding was allocated to the salaries of over 15,000 health staff in provinces and 200 in the national department.
Impact on Research and Higher Education
South Africa's leading universities and research organisations have also been severely affected by the Trump administration's decisions. Hundreds of grants were cancelled and others not renewed. The SA Medical Research Council, coordinating the response from the biomedical research sector, had initially requested R150 million in emergency funding. This figure has since risen to R400 million. This increase follows offers from two large donors willing to support the MRC and affected universities. The support is contingent on co-funding from the South African government. The MRC had estimated a staggering $109 million (R2 billion) funding gap due to the US withdrawal of support. As Treasury weighs emergency funding, this shortfall becomes even more critical.
Navigating Budget Constraints
Despite these pressing demands, the Treasury's latest budget iteration has seen a reduction in the provisional additional allocations to health's baseline. This is primarily due to the rejection of plans to raise additional revenue through a VAT hike. The provisional allocation for health, initially R28.9 billion in March, has been pared down by R8.2 billion to approximately R20.8 billion. The provisional nature means the funds are contingent on provinces meeting specific targets.
Crucially, the Treasury has affirmed that these cuts will *not* impact the previously announced plans to hire 800 unemployed doctors and other healthcare professionals. Consolidated health expenditure, while adjusted, is still projected to grow at an average rate of 5.5% over the medium term. This marginally exceeds the Treasury's projected average inflation rate of 4.4% for the period. Consolidated health expenditure is set to rise from a revised R277.2 billion in 2024/25 to R296.1 billion in 2025/26. It will further increase to R310.7 billion in 2026/27 and R325.8 billion in the outer year. Their decision-making process is especially vital when the Treasury weighs emergency funding against these forecasts.
The Treasury's final decision on these urgent funding requests from the Health Department and the MRC is anticipated in the period ahead. The nation grapples with the profound implications of these international funding shifts.