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Health Sector:Public Expenditure Review 2010/11

Kikuli, R. and Ally, M. (2012) Health Sector:Public Expenditure Review 2010/11. Technical Report. UNSPECIFIED. (Unpublished)

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Abstract

The main objective of Health Sector Public Expenditure Review for fiscal year (FY) 2011 (PER FY11) was to assess the budgetary allocations and expenditures to inform stakeholders about progress made in key health financing milestones over the 2006/07–2011/12 period. Specifically, the Health Sector PER sets out to provide: A review of PER FY10 findings and actions taken by the sector in response to those findings, indicating unaccomplished/pending actions, and identifying follow-up actions for FY11, Analysis of the trend of recurrent and development budget and expenditures for the past five FYs, Analysis of the trends in the sources of funding for the health sector for the past five FYs, Analysis of budget and expenditure trends for the different sectoral and subsectoral levels including the central-local government split, Assessment of budget performance (allocation versus actual spending) by classification (development and recurrent), funding sources (government funding and foreign funding), and different levels (central and local), Analysis of the core or priority areas/items of expenditure as highlighted in the Health Sector Strategic Plan III (HSSP-III) and the National Strategy for Growth and Reduction of Poverty (MKUKUTA) , A detailed analysis of income and expenditure at the district level. Public health sector financing has more than doubled over the five-year period under review, but the share of the health budget in the total government budget still remains below the 15 percent recommended under the Abuja Declaration. The health sector budget has increased in nominal terms from TZS520 billion in 2006/07 to TZS1.164 trillion in 2011/12. However, the share of public spending on health out of total government expenditure (excluding Consolidated Fund Services [CFS]) declined from 13.1 percent in 2009/10 to 12.0 percent in 2010/11; while the share of public health allocation in the total government budget (excluding CFS) also declined from 12.3 percent in the 2010/11 budget to 10.0 percent in the 2011/12 budget. This level of expenditure (which includes donor funding) is below the Abuja target, despite the government’s stated commitment to increase the share of health allocation in the budget to 15 percent of the total government budget.1 In 2010/11, public health expenditures were only about 2.7 percent of GDP, while public health budgetary allocations were down to 2.8 percent of GDP in the 2011/12 budget compared to 3.5 percent of GDP in the 2010/11 budget. Per capita public health allocations have almost doubled in nominal terms between 2006/07 and 2010/11, but the real increase was only modest. Further, per capita health spending is still low, and falls significantly short of the World Health Organization (WHO)-recommended target of USD54 to address health challenges, and is well below the HSSP-III projections of USD15.75 per capita spending by 2009/10. In nominal terms, public health allocations per capita increased by 108 percent from TZS13,785 (USD11) in 2006/07 to TZS28,673 (USD19.80) in 2010/11 before falling (by 7 percent) to TZS26,563 (USD17.30) in 2011/12. Actual per capita health spending increased by 58 percent from TZS13,698 (USD11) in 2006/07 to TZS21,635 (USD14.90) in 2010/11. In real terms, however, per capita allocations for health increased by 70 percent from TZS9,069 (USD7.30) to a peak of TZS15,425 (USD10.60) in 2010/11 before falling to TZS13,348 (USD8.70). Actual public health per capita expenditures rose from TZS9,012 (USD7.20) to a peak of TZS12,818 (USD8.80) in 2009/10, and down to TZS11,639 (USD8) in 2010/11, which is a 10 percent decline. Government funding remains the dominant source of health sector financing, but the share of foreign financing in health has increased noticeably during the period under review.3 Government contribution to health expenditures declined from 71 percent in 2006/07, reaching a low of 53 percent in 2010/11, and is estimated at 59 percent of the 2011/12 budget. However, because of much higher execution of local funds in the implementation of the budget, the share of government funds in the actual health spending has always remained above 60 percent throughout the review period. The share of external health financing increased from 29 percent in the 2006/07 budget to a maximum of 47 percent in the 2010/11 budget, and is estimated at 41 percent in the 2011/12 budget. Also, it is worth noting that foreign funding still accounts for a dominant (88.8 percent) share of the development budget in health interventions. This trend points to a potential threat to the sustainability of health sector financing in case of unanticipated declines in donor funding in the sector. The performance of the health sector budget execution was satisfactory throughout the review period, but it still remains vulnerable to low execution of foreign funds, and persistent challenges in the execution of the development budget, notably the low absorption capacity of spending units, non-release of funds, delays in the release of funds, and lengthy and cumbersome procurement processes. The execution of the health sector budget was generally good throughout the review period, with annual average execution of 91 percent, except for 2010/11 when only 75 percent of the budgeted funds were utilized. The performance of the recurrent budget has been generally higher than the development budget, which recorded a very low execution of 57 percent in 2010/11. Performance of government funds was generally higher than foreign funds for the past three fiscal years. With regard to foreign funds, the execution of basket funds was better than the non-basket funds, which recorded a very low execution of 51 percent in 2010/11. Budget performance continues to be hindered by among other factors: the low absorption capacity of the spending units; delays in the release of funds; non-release of the funds; over-ambitious budgeting (given the past performance); and lengthy and cumbersome procurement processes, which affect particularly the implementation of development projects. The overall performance of the recurrent budget for the Ministry of Health and Social Welfare (MoHSW) departments is excellent (92.7 percent), except for the Social Welfare and Finance and Accounts Departments that only have average performance, and the Internal Audit Department, which has poor performance with an execution of only about 34 percent. The poor performance of the Audit Department is due to non-release of the allocated funds. Non-release of funds to the Audit Department threatens the functioning of the unit and the entire public financial management (PFM) system of the MoHSW. Health sector financing continues to be concentrated at the central level, and the pace towards decentralization has slowed in 2011/12. However, there is a significant share of XVII health financing that is centrally controlled, but goes to the local level in the form of pharmaceutical and medical supplies. The share of public health financing controlled at the central level has declined generally, from 64 percent in 2006/07 to 60 percent in 2011/12. However, if the pharmaceutical component is excluded from the central spending, the share of health financing controlled at the central level goes down to 37 percent in 2011/12. The share of medicines, which eventually go to the local level, has increased from 15 percent of the health budget in 2006/07 to 28 percent in 2010/11, before declining to a projected 20 percent of the health budget in 2011/12. The other sources of funding at the local level (which are mostly off-budget) increased from 7 percent in 2009/10 to 14 percent of the council budget in the 2010/2011. Actual expenditure from councils’ own resources remained constant at 2 percent, which raises a concern about the sustainability of health interventions should there be a shock to the funds from the central level (government and development partners). Complementary health financing continues to grow in importance, but only a small proportion of the Tanzanian population (about 14 percent) is currently insured with the National Health Insurance Fund (NHIF) and Community Health Fund (CHF) based on the current estimates from NHIF reports. Between 2007/08 and 2010/11, receipts from the Health Service Fund (HSF) have almost doubled. Although this could be reflecting an increase in population, it is also reflecting the fact that majority of the population is not insured; only 14 percent of Tanzanians are insured (NHIF and CHF combined). Further, the HSF still has unspent balances, which in 2010/11 were equivalent to 20 percent of the receipts, a decline from 26 percent observed in 2009/10. In both 2009/10 and 2010/11, more was spent than collected which resulted in the decrease of the unspent balance. NHIF continues to accumulate huge reserves although compared to 2008/09 figures, they have declined from 63 percent to 59 percent of the total annual income. These funds (HSF and NHIF) should be used to improve health services promptly while maintaining prudent, actuarially determined reserves. Holding very large reserves defeats the whole purpose of collecting these funds. Following the accreditation of the Drug Dispensing Outlets, and improvements in the procurement of medicines by the Local Government Authorities (LGAs) from the Medical Stores Department (MSD), access to tracer drugs has significantly improved in the LGAs. Access to tracer drugs from the sampled health facilities was found to be high. This reflects efforts made by councils in procuring medicines from the Medical Stores Department but also accrediting Part I Pharmacies and Accredited Drug Dispensing Outlets (ADDOs) to serve the NHIF/CHF clients. These pharmacies and ADDOs are key conduits for making medicine accessible to rural marginalized areas, and more efforts should be made to work with ADDOs. This is also an area where the CHF funds could be used effectively. Following the improvement in the budget allocation for training and deployment of human resource for health, the overall human resource gap has narrowed to 41 percent in 2010/11 from 65 percent in 2006/07. The improvement in budget allocation for training and deployment of human resources for health has helped in bringing the overall human resource gap down to 41 percent in 2010/11. In terms of cadres, the gap for assistant medical officers (AMOs) has almost closed (73 percent available), followed by laboratory technicians (63 percent available), but the shortage of dentists and pharmacy technicians still persists (only 35 percent and 59 percent available, respectively). Despite the government’s stated commitment to increase the share of health sector financing in the government budget to at least the 15 percent recommended in the Abuja Declaration, this has yet to be achieved, and the share has fallen below 12 percent in 2011/12. It is important that this commitment is honored with the deserved political will if progress is to be made in addressing the key challenges in the sector, particularly in human resources (recruitments to fill the existing gap identified in the HSSP-III and retention of workers) and infrastructure. Execution of the development budget continues to be plagued by several impediments, including: low absorption capacity; non-release or delayed release of funds; and complexities in the procurement processes. Efforts should be increased to address these impediments to ensure smooth implementation of the budget. Although the delivery of health services is largely concentrated at the local government level, the largest share of health sector financing is still managed at the central level. Despite this observation, it is worth noting that a significant portion of the funds managed at the central level eventually goes down to the local level, particularly in the form of drugs and medical supplies. Nonetheless, the process of decentralization should be expedited, with particular focus on capacity strengthening for local government authorities in the areas of financial management and procurement. The poor performance of the Internal Audit Unit of MoHSW due to non-release of the allocated funds threatens the functioning of the department and the entire PFM system of the MoHSW. Thus, it is imperative to release funds as budgeted so as to enable the unit to perform its functions effectively. Efforts to promote enrollment of households in the CHF are evident at different levels. Lessons from best-performing districts and programs such as Tanzanian German Program to Support Health and the Swiss Development Cooperation-funded CHF Strengthening program in Dodoma should be harnessed and applied nationwide. The major actors here include NHIF and LGAs. Accreditation of Part I Pharmacies and ADDOs to serve the NHIF/CHF clients is an excellent move. These pharmacies and ADDOs are key conduits for making medicine accessible to rural, marginalized areas and more efforts should be made to work with ADDOs. The NHIF and Tanzania Food and Drugs Authority are key actors here. The government should intensify efforts to strengthen the linkages between CHF and NHIF in working towards universal coverage.

Item Type: Report (Technical Report)
Keywords: Health Sector, Public Expenditure Review;Health Financing;Tanzania
Subjects: Health Systems > Health financing & economics
Divisions: Ministry of Health and Social Welfare
Depositing User: Mr Joseph Madata
Date Deposited: 12 Nov 2012 05:21
Last Modified: 12 Nov 2012 05:21
URI: http://ihi.eprints.org/id/eprint/828

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