Industry Trend Analysis - Fiscal Pressures Will Drag On Government Health Spending - APR 2017

BMI View: El Salvador's budget for 2017 signals a deteriorating outlook for the country's pharmaceutical s and healthcare market. A potential reduction in government health spending poses downside risks for drugmaker revenues , although the extent of the cuts will depend on the efficiency of other fiscal departments. While El Salvador will avoid sovereign default in 2017, tepid growth and st ructural weakness will prevent a significant economic recovery and increase the pressure on health spending in 20 18, 2019 and beyond .

El Salvador's pharmaceutical and healthcare market will remain unattractive to multinational drugmakers as the country's economic turmoil manifests itself in reduced public expenditure. The government's annual budget, approved in January, estimates a 0.5% decrease in social security health spending from USD627.8mn in 2016 to USD624.8mn in 2017.

In releasing the budget, El Salvador's Finance Minister, Carlos Caceres, acknowledged that the government's resources are extremely limited and asked individual ministries to prioritise funds for the needs of the public. A breakdown of the health budget has not been released, and the Ministry of Health (MoH) is yet to decide which areas will be targeted for cuts. Caceres suggested that government health spending may be expanded through H217 after monitoring the budget execution of other ministries, but this is not confirmed.

Revised Market Forecast
El Salvador - Govt. Health Spend (USDbn) & Growth (%), 2016-2026
e/f = BMI estimate/forecast. Source: BMI/World Health Organization (WHO)

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