As part of its moves to achieve a balanced budget this year, the government has decided to hold back the construction of eleven new hospitals scheduled to begin this year.

Originally slated under the current Eighth Malaysia Plan, these hospitals will likely be held back until the Ninth Malaysia Plan, which will run for five years beginning 2006, Health Minister Dr Chua Soi Lek told a press conference at the Health Ministry in Kuala Lumpur this morning.

He assured, however, that there will be no cut-back on essential services, staff salaries and training programmes, despite the massive cost-cutting of healthcare expenditure.

"The budget cuts were made with a view of trying to balance the national budget and to emphasise on wise and prudent spending. We cannot touch salary, essential services, training and other life-saving areas," he said.

This disclosure by the minister today is a direct turnabout from what was revealed by his deputy Dr Abdul Latiff Ahmad in Parliament yesterday, who had slammed malaysiakini's exclusive report on the budget cuts as being "not true" and "blown out of proportion".

Treasury's instruction

On Tuesday, malaysiakini reported that the budget slashes were a result of a directive from the Treasury requiring that all ministries cut back on their 2004 spending to that of 2003 levels. The Treasury also stated that there would be no increase in financial allocation for 2004.

This new directive means that the Health Ministry would need to reduce its spending by about RM3.8 billion - from the RM9.5 billion originally planned for 2004 to RM 5.7 billion set the previous year.

Malaysiakini

also revealed that as a result of the cost-cutting measures, the Health Ministry will not be able to meet staff salaries by as much as RM210 million.

In order to meet the shortfall, the ministry has directed all department heads to 'review' overtime salary payments, and hold off the creation or filling of any new positions, unless critical and necessary.

Critical areas

Addressing the issue of the overtime pay 'review', Chua said that such moves are nothing unusual, as "reviews are done from time to time by the ministry".

However, he said he was unable to provide details on how overtime salaries would be affected under the budget cuts.

When asked whether the fiscal reductions will place additional stress on a health system already burdened by not enough doctors and long patient queues, Chua indicated that the postponement of the 11 hospital construction projects will serve to loosen up money for use in more critical areas.

Earlier in April, Chua hinted that the ministry may not go ahead with its plans to build 11 hospitals that were still in the planning stage, out of the 36 new hospitals slated under the Eighth Malaysia Plan. Eight of these have been completed, while 17 are still under construction.

The minister revealed that new hospitals construction is expected to account for half of the ministry's original RM9.5 billion budget before the Treasury-directed cuts.

The belt-tightening have come amidst the government's announcement last week that the present doctor-patient ratio in government hospitals stands at a disconcerting one to 5,000.

All ministries affected

Despite the deficits, the government also announced it will be implementing a two-tier health system within publicly-funded hospitals.

Government hospitals will soon accommodate 'private wings', which allow the rich to get faster, and possibly better, treatment, at a price.

At a budget consultation early this month, Prime Minister Abdullah Ahmad Badawi announced intention to slash this year's budget deficit from 5.4 percent to less than 4.5 percent, through a reduction in government expenditure.

Prior to this however, it was only known that the government would be cutting back on development expenditures, not essential services.

But malaysiakini has learnt that the Treasury's cutbacks will affect all ministries, not just health.

The cuts will allow the government to put a lid on its mounting debts, which have risen to 48 percent of gross domestic product in 2003 from a low of 20 percent in 1996, after six consecutive years of budget deficits.