Providing sustainability of harm reduction programs with funds from beer, ethyl alcohol and cigarettes excise duty

The funds allocated to the Ministry of Health for promotion of citizens’ health on annual basis, from beer, ethyl alcohol and cigarettes excise duty, , are potential source for funding of harm reduction programs. Half of the funds collected from this source, are spent for the Ministry’s current expenditures, instead of providing health care.
 
The Ministry of Health and the Macedonian Government have at their disposal many opportunities for providing sustainability of the 16 active harm reduction programs, implemented by 10 civil society organizations in the country. These should be seriously considered in the development and budgeting/operationalization of the 2017-2021 National HIV Strategy, especially since the financial support received from the Global Fund to Fight HIV/AIDS, Tuberculosis and Malaria designated for these purposes is ending on June 30, 2017. Consequently, if the Global Funds’ participation is not compensated with funds provided from the National Budget, Macedonia is going to face a severe increase in the HIV incidence, other blood-borne diseases, and other consequences to the health of people who use drugs.

The amount of funds that the Ministry of Health and the Government are expected to provide for the harm reduction programs is insignificant and won’t disrupt the budget stability in any way. It is only 0.5 % of the total budget of the Ministry of Health or 0.02 % of the Central Budget of the Republic of Macedonia.

In order to provide funds for harm reduction programs, as was specified in an analysis conducted by HOPS, the state needs to allocate 34,864,473 MKD (566,902 Euros) annually from the State Budget for the optimum model or 31,613,030 MKD (514,033 Euros) for the minimal model. 

The Ministry and the Government have the following two options at disposal to provide these finances immediately: designate some of the capital collected from the beer, ethyl alcohol and cigarettes excise duty regulated with the Law on Health Protection, commonly spent on purposes not determined by the Law, or revise the unspent budget of the Ministry’s programs (the text further elaborates in detail the first option). 

At the Government’s proposal, the Assembly voted the amendments to the Law on Health Protection, whereupon the Government undertook to increase the Ministry’s budget for the amount of funds collected from beer, ethyl alcohol and cigarettes excise duty, all towards protection of the citizens’ health (Official Gazette no. 43/2012 from 29.3.2012, Official Gazette no. 87/2013 from 17.6.2013 and Official Gazette no. 188/2014 from 19.12.2014). The last amendment prescribed providing a Denar per litre of beer, 40 Denars per litre of ethyl alcohol and 0.053 Denars per cigarette for exercising the guaranteed rights and established needs and interests of the citizens in healthcare from the Budget of the Ministry of Health.
 
“Article 16, paragraph 4 from the Law on Health Protection   the funds for exercising the guaranteed rights and established needs and interests of the state referred to in paragraph (1) of this Article shall be provided from the Budget of the Republic of Macedonia and from a part of the beer excise in the amount of 1 Denar per litre/percentage of alcohol and from a part of the ethyl alcohol excise in the amount of 40 Denars per litre pure alcohol as well as from a part of the cigarette excise in the amount of 0.053 Denars per cigarette towards procurement of medicine for rare diseases.”
 
With the amendments to the Law on Health Protection, the Government, among other, undertook the obligation to finance the 16 harm reduction programs with finances collected from the beer, ethyl alcohol and cigarettes excise (Article 16, paragraph 1).
 
“Article 16, paragraph 1 from the Law on Health Protection  All citizens of the Republic of Macedonia shall be ensured the exercise of the guaranteed rights, established needs and interests, that is:

 - measures and activities for protection against the harmful impacts of gasses, noise, ionizing and non-ionizing radiation, pollution of the water, soil, air and food on the health of the population, and other harmful impacts on the living and working environment, 
- measures and activities for maintaining the health of the population, 
- measures and activities for detection, prevention and eradication of infectious diseases, 
- provision of hygienic and epidemiological minimum of the population,
- prevention and treatment of quarantine diseases and drug addiction, 
- measures and activities for protection of women during pregnancy, delivery and breastfeeding and protection of infants,
- measures and activities for organization and promotion of blood donation, 
- covering the costs of people on dialysis, 
- provision of medicaments for patients with transplants, 
- provision of cytostatics, insulin and growth hormone,
- measures and activities determined by special programs and
- emergency medical care in accordance with the established network of healthcare institutions.”


After the amendments to the Law were implemented from 2013 to 2015, the Ministry of Health collected 1,026,037,787 MKD from  beer, ethyl alcohol and cigarettes excise. The amount of funds that the Ministry receives from this source increases every year for around 152 % (see chart 1), which represents  62 % (see chart 2) of the total budget of the Ministry’s self-financing activities. However, despite the increasing trend, the Ministry annually spends around 53% from the available funds on realization of measures and activities towards promotion of the public health. From 2013 to 2015, the Ministry spent only 541,747,952 MKD from the funds collected from this source. The remaining 484,289,835 MKD were spent for salaries and operational expenses; for the work of the State Sanitary and Health Inspectorate, the Agency for Medicines and the Accreditation Agency; for reconstruction of public health institutions and procurement of medical equipment. The remaining amount was not spent for the purposes prescribed with the Law on Health Protection (see chart 3). The Ministry of Health has to provide only 21.6 % (out of 484,289,835 MKD) from the non-purposeful use of funds for the optimal model, or 19.58 % for the minimum model.

Furthermore, it remains unclear how the Ministry of Health prioritizes the distribution of the finances collected from excise duty. From 2013 to 2015, more than one third of the finances (40.30 %) were spent on one program (the Program for Participation aimed for people with health insurence), with the least amount spent on the Program for Prevention and Eradication of Brucellosis (0.03 %). Such distribution and spending indicates that the Ministry of Health should urgently establish criteria for distribution of finances collected from the beer, ethyl alcohol and cigarettes excises among  different budget programs. 

Darko Antik, MSc
 
Darko Antik since 2011 is Coordinator of the program for budget monitoring and analysis in the Association for Emancipation, Solidarity and Equality of Women (ESE). As part of ESE’s team, he works on promotion and advocating for: creating human rights-sensitive macroeconomic environment and policies aiming towards satisfying citizens’ needs; creating public budgets towards meeting citizens’ needs; developing budgets  based on the principles of efficiency, effectiveness, cost-effectiveness and transparency; financially transparent and accountable public administration; participative and opened budget processes; consistent implementation of health policies and programs etc.

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