Effects of recent PFM reforms on public expenditure for health in Uganda
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1 Effects of recent PFM reforms on public expenditure for health in Uganda Dr. Grace Kabaniha, Mr. Tom Aliti, Mr. Brenda Kwesiga, Mr. Stephen Lagony
2 Outline of the presentation Background Methodology Results Discussion Conclusion
3 Background Countries looking to expand Fiscal Space for health in context of UHC and SDGs Critical component to many countries is efficiency. Public Finance Management very critical element for efficiency. Uganda has implemented number of PFM reforms. Study focused on describing the reforms and the effects on health service delivery and Efficiency.
4 History of PFM Reform / / Medium Term Expenditure framework instituted to enable predictability of budget and enable harmonization of aid Enactment of the Public Finance Act Implementation of Output Based Budgeting reform within Results Oriented Management reforms Institution of Treasury Single Account, Straight Through Processing and Decentralization of Pay roll. Enactment of Public Finance Management Act 2015 that legalized above reforms and more
5 Methodology Primary and Secondary Data collection Primary study: Qualitative study with KII (18) Respondents Purposively sampled based on criteria: Knowledge and working experience of PFM Reform in Uganda Public Health Manager at service delivery level Long term budgeting and financing experience in the health sector and government at large Secondary study: Desk Top Reviews of key background documents: PFM reviews, PFM Reform Strategy, Budget monitoring reports, published literature etc. Operation definition of PFM reform : changes (institutional, policy and legal) that affect the management of the collection and expenditure (budgeting, allocation and use) of funds by governments.
6 Methodology-2 Reforms reviewed: Medium Term Expenditure Framework (MTEF) Integrated Financial Management System Output-based Budgeting (OBB) Straight Through Processing (STP) Decentralization of the payroll system
7 Results
8 Medium-Term Expenditure Framework Implemented as part of broader macro-economic reform to ensure predictability of public and external financing according to national plans. Respondents noted that it has increased budget transparency (ODI index >70%) Has had little effect on allocative efficiency of public resources At the end of day when writing an annual plan, the most pressing needs are ignored due to strict budgeting process No predictability of resources or alignment of funding to the planned priorities & projections in sector plan- budget ceilings & changing figures during budgeting However, if you study the MTEF you ll find that there is disconnect between the figures that are reflected in the MTEF, figures that are given to the sectors for budgeting and those reflected in the development plans of the sectors No increment in donor funds on budget
9 Budget execution rate (GOU) FY Approved budget (Bn shs) Releases (Bn shs) Expenditure ( Bn shs) Unspent Balances (Bn shs) Proportion of unspent 2012/ / / /
10 Budget execution with EF FY Approved budget (Bn shs) Releases (Bn shs) Expenditure ( Bnshs) Unspent Balances (Bn shs) Proportion of unspent 2010/11 680, , ,129 3, /12 825, , ,370 2, /13 882,527 1,006, ,219 2, /14 1, , ,734 17, /15 1, ,260,182 1,067, ,
11 Integrated financial management systems IFMS implemented to foster transparency, accountability and efficiency in management of public funds. Initially disintegrated, now integrates MDAs and LG as well DAH (GAVI & GFATM) The IFMS has increased linkage between budgeted funds and what is released. Ability to track budget & reporting as well as timely release of funds to managers at service delivery level has improved. Significant challenges exist: Limited capacity of the implementers Internet connectivity challenges Limited usability rights and people who conduct budgeting have no access to system
12 Output based budgeting OBT introduced to foster budgeting amongst sectors according to work-plan and planned outputs within expenditure ceilings, Has improved reporting and monitoring of expenditure and outputs Has had no impact on the efficiency of the system and no perceived effect on service delivery There are no sanctions for poor performance and therefore no incentive to perform and therefore not influenced service delivery. The goals of the tool have not been realized because there are no sanctions for those who did not achieve d the targets The financial (cost) figures in the tool do not reflect the reality on the ground and therefore impedes effective service delivery. The tool is still of a theoretical nature which forces planners and implementers to apportion figures/amounts within the tool which is far from the reality on the ground. Challenges: Difficult to define outputs and therefore linking it to strengthen link between budget and outputs The tool is always changing with changing indicators and outputs. Difficult for monitoring
13 Sample of Reporting for OBT
14 Decentralization of payroll Spurred by delays in processing salaries for health workers leading to poor motivation at work and poor service delivery. Included interfacing the integrated Personnel payment System with the Integrated Information Management System In 2015, savings of up to 100 billion shillings made from cleaning up the ghost worker payroll. 30% of savings returned to health sector to recruit new health workers Improved attitude among health workers due to timely payments of salary
15 Straight through processing Has reduced bureaucracy and the delays during disbursement of funds increasing absorption capacity and service delivery. Overall it has improved upon the timeliness in which funds are received thereby facilitating the delivery of health services within the district, however, challenges do exist with regards to the spoor staffing levels at different health facilities, shortages Leakages of funds have been minimized as a result. More and more funds are reaching their final destinations and are used for purposes of improving service delivery Increased Supervision of staff by the supervisors STP increases centers of transaction as health facilities are required to manage their own accounts yet they may not have the capacity/competence to manage these funds.
16 Attitude of workers
17 Lessons learnt The effects of the reforms on health service delivery, budget execution and efficiency is mixed. Effect of reforms blunted by: Execution: Laws and processes highly rated but enforcement of the penalties or sanctions is low. Effectiveness affected by other systemic factors that need to be resolved, internet connectivity, procurement challenges etc. Institutional capacity building is also key to success of the reforms Critical to assess all reasons for effects of reforms before embracing new reforms such as PBB and PBF- especially definition of outputs. Thinking on the MTEF and OBB in context of dysfunctional SWAP mechanisms- implications for guidance to countries.
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