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


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.


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)


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


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.


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


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


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?


12

Public expenditure on health as

percent of general government

expenditure in African countries,

1998


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


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


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


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




activities

19

Priority areas for donor funding for HIV/AIDS in South Africa




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.


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.


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


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)


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.’


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


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:


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


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


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]


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.


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


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


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


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


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

government budgeting for hiv/aids: an analytical framework and key issues presentation to workshop...

Documents

hivaids budgetingswakopmund

hivaids interventions3

public finance2

donorsresearch unit

budget process

prevalence dataresearch

alison hickey research

government budgeting