Govt scales back health budget

Development expenses reduced, hospital services cut too
<p>A new Emergency Ward has been inaugurated in Mayo Hospital Lahore on February 7, 2022 (Photo: Online/ File)</p>

A new Emergency Ward has been inaugurated in Mayo Hospital Lahore on February 7, 2022 (Photo: Online/ File)

With the country still reeling from the after-effects of the Novel Coronavirus (Covid-19), with a new variant discovered just a few weeks ago and a slew of new poliovirus cases after a 14-month gap, the federal government on Friday announced budgetary allocations for the sector which hinted that it may be scaling back some of the services.

During his budget speech in the National Assembly on Friday afternoon, Federal Finance Minister Miftah Ismail announced that the government will allocate Rs24 billion for the sector.

“An amount of Rs24 billion has been allocated to provide better health services to the people, control and eradicate viral diseases, provision of medical equipment, vaccination and enhancement in the capacity of health establishment,” he had said.

However, a closer look at the budget documents showed that the quoted figures and intentions were far from what the government is actually willing to commit to.

The budgetary allocations show that the government had allocated Rs28.35 billion in the outgoing fiscal year of 2021-2022. However, it went far over that budget during the course of the year, spending 446.35% more, or around Rs154.89 billion.

The increase in expenditure was driven by higher spending on the public health services where Rs126.2 billion were spent despite an initial allocation of just Rs849 million, an increase of 14,764.5% increase.

However, the incoming financial year will see these expenditures scaled back further. Primarily, the scale back has taken place in the hospital services sector where the government allocated Rs23.98 billion last year and ended up spending Rs25.16 billion. In the incoming fiscal year, the government has budgeted the sector at Rs14.86 billion - a 40.94% decrease.

Elsewhere, the government aims to nominally enhance spending on the public health services and health administration sectors, increasing by Rs151 million and Rs203 million respectively.

In FY 2022-23, the government has allocated Rs1 billion for public health services and Rs3.692 billion for health administration.

Development expenditure

Of the total allocation, the government has allocated Rs12.46 billion for the development of projects while the remaining, Rs7.122 billion for non-development expenditures.

This is far less than the Rs21.75 billion allocated last year - of which only Rs1.36 billion was spent.

Within the development allocations, the government has decided to scale back the allocations for hospital services, for which Rs12.82 billion were allocated last year but has now been cut down to just Rs120 million.

In the public health services sector, where Rs2.715 billion was allocated last year, and Rs1.326 billion was spent, the government has allocated only Rs1.157 billion for the upcoming year.

The biggest increase has been for the health administration sector where Rs6.216 billion were allocated in the outgoing year while Rs11.186 billion have been allocated in the upcoming fiscal year.

There has been no allocation for research and development.


Apart from the budgetary allocations, the government has decided to reverse restrictions or grant exemptions to items used in the health process.

These include exemptions on medical equipment such as organs including eye cornea, artificial kidneys, hemodialysis machines, hemodialyzers, fistula needles, dialysis fluids, tubing lines, reverse osmosis plants for dialysis, double lumen catheters and catheters for renal failure. The tax cost of this will be Rs604 million.

Moreover, over 100 pharmaceutical raw materials have been exempted.

These include raw materials imported for the manufacture of contraceptives under the input-output ratios determined by the Directorate of Input-Output Co-efficient Organization. Contraceptives and accessories thereof, have also been exempted. The goods had a tax cost of Rs85 million.

Items imported for use of specially-abled people such as wheelchairs, artificial limbs and items for rehabilitation of the blind have also been exempted. The tax expenditure for this move was Rs205 million.

Further, disposable equipment not manufactured locally, but is used in cardiology/cardiac surgery, neurovascular, electrophysiology, endosurgery, endoscopy, oncology, urology, and gynaecology; such as stents, will be exempt.

The tax exemption for the sector will cost the government Rs753 million.

Similarly, the government has exempted diagnostic kits for HIV and hepatitis which had a tax expenditure of Rs406 million.

Further, the import of active pharmaceutical ingredients by the pharma sector worth Rs1.892 billion has been exempted.

Likewise, chemicals imported by the pharmaceutical sector worth Rs525 million in taxes annually have been exempted.

Some 32 life-saving drugs which had an annual tax expenditure of Rs10.179 billion have also been exempted.

Around 35 items used as packing materials / raw materials for packaging by the pharmaceutical sector have also been exempted. The annual tax expenditure on this was Rs1.159 billion.

Diagnostic kits/ equipment used by the pharmaceutical sector with a tax expenditure of Rs3.591 billion has also been exempted.



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