South Africa Plans Increased Health and Defense Spending Following U.S. Aid Cuts
South Africa’s lawmakers aim to increase health and defense funding following U.S. aid cuts, proposing a 0.5% VAT increase that will raise living costs. An additional 28.9 billion rand is to be allocated for health services, ensuring salaries for thousands of medical staff. The budget’s approval is pending, while the government seeks to address funding gaps due to U.S. funding cuts and enhance military capabilities.
Lawmakers in South Africa plan to bolster funding for health and defense budgets while increasing value-added tax (VAT) by 0.5%, which will raise living costs for consumers. An additional 28.9 billion rand (approximately $1.5 billion) has been allocated for health services in the 2025 budget, according to Finance Minister Enoch Godongwana. This effort comes as a response to reduced U.S. aid following budget cuts instituted during the previous administration.
The additional funding will support the salaries of approximately 9,300 medical staff and 800 newly graduated doctors, contributing to a projected increase in overall health spending, from 277 billion rand in 2024/25 to 329 billion rand by 2027/28. Amid these changes, South Africa’s health system, which manages the world’s largest HIV population with 5.5 million individuals on life-saving antiretroviral drugs, faces strain due to cuts from USAID (U.S. Agency for International Development).
In February, the Trump administration canceled PEPFAR, which funded more than $400 million annually for South Africa’s HIV programs. Although 74% of the nation’s HIV response is funded locally, U.S. contributions account for about 17% of the total AIDS budget. Despite being one of the more developed nations in Africa, South Africa continues to struggle with significant debt and sluggish GDP growth.
The health ministry is set to engage in discussions concerning the allocation of funds, particularly addressing the gaps resulting from U.S. funding cuts. Spokesperson Foster Mohale remarked on the uncertainty of how assistance will be provided to those affected by the funding freeze, assuring that details will be communicated shortly. The current budget requires parliamentary approval, wherein upcoming debates will determine its acceptance before being voted on.
Additionally, 5 billion rand ($271 million) has been reserved to enhance military capabilities, reinforcing South Africa’s commitment to regional peacekeeping amidst escalating violence in eastern Congo. To finance increased spending across health, education, and security, the government intends to raise VAT by 0.5% in 2025–2026, with an additional increase planned for the following year, bringing the VAT rate to 16% by 2026–2027. Finance Minister Godongwana defended this approach against criticism, emphasizing that it is a necessary measure to prevent additional cuts and support social welfare initiatives.
In conclusion, South Africa’s legislative actions reflect a commitment to enhancing health and defense budgets amidst reductions in U.S. aid. The proposed VAT increase aims to cushion the impacts of funding cuts while ensuring sustained support for critical health and social services. However, these measures have sparked discourse on the broader implications for the cost of living and economic pressures faced by the citizens of South Africa.
Original Source: abcnews.go.com
