Government budgeting for HIV/AIDS: An analytical framework and key issues Presentation to Workshop...
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Transcript of Government budgeting for HIV/AIDS: An analytical framework and key issues Presentation to Workshop...
Government budgeting for HIV/AIDS:
An analytical framework and key issues
Presentation to Workshop on HIV/AIDS BudgetingSwakopmund, Namibia
12 August, 2003
Alison HickeyResearch Unit on AIDS and Public FinanceBudget Information [email protected]
1. Analyse government budget from an HIV/AIDS perspective
OBJECTIVES of Research Unit on AIDS and Public Finance
2. Produce recommendations for policy-makers on allocations and effective funding mechanisms for transferring money for HIV/AIDS interventions
3. Build capacity in Parliament and civil society to participate in the budget process on HIV/AIDS issues
South African non-governmental organisation promoting sustainable democracy
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
3
PRESENTATION
Indirect vs. direct expenditure on HIV/AIDS
Determinants of national allocations/budgeting
II. Key issues: What have we learned about budgeting for HIV/AIDS?
I. Overview and analytical framework
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
4
Massive resource boost needed to strengthen health sector generally.
Supply and demand effect...
HIV/AIDS directly impacts on government’s ability to deliver regular services,
at the same time that it requires that government deliver more services.
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
5
Direct expenditureon HIV/AIDS programmes
e.g. condoms, PMTCT, public awareness campaigns
Indirect expenditureas result of impact
of HIV/AIDSe.g. increased demand for social security grants, higher hospital bed occupancy,
medicine for OIs
Usually requires unconditional transfers
or general budget support
On recurrent or operational budget
(State Revenue Fund)
Best addressed using earmarked/ring-fenced funds
On development budget (partially
covered by donors)
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
6
HIV/AIDS sectoral impact
assessments
Design policy and
programmes (strategic
plans)
Costing programmes
and interventions
Resource allocation
and budgeting
Structures and institutions for implementation
(including financial flows)
Service delivery
(implementation)
Monitoring & evaluation:
programme impact assessments & financial audits
Data used to revise
programme and to budget for
future
Where do budgets fit into policy-making and service delivery?
Demographic and
prevalence data
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
7
budget inputs: funds, resources
budget outputs: medicine, vaccinations, HIV tests
budget outcomes: improved child health
Indicators? How do we measure inputs, outputs and outcomes?
Demographic data and impact studies are critical to resource allocation for HIV/AIDS.
Demographic data (prevalence rates) Studies on socio-economic impact of HIV/AIDS Sectoral impact studies on HIV/AIDSall have a very important role to play in budgeting for HIV/AIDS.
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
8
HIV/AIDS sectoral impact
assessments
Design policy and
programmes (strategic
plans)
Costing programmes
and interventions
Resource allocation
and budgeting
Structures and institutions for implementation
(including financial flows)
Service delivery
(implementation)
Monitoring & evaluation:
programme impact assessments & financial audits
Data used to revise
programme and to budget for
future
Demographic and
prevalence data
Budgetoutcomes
Budgetoutputs
Budgetinputs
9
What determines the budget? (national resource allocation)
• Previous budget
• Constitutional obligations/legal framework
• Rights/moral choices
• Policy priorities (political)
• Need (e.g. prevalence rates)
• Cost effectiveness research
• Capacity to spend
• Equity
• Cost of programmes
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
10
Percent of HIV/AIDS budget sourced from intl donors
Intl donors account for 2/3 budgeted HIV/AIDS spending in 2002 in low & middle income countries (via ODA).
Proportion of total funds contributed by natl govt much less in some regions: sub Saharan Africa ~ 9%.
Share of national health bill covered by public vs. private sources (out of pocket spending)
Context for financing national HIV/AIDS responses
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
11
2. What are spending on HIV/AIDS interventions specifically?
1. What are we spending on health generally?
National government expenditure:
3. What are we already spending indirectly as a result of the impact of the HIV/AIDS epidemic on the public health system?
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
12
Public expenditure on health as
percent of general government
expenditure in African countries,
1998
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
13
What is government spending on HIV/AIDS?
Special designated funds for HIV/AIDS interventions spent by national
Ring-fenced funds to provinces or local government for HIV/AIDS
HIV/AIDS-specific allocations
+
Total government spending on HIV/AIDS
Funds for general strengthening of health sector (non-specific HIV spending)
Other programmes: nutrition, poverty alleviation, social security, food relief etc.
Indirect expenditure as a result of impact of HIV/AIDS
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
14
PRESENTATION
Indirect vs. direct expenditure on HIV/AIDS
Determinants of national allocations/budgeting
II. Key issues: What have we learned about budgeting for HIV/AIDS?
I. Overview and analytical framework
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
15
1. Budgeting for multi-sectoral response is complex.
Driven by health or located outside health ministry?
Mainstreaming in non-health departments (beyond condom distribution) ~ HIV/AIDS as core business
Multi sectoral (involve ministries of health, transport, finance etc.)
Intergovernmental (involve national, regional, local)
Public, private and NGO sectors
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
16
o Integrated programme planning (alignment with PRSPs)
o Degree of national control over resource allocation (policy priorities; prevention vs. treatment; cost effectiveness of interventions)
2. Source of funds (national vs. donor) hascritical implications for:
o Budget processes and structures (recurrent vs. development; on or off budget)
o Flow of funds and efficiency of spending
o Transparency and monitoring (on or off budget)
17
South Africa donor funds for HIV/AIDS Average funding per annum
Source: van Rensberg et al. 2002. Strengthening Local Govt.. Response to HIV/AIDS in South Africa
www.uovs.ac.za/faculties/humanities/chsrd
NB. Partial view of HIV/AIDS donor
activities
18
Urban/rural focus of donor funding for HIV/AIDS in South Africa
Source: van Rensberg et al. 2002. Strengthening Local Govt.. Response to HIV/AIDS in South Africa
www.uovs.ac.za/faculties/humanities/chsrd
NB. Partial view of HIV/AIDS donor
activities
19
Priority areas for donor funding for HIV/AIDS in South Africa
Source: van Rensberg et al. 2002. Strengthening Local Govt.. Response to HIV/AIDS in South Africa
www.uovs.ac.za/faculties/humanities/chsrd
NB. Partial view of HIV/AIDS donor
activities
20
3. What are the suitable funding mechanisms for HIV/AIDS interventions?
Need to protect AIDS as national priority, and treatment and care as constitutional obligation.
Ring-fenced funds can ‘force’ regions/depts toimplement programmes, and serve as a
catalyst
Earmarked or ring-fenced funds
vs. unconditional transfers?
Advantages of decentralised budgetingUnconditional transfers allow regions discretion:
- to make different political choices (outside natl policy)
- to allocate funds to most cost-effective programmes
21
• South Africa HIV/AIDS funding framework has three streams:
1. Line-items on Natl Health Dept. budget for centrally-run programmes.
2. National sends extra funds to provinces intended for HIV/AIDS. Relies on provinces to allocate as they see fit.
3. Suitable funding mechanisms, cont.
3. National uses conditional grants to kick-start new interventions; ensure implementation of key programmes; retain control of how funds allocated across provinces.
Provinces create business plans, but national determines funding,
usually insufficient for full implementation of plan.
No HIV/AIDS transfers to local govt.
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
22
Which funding channel is appropriate depends upon the purpose of the expenditure, or the intended outcome.
Budget support or unconditional transfers Indirect costs too intertwined in regular heath care service delivery to use ring-fenced funds to finance them HIV related expenditure which is difficult to isolate (medicines, treatment of OIs) must be financed with uncondtl transfers Is best means to ensure general strengthening of health sector
Earmarked funds only appropriate for limited aspects: public awareness campaigns, condom distribution etc.
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
23
Mechanisms to finance interventionsPossible financing sources/mechanisms
Interventions implemented by:
•Regular allocation from general revenue fund (line-items in dept budgets)•Special levy
National government
•Grant from national or subnational govt•Direct donor funds
NGOS and CBOS
•Intergovernmental transfer from national govt Conditional grant (earmarked transfer) Unconditional transfers
•Own revenue•Special levy•Donor funds (direct)
Regional and local government
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
24
5. Capacity to rapidly expand programmes
Need for skilled experienced staff (filling posts quickly)
How does govt rapidly build capacity in the public service(financial and programme management skills)?
Scaling up (from pilots to national programmes)
Short vs. long term costs (infrastructure/training costs)
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
25
5. Capacity (cont.) Basic trade-off between accountability and bureaucracy. Strict restrictions/procedures for public expenditure can contribute to underspending.
-But alternative to underspending is irresponsible
spending/corruption
- What line departments see as rigidity, treasury sees as a
capacity problem.
- ‘Underspending is a management problem.’
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
26
Improvement in spending record on HIV/AIDS condtl grants
84.1%
98.6% 96.7%
35.6% 36.5%
22.3%
59.5%
92.9%
114.9%
70.4%
97.4%93.7%
0%
20%
40%
60%
80%
100%
120%
140%
Education sector Health sector Social Developmentsector
Total HIV/AIDSconditional grants
Act
ual
sp
en
t b
y p
rov
ince
s as
pe
rce
nt
of
tota
l av
aila
ble
2000/1 2001/2 2002/3
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
27
Average spending on regular provincial health dept
budgets = 99.3%
HIV/AIDS conditional grant spending generally = 96.7%
HIV/AIDS health cg specifically = 97.4%
Provincial health depts more easily spend funds from their regular provincial budget--compared to ring-fenced funds transferred from national govt as conditional grants
Example of South Africa:
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
28
South Africa: Aggregate actual expenditure of HIV/AIDS conditional grants, 2000/1 to 2002/3
135.474
207.269
46.273
389.016
0
50
100
150
200
250
300
350
400
450
Lifeskillsconditional grant
Health condtlgrant
CHBCS condtlgrant from DSD
Total HIV/AIDScondtl grants
R m
illio
n (n
omin
al)
2000/1 2001/2 2002/3
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
29
South Africa: Provincial actual expenditure of health HIV/AIDS conditional grants
0
10
20
30
40
50
60
70
80
90
R m
illi
on
Unaudited provincialactual spending 2001/2
Provincial actual spending2002/3
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
30
5. Resource allocation and targeting funds
Need vs. ability to spend
Target resources based on prevalence rates?
Equity
Thank You
Alison HickeyResearch Unit on AIDS and Public FinanceBudget Information [email protected]
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
32
Overview of actual spending on HIV/AIDS conditional grantsR million
Allocated SpentPercent
spentTotal
available
Unaudited provincial spending
Percent spent
Total available
Actual spending
Percent spent
Lifeskills conditional grant 26.93 6 22.3% 63.5 44.723 70.4% 144.605 135.474 93.7%
Health HIV/AIDS conditional grant 16.819 10 59.5% 54.398 50.525 92.9% 210.209 207.269 98.6%
HIV/AIDS conditional grant from DSD 5.62 2 35.6% 12.5 14.359 114.9% 47.5 46.273 97.4%Total HIV/AIDS conditional grants 49.369 18 36.5% 130.398 109.607 84.1% 402.314 389.016 96.7%
2000/1 2001/2 2002/3
Source: National Treasury.
Example of South Africa:Good evidence that spending on the HIV/AIDS conditional grants is markedly improving in the last two years.
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
33
R million
Unaudited provincial actual spending 2001/2
Provincial actual spending 2002/3
Percent increase in actual expenditure
Eastern Cape 11.395 24.758 117%Free State 3.767 18.657 395%Gauteng 4.409 16.113 265%KwaZulu-Natal 14.240 80.857 468%Mpumalanga 1.528 7.946 420%North West 2.254 21.245 843%Northern Cape 4.665 7.657 64%Limpopo 4.701 18.517 294%Western Cape 3.566 11.519 223%National Total 50.525 207.269 310%
Actual expenditure on health HIV/AIDS conditional grants, by province (2001/2 and 2002/3)
Source: Statement of the National and Provincial Governments' Revenue and Expenditure and National Borrowing as at 31 March 2002, and as at 31 March 2003. Except NW whose 2002/3 figure taken from presentation to Parliamentary Health Committee 16 April 200
South Africa Bilateral Donor Funds to DoH
€4 million2001-2003Ireland Aid
R1 million2003JICA (Japan)
$25 million2003USAID
$3 million2003CDC
€9 million2003-2004KfW
£30 million2003-2008DFID
DK100 million2002-2004Denmark
€6.2 million2002-2007Belgium
R26 million2002-2003EU
FundingPeriodDonor
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
35
TANZANIARecurrent and development health expenditure
Recurrent Expenditure
Development expenditure
0
20,000,000,000
40,000,000,000
60,000,000,000
80,000,000,000
100,000,000,000
120,000,000,000
2000/01 Actual Expenditure 2001/02 Approved Estimates 2002/03 Estimates
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
36
How much is specifically targetedfor HIV/AIDS interventions?
R billion 2000/1 2001/2 2002/3 2003/4 2004/5 2005/6Idasa estimate:HIV/AIDS targeted allocations in national budget 0.214 0.349 1.004 1.952 2.950 3.568As percent of consolidated expenditure 0.1% 0.1% 0.3% 0.6% 0.8% 0.9%
South Africa
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
37
What is achievable is not only determined by available resources.
Absorption capacity becomes critical question.- programme & financial management
skills
Effective HIV/AIDS response will require:- political committment- getting the policy right- allocation of sufficient resources- set-up of appropriate structures/systems- capacity to deliver services
Research Unit on AIDS and Public Finance ~ Idasa ~ 12 August 2003
38
Apart from the impact on public sector expenditure….
• Impact of HIV/AIDS on revenue (macro economic growth)
• Link between revenue and expenditure sides of the budget (tax expenditure)
• Example of personal income tax cuts in South Africa
• Need for tax analysis from HIV/AIDS, pro-poor perspective