Final Report:Health sector Public Expenditure Review(PER) update financial year (FY) 06

The Public Expenditure Review update for FY2005/06 (FY06) takes a slightly different form from previous years. A summary briefing paper was provided for discussion at the Annual Joint Heath Sector Review, while this later report has been provided as input to the Cluster PER and the budget process for FY2007/08. The change in timing had some negative consequences in that it overlapped with the final stages of the budgetary process for FY2006/07, making it more difficult than usual to access key individuals and data. Review of the PER findings and recommendations for FY05 found that there had been some progress in the area of lobbying for additional funds for that year’s budget, that it had been agreed to review the allocation formula for drugs and medical supplies, and that a tracking study on all drugs and supplies within the sector had been initiated. However, other recommendations had not been followed up, in part due to human resource constraints within the Department of Policy and Planning. Notable was the failure of the High Level committee on health financing, established during FY2003/04, to meet regularly and take forward the many issues in this area.\u

Public Health Sector Performance Profile 2001

\ud The health sector has been undergoing far-reaching reforms since the mid-1990s and has adopted a Sector-Wide Approach (SWAp). The reforms are being implemented at all levels and involve fundamental changes in many critical areas of the sector. The complexity of the current reforms and the challenges ahead are quite immense. Thus, close monitoring and evaluation of the health sector’s performance overtime is quite imperative. To this effect, 26 indicators, (input, process, output and outcome), encompassing financial, human, utilisation and epidemiological data have been identified and selected. The Public Health Sector Performance Profile has been developed to provide a commentary on the performance of the public health sector utilising the identified indicators. It is expected to be produced on an annual basis and will fulfill two critical roles, i.e., a tool to track the health sector reform progress year-on-year and to provide critical information for the monitoring of the health sector Poverty Reduction Strategy Paper (PRSP) targets. The work on performance monitoring in the health sector comes at quite an opportune time in light of the PRSP and Poverty Monitoring. Efforts have been made to ensure that the work in the health sector is securely anchored to these critical processes. This first profile provides baseline data for most of the identified indicators, although issues over completeness and quality of data, particularly routine and denominator data, still remains an outstanding and critical obstacle in this challenging process. Moreover, as this is a very new an innovative initiative, there may be other groups working on relevant/critical data which has not yet been accessed by the profile. Consequently, it is hoped that this profile will act as a catalyst and encourage such groups to come forward and to contribute to the next profile in 2002. Altogether, there are 26 Health Sector performance indicators, including those indicators which the health sector is expected to report on for the PRSP. There are 7 input indicators covering financial and human resources at the national, regional and district level. Process indicators consist of four in total, including the utilisation of HMIS/NSS data at the district level, proportion of public health facilities in a good state of repair, percentage of public health facilities without any stock outs and availability of drug kits in public health facilities. There are six output indicators encompassing cost sharing, OPD attendance, proportion of births attended by skilled attendants’, immunisation, malaria and consumer satisfaction. Finally, there are nine outcome indicators and these cover a number of aspects, including, maternal death, malnutrition, malaria and HIV/AIDS. Each indicator is presented under the following headings: relevance, sources of data, data quality, baseline data, discussion and future development of the indicator.\u

Final report:Health sector Public Expenditure Review (PER) update Financial Year (FY) 05

In contrast to recent years, the health sector Public Expenditure Review update for FY05 is presented largely as an internal sectoral document for reviewing trends in budget and expenditure rather than as a detailed input to the budget process due to its delayed timing and a change in the focus of the overall government poverty reduction strategy with the development of the MKUKUTA (the Kiswahili acronym for the National Strategy for Growth and Poverty Reduction, the second Poverty Reduction Strategy Paper)1. This highlights “priority cluster outcomes” rather than priority sectors, and entailed a change in the way that sector inputs to the budget guidelines were prepared and presented, together with a recognition that undertaking full sectoral PER updates would present a significant administrative burden on line ministries in addition to these changes. This document is therefore somewhat less detailed than its predecessors. The document was produced by a team led from the Ministry of Health Department of Policy and Planning, supported by an external consultant. Major constraints, as in previous years, remain the timely availability of the necessary data, both within the sector and from Ministry of Finance, together with the questionable quality of data provided by local government authorities in the absence of detailed expenditure data collated on their behalf through the Integrated Financial Management System (IFMS). Data on off-budget sources of funding, namely cost-sharing revenues and expenditures and details of off-budget external resources, remain particularly weak. Initial findings use Ministry of Finance summary data, while subsequent analysis of subsectoral spending relies on data compiled specifically for the PER update. Inconsistencies remain but are not believed to affect the major findings. Sectoral budget and expenditure trends The health sector is defined as follows: On-budget includes recurrent and development spending at MOH headquarters, allocations by PORALG to Regional Curative and Preventive sub-votes, and to Local Government sub-votes for Curative, Preventive, Health Centres and Dispensaries, together with the central PORALG development budget related to Primary Health Care rehabilitation. In addition, it includes the contribution from the Accountant-General’s Office (AGO) to the National Health Insurance Fund (NHIF) on behalf of public servants. Off-budget includes also the use of cost-sharing revenues at public sector hospitals, and through the Community Health Fund (CHF), and external funding of projects captured within the MOF External Finance database. Comments relate to on-budget funding unless otherwise specified. Key figures – on-budget Ministry of Finance data: Nominal budget outturn for FY04 rose year on year from TSh186.7bn in FY03 to TSh 218.2bn in FY04, an increase of 16.9%. This represented a real increase of 12.5% For FY05, the nominal budget rose to TSh 290.4bn, an increase of 33% on FY04 outturn. This is represents a real increase of almost 28% Final budget outturn for FY04 shows a sector share of 9.7% of overall government spending (excluding CFS) compared with FY04 PER estimates of 9.2%, This is projected to rise to 10.1% for FY05, but still falls short of the FY03 figure of 10.4% The share of government spending remains low relatively to the Abuja target of 15% Per capita spending remains low in relation to costs of delivering on health sector goals and targets at US$7.42 for FY05, but has seen a substantial increase on FY04 outturn from US$5.71 Although the sector remains severely under-funded in relation to the Abuja target of 15% of GOT budget, and in relation to recent estimates of what it would cost to provide a limited package of services to the Tanzanian population, the overall picture of both expenditure in FY04 and the budget for FY05 is more positive than it was in the previous year. Overall MOF data show that the final share of FY04 expenditure (excluding Consolidated Fund Services, CFS) was 9.7% compared to an estimate of 9.2% at the time of the FY04 PER update. It should be stressed, however, that this still represents a fall from the FY03 figure of 10.4%. In FY05, the picture is redressed somewhat with a budgeted share of 10.1% of total GOT spending (excluding CFS). In nominal terms, this represents an increase (on FY04 outturn) of 33%, while in real terms the increase is almost 28%. In nominal per capita US dollar terms, the allocation to the sector has risen from US$5.71 to US$7.42. This increase is due both to a significant rise in external funding, notably the significant inflow from the World Bank, but also to an increase in domestic recurrent funding (including General Budget support, GBS) of Other Charges. Key figures – PER data, The budgeted overall public health sector resource envelope rose in nominal terms from TSh 291.1bn in FY04 to TSh 453.2 bn in FY05, an increase of 56%, Compared with FY04 estimates of outturn, this represents an increase of 46%, This converts to a per capita US dollar figure of US11.57, a significant increase on the US$8.12 of FY04 In real terms, the increase in the value of the resource envelope represents an increase of 40$11.57 for FY052. Analysis of sub-sectoral spending is largely confined to on-budget sources, using PER data, due to lack of data on how off-budget funds are spent. For FY05, the split between the recurrent and development budgets has remained broadly stable, with recurrent spending accounting for 77% of the total on-budget. In actual expenditure terms, there was a continued slight fall in the share of recurrent spending due to improved budget performance of the development budget. Linked to the substantial absolute increase in basket and other external funding to the sector, the share of domestic funding (including GBS) in the sector budget has fallen from 23% in FY04 to almost 38% in FY05. This is largely temporary as much of the World Bank funding will move to GBS for FY06 onwards. The external share of actual outturn for FY04 was almost 28%, higher than budgeted due to the within-year reallocation to the development budget and reasonable disbursement thereof. In comparison with recent years, there has been a noticeable recentralisation of the budget in FY05, with the local government share falling from 33% of the final FY04 budget to 27% of the FY05 budget. This is largely due to the significant absolute rises in both central level GOT and basket funding, which mask a corresponding increase in the allocation for drugs and medical supplies for other levels. Another source of this shift is the increase in the budgeted GOT transfer to the NHIF, again ultimately intended to result in spending at LGA and regional (hospital) level. Although the same definitions have been used for consistency and comparison with previous years, the large share of central spending which is channeled to other levels means that this analysis is of limited use, and a more comprehensive attempt to determine the allocation of such funds to beneficiary levels is overdue. Such an attempt is made in terms of GOT recurrent funding by activity type (administration, hospital and preventive/primary), although minor concerns remain regarding the completeness of this information. The available data indicate a slight reduction in the share of actual expenditure going to Administration between FY03 and FY04, from 44% to 42%, a similar reduction to the Preventive and Primary category (from 16% to 14%), with a corresponding increase in the allocation to hospitals. This may in part be due to the reassignment of funds during the FY for the purchase of anti-retroviral drugs which are delivered at hospital level. The projected share of off-budget spending for FY05 is 6% higher than it was in FY04 at 31%. Actual off-budget expenditure in FY04 accounted for an estimated 29% of the total. Concerns regarding data quality and completeness and the assumptions used in estimation of both external and cost-sharing reduce the usefulness of this analysis. Notwithstanding, reported data indicate an increase of 51% in the nominal value of Health Service Fund (HSF) revenues, and a rise in the per capita value of such receipts from TSh59 in FY03 to Tsh87 in FY04. Community Health Fund data remain very weak, and various assumptions and extrapolations were required to reach a very tentative national revenue estimate of TSh4.75bn. Off-budget external financing estimates for FY05 were taken from the data submitted to the MOF External Finance Department, and indicate a significant increase from TSh69bn in FY04 to almost TSh 133bn in FY05. Budget performance of the on-budget sectoral total (PER data) improved in FY04, with expenditure matching net approved budget, partly due to a higher than budgeted release of funding to NHIF, and partly due to improved release of funding through the MOH headquarters development budget during the course of the year. IFMS data on MOH headquarters budget performance (release as % budget) indicate an improvement in this component of sector spending, with 97% of budgeted funds released by MOF in FY04, compared with 90% in FY03 (GOT and basket) and only 86% of the GOT share of this. In terms of absorption capacity (expenditure as % of release), MOH performance also improved, from 97.9% (GOT and basket) to 99.5% in FY04. Data on the first half year performance for FY05 indicate that over 50% over budgeted funds had been released by the end of December 2004 (50.6% of GOT funds and 62% of basket funds). Absorption of these funds was at 75% overall by end December 2004. At Regional level, expenditure as a percentage of approved estimates was 98.7% for FY04, with both Curative and Preventive sub-votes performing well. Personal Emoluments (PEs) performed slightly better than Other Charges (OCs). For the large hospitals, IFMS data indicate a 98% release of funding for FY04, with 100% expenditure of released funds. MOH HQ spending on drugs and supplies, a key input in the sector, has risen from an actual level of TSh 29.2bn in FY04 to a budgeted figure of TSh 50.2bn for FY05 (which excludes a further TSh3.5bn for anti-retroviral drugs). The health basket is expected to contribute roughly 24% of this figure. Drugs and medical supplies are expected to account for 42% of MOH OCs in FY05, up from 36.5% in FY04 (actual), while the per capita US dollar figure rises from US$0.76 in FY04 to a projected US$1.37, of which only a small proportion is currently due to anti-retroviral drugs (ARVs). More work is required in this area to ascertain total figures from all sources of funding as the PER analysis concentrates on GOT and basket funding. Budgeted allocations to councils rose for FY05 to TSh63.6bn, a 37% increase on releases during FY04. In real terms, this represents year-on-year growth of 31% in the LGA allocation. This was largely driven by an increase in the OC allocation, in contrast to the previous year where PEs accounted for the whole of the 14% increase over FY03. The nominal value of the LGA health budget (PE and OC) converts to an approximate US dollar value of $1.62 per capita. Although data for individual councils was incomplete, summary data indicate that budgeted Health sub-votes account for 17.6% of LGA allocations on average for FY05. This represents a 1% increase on FY04 which is encouraging, but also indicates that the sector has failed to attain its baseline share of 18%. Given a 14.2% reduction from original to net approved estimates for LGA OCs during FY04, it is also likely that the final share of actual expenditure could be quite different, but unfortunately data were not available to compare actual as opposed to budgeted proportions. Budget performance appeared to be satisfactory at LGA level, with PER data indicating releases of 101% of the final budget. This was driven by releases for PEs exceeding budget by 5.1% (slightly higher for urban than for district councils) which masked an 8% shortfall in the OC release (broadly similar by council type). Financial years for central and local government were harmonised from the start of FY05. In addition, the geographical allocation formula employed for the health basket was also applied to the block grant (although it remains unclear whether this was for both OC and PE components). These moves are both expected to facilitate future analysis of sectoral funding, and the LGA component thereof, and are welcomed. Although the quarterly health sector physical and financial implementation reports produced by each council are a potentially valuable source of information on the intra-district allocation of funding and on actual expenditures, for many councils they remain weak in terms of data quality and comprehensiveness. Opportunities for central level comparative analysis of LGA finances are therefore not exploited. Further efforts to improve the quality and consistency of such reports (and analysis thereof) would be worthwhile, particularly in the continued absence of IFMS data at the LGA level. As a priority sector, Health showed a slight gain in its share of overall GOT spending (as noted above) compared with FY04, but has not yet regained the level attained in the earlier years of PRSP 1. The available data suggest that spending on priority items within the sector has fallen for the second year running as a share of sector spending (GOT on-budget). The figures for FY04 are likely to have been affected by the substantial over-spend on NHIF under Vote 23, while incomplete data on spending on drugs and medical supplies for district health services may also have contributed to this picture. This should be explored in more detail in the next update. In terms of sectoral performance indicators, the substantial increases in the overall resource envelope are reflected in positive movement of the central and local government values of indicator 1 which monitor the per capita GOT allocation to health at each level. There has been a slight fall in the budget for the regional level for FY05. Indicator 2 measures the total per capita resource envelope for the sector, and has also seen a 52% increase in the year on year budget in FY05. However, in terms of the breakdown between levels of the health system, as far as the PER data were able to show, there has been a continued poor showing in terms of the allocation between central and local government shares, despite a stated commitment in the Health Sector Strategic Plan to decentralisation and to improving the performance of district health services in particular. Early agreement is required both on the terms of reference for any subsequent health sector PER update to feed into internal sectoral review and discussions, but also on the nature of any cross-sectoral PER exercise which might seek to reflect the cluster approach of the MKUKUTA. Timing will need to be arranged in order to prevent duplication of these two potentially parallel processes. The PER Working Group should be approached to help facilitate the timely and simple transfer of the necessary information for the PER update from MOF, Treasury and PORALG, among others. Ideally the PER Task Team should endeavour to compile this on a quarterly basis in order to reduce the task at year-end. This should be extended also to internal data from the Chief Pharmacist on the allocations for drugs and medical supplies which is already compiled quarterly for departmental purposes, and for the National Health Insurance Fund, along with any other major data providers. A more detailed assessment of the total value and volume of drugs and essential medical supplies within the s