Public Sector Financial Management and the Health Sector

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1 Public Sector Financial Management and the Health Sector Soukeyna Kane Practice Manager, Public Resource Mobilization and Management Governance Global Practice

2 Objectives PFM in the Health Sector Challenges and barriers to reform Some ideas to move forward

3 PFM in the Health Sector Budget Credibility Outturn compared to the original approved budget. (including share of primary vs secondary and tertiary health care; vertical diseases vs general health system financing) Composition of expenditure compared to the approved budget User Fee collections compared to the original approved budget

4 PFM in the Health Sector Policy Based Budgeting Multi-year perspective in planning and budgeting for the health sector. Fiscal space: Interactions between user fees, national health insurance scheme payments, domestically financed budget spending (at various levels of Government) and donor funding

5 PFM in the Health Sector Predictability and control in budget execution Transparency of obligation and liabilities Predictability of availability of funds for commitment of health expenditures Effectiveness of payroll controls( time on task, absenteeism) Procurement quality assurance, price competitiveness, timeliness Inventory management, especially for vaccines and pharmaceuticals Asset management including maintenance and usage of specialized medical equipment (operating theaters, MRI, Doppler, CT scans, X-ray machines ) Effective internal audit function

6 PFM in the Health Sector Accounting, Recording and Reporting Availability of information on resources received by district health facilities Quality and timeliness of in-year reports Quality of annual financial statements External scrutiny and audit Scope, nature and follow up of external audit in the health sector. Ability of SAIs to undertake performance audits in the health sector

7 Effects of Weak PFM Deficient facilities Deficient supplies

8 IHP+ FM Focus Areas Achieved through use of country FM systems Joint FM supervision ALIGNMENT One audit report for the sector One set of financial statements for the sector HARMONIZATION Achieved through use of some aspects of country FM systems and parallel arrangements agreed upon by DPs and government, or parallel arrangement alone, where none of the aspects of country systems cannot be used

9 FM Harmonization and Alignment - Key Principles Align with country systems whenever they meet the minimum acceptable level Harmonize among development partners even when all or part of the national PFM system is not sufficiently developed Joint FM Assessment, joint action plan for strengthening the system and joint supervision Not wait until all problems have been solved, but use elements of country systems as part of the process of improving systems and developing capacity

10 Health Sector - Fiduciary Objectives Funds need to be channeled to the health sector (right amount, right place, right time) These funds need to be spent for intended purposes, with value-for-money Stakeholders (donors) need a reasonable assurance on intended purpose and valuefor-money Problem: if each donor sets up its own FM arrangements, there are unintended consequences for the whole system

11 Challenges/Barriers to Reforms Fund flow and reporting relationships are inherently complex in the health sector Unintended consequences of treasury reforms (centralization and lack of flexibility) Moving from input based to output orientated budget formulation and reporting (centralized v decentralized decision making, costs and fiscal sustainability) Linking technical and financial reports Developing a common understanding between PFM and Health professionals Moving from cash to resource based financial reporting

12 Fund flow and reporting relationships are inherently complex in the Health Sector ( example from Tanzania)

13 The addition of a plethora of FM arrangements for donor funding brings the complexity to a whole new level

14 Some Ideas on the Way Forward Draw on a wide selection of health and PFM team where commitment to reform is strong Consider the impact on costs and broader effects on the public sector when focusing on activity and RBF Link health financing to broader public sector reforms (e.g. strategic purchasing decisions, pro-poor spending and improved equity in service use) Act as a bridge between officials in the MoF and MoH

15 Thank You Soukeyna Kane Practice Manager, Public Resource Mobilization and Management Governance Global Practice