7-9% Policy Brief The health budget: the disparity between political discourse and practice. Executive Summary

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1 Policy Brief The health budget: the disparity between political discourse and practice Executive Summary In recent years the Health sector in Mozambique has made remarkable advances in the provision of health services to citizens. However, there is an enduring perception among public health practitioners and users that the current quality of services is far from satisfactory. Systematic stock-outs of medicine and supplies, the need to travel long distances to the nearest clinics, and reports of long wait times and sometimes inhumane care, continue to persist as barriers to medical care. Several factors affect the performance of the health sector, including the levels of the current funding. Data from recent years indicate that, of the priority sectors defined by the Government of Mozambique (GoM), the health sector is amongst the sectors receiving the lowest funding by the State Budget (SB). Between 2010 and 2014, the budgetary allocation from the state to the health sector lay between 7-9%; far below the political commitment made in Abuja to allocate 15% of the state budget to health (LOE, FDC, UNICEF & ROSC, 2014). Allocations are not expected to exceed the threshold of 9% until 2016 (LOE 2015, Dutta et al., 2014). A recent costing exercise of the Strategic Plan for the Health Sector estimates a budget deficit of around 2,502 million US dollars (conservative scenario) (Dutta et al., 2013). Additionally, despite a Between 2010 and 2014, the budgetary allocation from the state to the health sector lay between 7-9% slight increase of internal funding for health over the past four years, a significant contribution comes from external funding sources. These include the PROSAÚDE common fund mechanism as well as specific projects. In 2010 and 2011, for example, the contribution from development partners was above 50% and in 2012 it slightly exceeded the proportion of state funds allocated to the health sector. According to MOH data for the year 2014, of the million USD allocated to the health sector, 44% came from external sources (REO MOH, 2014). Given the consistently low levels of State Budget funding to Mozambique s health sector and the unpredictability of external funding, it is essential that the country commit to an increase in domestic spending on health, through budgetary increases of 6-7% per year until By adequately funding health services through national resources, Mozambique may avoid compromising a fundamental human right the right to life in the face of a changing donor environment.

2 Key Messages Health is a human right and is constitutionally protected in Mozambique; The health sector is considered a priority sector by the Government of Mozambique; The health sector is amongst the least funded by the State Budget in the past four years, (with less than 8% on average), against the 15% assumed in Abuja; For the year 2014, of the million USD allocated to the health sector, 44% came from external sources (REO MOH, 2014). The combined PROSAUDE resources, and the specific "off-budget" projects funding demonstrates the enormous reliance on external partners to support the country s health strategy; There is an urgent need to increase internal State Budget funding for the health sector to ensure sustainability. The weight of the Health Budget versus other priority sectors The Government of Mozambique, through its Five-Year Government Plan (QGP, ), places health as a priority. Nevertheless, funding for the health sector has been, over the years, lower when compared to other priority sectors, showing one of the lowest growth rates in incremental funding (see Chart 1). 25% 20% 15% CHART 1 Health Budget allocation versus other priority sectors Education Infrastructure Agriculture and Rural Development Over the past five years, the health sector budget has only marginally increased by 3,7% Over the past five years, the health sector budget has only marginally increased by 3.7%. This growth rate is about half that of the budget for Education (6.6%), and almost a third of the growth seen in Infrastructure (12.2%). The 2015 State Budget allocates 22.8% of all funding to Education and 15.8% to Infrastructure; Health, however, will receive only 10.2% of government funding (Government of Mozambique, 2015). 10% 5% 0% Governance, State Security and Judicial System Other priority sectors (Social Affairs and Labour) Health 2 Source: OGE

3 Recent years have laid bare a tangible gap between the political commitment to health as a priority and the economic reality. Inadequate government funding threatens to compromise the health objectives laid out in the current 5-year health sector Strategic Plan (PESS ), including expansion of public health services. Moreover, current funding levels directly contradict the political commitment made by the Mozambican government in Abuja, where it pledged to allocate 15% of state budget to the health sector. Delayed fulfillment of this commitment has resulted in the postponement of improved health care for Mozambican citizens. In line with the escalated funding in other sectors, we recommend that the health sector receive funds beyond the minimum proportions allocated thus far. We encourage the Mozambican government to find additional internal sources to cover this increase, as similar efforts for Education and Infrastructure sectors have demonstrated the value of such investment. Health sector funding sources The health sector in Mozambique is financed by two main sources: the State Budget (OE) and development partners (external resources). These channel their funding through the common sector fund (Common Fund) or through vertical programs (eg Global Fund). Chart 2 shows the resources available to the health sector in CHART 2 Resources received by MISAU in % 56%! Internal Funds External Funds Source: Adapted from REO MISAU (2014) 3

4 Despite the significant growth of the OE funds from 2010 to 2013 (UNICEF, FDC & ROSC, 2014) the share of foreign funds is still significant in the total resources available to the health sector. According to MOH data for the year 2014, of the million USD allocated to the health sector, 44% came from external sources (REO MOH, 2014). Therefore, there remains a huge dependence on external funds to finance the health budget in Mozambique. According to MOH data for the year 2014, of the million USD allocated to the health sector, 44% came from external sources (REO MOH, 2014). External funds funneled through the PROSAÚDE common fund have varied significantly in the past five years, ranging from 35% in 2010 to 14% in This is likely due to the exit of the European Union and reduction of funds by the Canadian government. Special project funding too has been unstable, rising from 12% in 2011 to 34% in 2012, only to drop again to 8% in Should this trend towards withdrawal of external funds not be met with proactive measures by the Government of Mozambique, it is possible to say that the public s health will be at risk. It is essential for the government to seek out and harness domestic funding opportunities. The Health Sector Strategic Plan In the most recent Strategic Plan for the Health Sector (PESS), the Ministry of Health in Mozambique (MISAU) has budgeted US$7, million for This amount is distributed across the various health programs, as shown in Chart 3 below. CHART 3 Costs of the PESS by program from 2014 to 2019 In Millions of USD 1, , , , Governance Infrastructure Logistics Human Resources Medical Care Program Public Health Program 4 Source: Dutta et al., (2014); MISAU/DNPC (2013).

5 Many observers in Mozambique believe that new investments, especially from the extractive industries, will increase state revenues. However, this logic may prove faulty in an environment of continuous market fluctuations. Projections of external funding in all scenarios were made based on information provided by development partners. Yet, in practice, disbursements from development partners are often late or released in smaller amounts than originally committed. Funding of the PESS will therefore always rely on unstable financial and social dynamics. Evidence shows that the PESS has a deficit of approximately million US dollars (Dutta et al., 2014). If confirmed, this will have a significant effect on the ability of the health sector to provide quality health services for the next 5 years. Without sufficient funding, it will be difficult to achieve the vast expansion of health services outlined in the most recent Five-Year Government Plan. Evidence shows that the PESS has a deficit of approximately million US dollars CHART 4 Forecast of the budget deficit of the PESS In Millions of USD Source: Dutta et al., (2014) 5

6 Final considerations Though the Mozambican Government has named health as a national priority, it remains the lowest funded priority sector in the country. With only 10% of the State Budget allocated to health in a far cry from the 15% goal set in Abuja - the country continues to struggle to reach greater numbers of Mozambicans with better quality health care. The recent upsurge in state budget allocation to other priority sectors, such as Education and Infrastructure, point to the viability of increased health financing through internal funds. The Government of Mozambique should make a deeper commitment in seeking alternative sources of funding in order to significantly increase its financial contribution to the health sector. In light of this and the country s heavy reliance on variable external funding, it is of utmost urgency that the Government of Mozambique act to increase current levels of funding to health care. We believe that health deserves greater public investment. An increase of 6-7% in state funding per year will enable the country to meet current and future needs in health quality and care. By using internal funds and resources to meet the commitment made in Abuja, Mozambique may ensure the sustainability of quality health services, even in the face of a changing donor environment. References Dutta, A., Perales. N., Silva, R., Criville, L. (2014). Necessidades de Recursos Estimados e Impacto do Plano Estratégico do Sector de Saúde de Moçambique, Washington DC: Futures Group, Projecto de Políticas de Saúde. FDC, UNICEF & ROSC (2014). Informe orçamental Sector da Saúde. Governo de Moçambique (2010), Lei do Orçamento do Estado 2011, Maputo. Governo de Moçambique (2011), Lei do Orçamento do Estado 2012, Maputo. Governo de Moçambique (2012), Lei do Orçamento do Estado 2013, Maputo. Governo de Moçambique (2013), Lei do Orçamento do Estado 2014, Maputo. Governo de Moçambique (2015). Lei de Orçamento de Estado Maputo MISAU/DNPC (2013). Plano Estratégico do Sector de Saúde PESS República de Moçambique (2015). Programa Quinquenal do Governo , Maputo.