The effect of R40bn in spending cuts will be felt most in the public health system, the provision of free basic services, the roads network, and in the limitations placed on water and electricity provision in rural areas, Treasury documents show. Michael Sachs, head of the budget office, said the top concern was the health budget, which although still growing in real terms — there is a 8.2% increase over the three-year period — was under acute pressure. This was because of fast-rising costs for items such as medicines, brought about mainly by the rand exchange rate. "We would have liked to allocate more money to health, but we are unable to do that now," he said. The local equitable share to municipalities, which provides funds to subsidise free electricity and water for the poor, would be "more thinly stretched" and "is not growing as fast as utility prices or the growth in the number of households", Sachs said.
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