Ooms, Gorik

Philips, Mit

English

MSF Field Research

XVII INTERNATIONAL
AIDS CONFERENCE
3-8 August 2008 | Mexico City
Oral Abstract Session 
MOAE02 - Global Monies: International Assistance and Funding Mechanisms  
 
MOAE0206 - Fiscal space for health expenditure in Mozambique: blocking effectiveness of international 
funds through budget support  
 
G. Ooms1, M. Philips2 
  
1Médecins Sans Frontières, General Direction, OC-B, Brussels, Belgium, 2Médecins Sans Frontières, Analaysis & Advocacy 
Unit, OC-Bxl, Brussels, Belgium 
  
Issues: HIV/AIDS compounds the health workforce gap in Mozambique. Mozambique receives much donor aid, including 
for health. General or sector-specific budget support is currently the only possibility to improve salaries or recruit 
additional MoH-staff with international funding. However, fiscal ceilings limit funding of these recurrent costs.  
Description: Case study on health spending and wage bill caps as obstacle to use international funding for health and 
health workforce boosting in particular. Interviews were conducted with all major stakeholders in Mozambique. New 
findings: Mozambique applies the ‘ceiling on primary deficit’, which reflects the estimated ‘capacity of Mozambique 
to accommodate expenditures financed with aid within the domestic budget constraint in a reasonable period of time’. For 
IMF and others foreign assistance is at best temporary, thus limiting recurrent expenditure to the domestic budget, 
excluding donor grants. This de facto acts as an international aid cap for recurrent expenditure. International funding in 
excess of this ceiling is rather diverted towards international reserves or public savings. During 2004-2006, reserves grew 
with 315 million US$, equivalent to 91% of the increase in international funds. In 2006 for each additional aid dollar, 50 
cents were programmed to increase international reserves. Most donors are unaware of this.  
Lessons learned: All international funding through budget support will be affected by this ‘IMF tax’. Specific ‘common 
pool funds’ are somewhat ring-fenced and project aid is not covered by the cap, thus could increase. These limitations 
basically have the same effect on any budgetsupport as explicit ceilings. International aid will be accepted, but diverted 
to international reserves.  
Next steps: These mechanisms de facto cap budget support, while project aid is not affected. Donors should adapt 
funding channels, in order to spend international aid for health more effectively than through comprehensive budget 
support grants with the current caps. Greater transparency on these matters is urgently needed.    
Presenting author email: gorik.ooms@msf.be 

Fiscal space for health expenditure in Mozambique: blocking effectiveness of international funds through budget support

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