Data provided by iNet BFA
Loading...
See More

'NHI plan needs economy to grow 7%'

Oct 20 2010 11:46 Sapa

Related Articles

Shisana: NHI tax deductions to start soon

No escape from NHI cost

NHI won't change dual system

ANC wants to implement NHI in 2012

NHI could cripple private sector

'NHI too costly for SA' - study

 
Johannesburg - The proposed National Health Insurance (NHI) scheme will require that the South African economy grows by an "improbable" 7% a year, consultancy Econometrix said on Wednesday.

Implemented in its current form, NHI could squeeze out other forms of spending such as education, housing and productive infrastructure.

Its analysis comes a day after Reserve Bank Governor Gill Marcus said she expected growth this year to be about 2.8%, increasing to 3.2% in 2011.

Econometrix said the proposed NHI budget released by the ANC at its recent national general council meeting in September meant that the country would not only have to achieve a growth rate of 7%, but sustain it for 13 consecutive years.

"It is far more likely that South Africa will experience growth of between 3.5% and 4.5% per year over the period that the NHI is implemented," said Econometrix's Tony Twine.

"[This] would result in health care expenditure consuming between 22.8% and 28.2% of all government spending and up to 8.5% of GDP by 2025."

In the lower growth level scenarios outlined in the ANC document, healthcare spending would reach nearly 40% of total government revenue by 2025, while at 3.5% it would increase to 28% by the same date.

Government would have to raise the additional funds for the NHI either by increasing taxes or taking on more debt.

Increasing the general tax load too much would simply weigh down the economy, limiting its ability to stimulate growth and create jobs.

"There would also be little point in government borrowing more to fund the NHI, as government would then have to hive off more money to fund the interest repayments," Twine said.

"Policy makers will need to sharpen their pencils and perhaps cut back on some nice-to-haves in the proposed NHI if it is to be sustainable. "

Twine said a crucial early indicator of government's intentions around the NHI proposal would be the Medium Term Budget Policy Statement to be presented by Finance Minister Pravin Gordhan on October 27.

      
gill marcus  |  nhi
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
22 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're talking about:

Small Business

A cash flow crunch often occurs in small businesses trying to balance cash coming in with cash going out. Watch this video to help you improve.
 
 

Disregard of interest rate impact deplored

A Fin24 user protests what he sees as disregard of the broader impact of increased interest rates on those who cannot yet say "bring it on" with a smile.

 
 

Start saving...

No need to keep up with the Joneses
Where can you stash your cash?
Time the key for retirement saving
Dummy's guide to saving

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...