El mito de la tabula rasa

A key aspect of both efficiency and effectiveness in the sector concerns how well financial budgets and plans are executed. One aspect of this can be termed budget performance. Budget performance can be measured by the degree of correspondence between budget estimates, budget releases and actual expenditure. For central Ministries, Departments and Agencies (MDAs), the evaluation analysed the relation between budget estimates and actual expenditures. For councils, the analysis compares the release of financial resources as compared to budget estimates. The decision to focus on these two different measures is based simply on questions of data availability.

The most striking distinction in budget performance is the extent to which on-budget resources are much more effectively executed. In the areas where data is available, budget performance for the off-budget component is poor in the sense that actual expenditure in some years is 20% over budget estimates and in other years 20% below. The poor per- formance of the off-budget component is arguably to some extent explained by funds from DPs not being made available as planned. This in turn can be explained by cash- flow problems on part of the DPs as well as inability of the beneficiaries to meet certain conditions for release of additional funds. Further down the process, it may also have to do with absorption capacity of the beneficiaries.

For the on-budget component, by contrast, performance has improved gradually over the period from roughly 80% in FY 2000 to close to 95% in FY 2005. Moreover with respect to on-budget expenditure, it is useful to distinguish between recurrent and devel- opment expenditure. On balance, budget implementation for recurrent expenditure has been between 95% and 101% in the period FY 2002 to FY 2004. Implementation of development expenditure by contrast was at only 66% in FY 2002, but has improved remarkably over the period and was close to 100% in FY 2004.

Despite the relatively good performance of the on-budget component, performance can still be further improved. Three major factors have a negative impact on-budget perform- ance:

• Late Parliamentary approval of the national budget estimates is a consistent occurrence;

• The Medium Term Expenditure Framework (MTEF) is not yet consistently used in the medium term sense of the word, but is more of a one-year planning document; and,

• The abovementioned cash limitations have at times made it necessary for the Ministry of Finance to release less than estimated.

Central Level Budget Performance MOHSW

After a period of consistent improvement from FY 2003 to FY 2004, budget perform- ance by MOHSW deteriorated in FY 2005 for curative services, preventive services and policy and planning functions before rebounding somewhat in FY 2006.

Not surprisingly perhaps, the decline in budget performance observed in the MOHSW is mainly due to the development expenditure component. This component includes funds

from the Basket Fund and on-budget foreign funded projects. It is likely that part of the reason lies in procurement related delays. This has been cited continuously as a reason for low absorption capacity in the MOHSW for the development budget and was identified in the preliminary findings of the 2007 Public Expenditure and Financial Accountability Review exercise – with health finances among its focus areas. The procurement related capacity constraints are underlined by substantial delays incurred by the MOHSW in recruiting a procurement audit team.

MOHSW plans to scale up the current supplies unit to a procurement management unit – and training through the Public Procurement Regulatory Authority is reportedly being organised to support this.

Health Sector Basket Fund

Budget implementation of Basket Fund has improved significantly over the period from a low of 20% in fiscal year 2000 to well over 90% in 2004. From FY 2001 to FY 2003, the budget performance of the Basket Fund was far superior to the same measure for other foreign funds. On the other hand, the Basket Fund remains short of the 100% target. The latter is likely to be a result of the still relatively weak procurement capacity of MOHSW, PMO-RALG and the councils (considering that a relatively large proportion of the HBF goes to development expenditure). Another possible contributing factor may be delays by the beneficiaries in preparing and submitting reports, work plans and other documentation in time for the BFC to approve new releases. In this context it should be noted that the decision to have only semi-annual BFC meetings (in place of quarterly) has, according to MOHSW officials, provided for a more expedient process.

Council Level Budget Performance

At the level of individual councils, budget performance can be examined in relation to both on and off-budget resources. Turning first to on-budget financial resources, around 90% of council revenue comes from intergovernmental transfers generally composed of recurrent block grants, the HBF and development grants. Refer to Annex 5 for a diagram showing the flow of Basket funds to the councils.

In the PER FY 2003, based on a sample of release figures for selected councils, releases were assessed as satisfactory with 93% of councils receiving their budgeted allocation, although the timelines of receiving these payments was not assessed. For FY 2004, per- formance was even better with releases to urban councils constituting 102.8% of esti- mate and for rural councils just over 100% of estimates. For both rural and urban coun- cils it is mainly the Personal Emolument components that boost the statistics, while Operating Cost releases were slightly below target at close to 92% for both for the years in question.

More recent analysis suggests that release performance has been less than satisfactory. Nyaywa and Petersen (2007), point out that two thirds of the councils assessed reported delays or non-disbursements of funds from either the HBF or block grant as a main chal- lenge. Similarly, in the joint (MOHSW and PMO-RALG) assessment of 113 CCHP implementation reports for the FY 2005/06, all councils reported late release of funds.