Treasury to spend R19.3bn buying Covid-19 vaccines

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National Treasury has provided an update on how Covid-19 vaccines will be funded. (Photo: Reuters)
National Treasury has provided an update on how Covid-19 vaccines will be funded. (Photo: Reuters)
  • Government will prioritise the rolling out of Covid-19 vaccines to save lives and support the reopening of the economy, Treasury says.
  • Government estimates total funding for vaccines could come to R19.3 billion – this will be funded through budget allocations, and possible withdrawals from the contingency reserve and emergency allocations.
  • Vaccines will be provided free of charge, in line with need and rollout schedules, and private providers will be able to claim from medical aid schemes.

Government estimates that total funding for Covid-19 vaccines could come to R19.3 billion, and it is prepared to fund this through the budget and - if necessary - withdrawals from the contingency reserve and emergency allocations, National Treasury highlighted in the 2021/22 budget review.

Finance Minister Tito Mboweni tabled the national budget in Parliament on Wednesday. During his speech he addressed concerns on where funding for Covid-19 vaccines may come from.

Treasury director general Dondo Mogajane had previously said that a number of options were being considered, such as tax revenues, further borrowing, reprioritisation of expenditure or withdrawals from the National Revenue Fund.

The vaccine rollout will be free for the majority of citizens, and private providers will be able to claim back the cost from medical aid schemes, according to a Treasury official.

No new taxes

Government will not be introducing a special Covid-19 tax, as tax experts had previously highlighted as an option. A Treasury official also confirmed to Fin24 that the tax revenue windfall in the latter part of 2020 also meant no new taxes would have had to be introduced.

"Funding for vaccine procurement and rollout is drawn from the national budget. Since the state is procuring vaccines on behalf of both the public and private sectors, some revenue will return to the fiscus when private providers buy vaccines from the state," Treasury said in its budget review.

Treasury said that the rollout of Covid-19 vaccines is a priority to save lives and support the reopening of the economy. Government aims to have 67% of the population, or 40 million people, vaccinated by the end of the year.

Government has allocated R9 billion over the medium. term for the rollout of vaccines.

The breakdown of the allocation is as follows:

  • The Department of Health is allocated R6.5 billion to procure and distribute vaccines.
  • The South African Medical Research Council will be allocated R100 million for vaccine research.
  • Provincial health departments are allocated R2.4 billion to administer vaccines.
  • The Government Communication and Information System is allocated R50 million for a communications campaign on vaccines.

Apart from the main budget, allocations are also made through the "Covid-19 component" of the HIV, tuberculosis, malaria and community outreach grant – which was introduced in the June 2020 special adjustments budget.

For the current year, R1.3 billion has been allocated to vaccine purchases.

"Given uncertainty around final costs, an estimated R9 billion could be drawn on from the contingency reserve and emergency allocations, bringing total potential funding for the vaccination programme to about R19.3 billion," the review read.

The contingency reserve has been increased from R5 billion to R12 billion to make room for possible withdrawals for the Covid-19 vaccines, according to the budget review.

TERS extended

As part of government's Covid-19 response, the special Covid-19 social relief or distress grant and the Temporary Employer/Employee Relief Scheme (TERS) administered through the Unemployment Insurance Fund has been extended for an additional three months, the review highlighted.

Treasury said that these response measures to Covid-19 do not add to longer-term expenditure, as underspending in national departments had offset spending additions targeted at the rollout of Covid-19 vaccines and social relief.

The review also indicated that social security funds are expected to run large cash deficits in the current year due to higher spending by the UIF in response to Covid-19. The deficits will be offset by cash surpluses recorded by public entities, Treasury indicated.

Last week 80 000 Johnson & Johnson Covid-19 vaccine shots arrived in the country. These are being administered to healthcare workers as part of a vaccine implementation study by the national health department and the South African Medical Research Council, Health24 reported. Up to 500 000 jabs of the Johnson & Johnson vaccine will be provided to SA for free, as it aids research on how willing South Africans are to receive the vaccine, as well as to see how it works against the variant 501Y.V2, which is dominant in South Africa. About 80 000 new doses are expected to be received this weekend, News24 reported.

The country had previously procured the Oxford-AstraZeneca from the Serum Institute of India, but the rollout of these doses was put on hold as a new study found it provides minimal protection against the 501Y.V2 variant, News24 previously reported.

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