MDGORIENTATED SECTOR AND POVERTY REDUCTION STRATEGIES:

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MDG-ORIENTATED SECTOR AND POVERTY REDUCTION
STRATEGIES

• Lessons from Experience in Health

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MDGs need local adaptation

• All have IMR, MMR, clean water targets - but nine
  from 14 set lower targets for MMR.
• Communicable disease targets indicators differ
  from MDGs, reflect local ME HMI systems.
• Other priorities, e.g. smoking in Viet Nam
  chronic disease in Albania.
• Disaggregate to ensure vulnerable groups benefit.

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Should strategies be "needs-based",
"resource-constrained", or both?

• Reconcile "needs-based" and "resource- based"
  approaches by developing more than one scenario
  for PRSPs
• High Bid for resources to meet needs
• Resource-based Prioritize within budget
• Low Plan for adverse shocks.
• Examples Niger, Rwanda, Senegal

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Framing health strategies to achieve the targets

• Moving from "health services strategy" to "health
  strategy" needs interdepartmental coordination.
• Increased support to high-priority interventions
  (on which there is broad agreement) needs to be
  supported by effective strategy to contain public
  funding of lower priorities.
• Most countries support national targets with
  improved performance incentives.
• But increased accountability of service providers
  for results needs to be supported by more control
  of the resources necessary to achieve them.

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Better costing helps win bigger budgets

• In Mauritania, the Ministry of Finance increased
  the health budget by 40 in 2002.
• It was influenced by MTEF analysis suggesting
  targeted increase would reduce infant mortality
  by 30 and maternal mortality by 40 in five
  years.

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Estimating the costs of achieving the targets

• Strategies should include explicit analysis of
  expected linkages between costs, outputs and
  outcomes.
• Cost estimates should address institutional
  constraints and be prepared in a form that can be
  mapped to budgets and support resource bids.
• Priorities to permit adjustments in the light of
  resource availability should be identified.

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Public spending on healthIs required funding
available?

• Half the countries have substantially increased
  spending but none spend more than 3 of GDP.
• Benin, Cambodia, Ethiopia and Tajikistan spend
  less than 2 of GDP.
• Only three countries spend over 10 per capita.
• Cambodia 3, Ethiopia 1.50.

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Are macroeconomic frameworks too restrictive?

• Involve MOF/IMF in preparing PRSP fiscal
  framework to be consistent with the budget.
• But require explicit rationale, open debate.
• Coordinate PRSP reviews with budget cycle,
  including revision of budget ceilings and
  priorities.
• Reduce risks of aid dependence by longer-term
  commitments less prone to interruption more
  reliable timing of disbursements.

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Coordinating health plans with the MTEF and the
budget

• Minimum standards of public expenditure
  management need to be attained before any health
  strategy can be effective.
• In good practice cases, PRSP identifies spending
  priorities in consultation with sectors,
  MTEF/budget process shifts resources towards
  them, reviews and adjusts each year in light of
  performance.

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Absorptive capacity

• On present trends, the binding constraint is lack
  of finance, not lack of capacity.
• Capacity problems can be managed if health
  strategies tackle bottlenecks in a logical
  sequence and avoid large "earmarked" commitments
  that distort health sector priorities.
• Where government is committed to improving
  financial management, external partners should
  use government systems while supporting
  coordinated action to strengthen them as
  necessary.

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Where does all the aid go?

• On average, for every 1 disbursed by donors to
  our 14 case study countries, we estimate
• Not recorded in balance of payments (B of
  P) 0.30
• Recorded in B of P but not as govt. spending
  0.20
• Aid earmarked to specific projects 0.30
• Budget support 0.20
• In the 1990s, in many African countries,
  structural adjustment provided a larger share of
  a bigger aid volume as general budget resources,
  though with policy conditions.

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Reforming development assistance

• Progress towards the MDGs requires a further
  shift towards budget support as the main aid
  modality in aid-dependent countries.
• All donors should participate in sector
  coordination and provide information to enable
  government to include their commitments and
  disbursements in the macroeconomic framework and
  in public expenditure plans.
• Where government has a sound sector strategy, the
  first call on donor funds should be to ensure
  that it is fully funded.
• Donors should try to commit early enough to
  inform the budget preparation.
• Coordinate macro- sector-level policy dialogue.
  Poverty Reduction Support Credit (PRSC) should
  rely on sector reviews to agree sector-level
  actions and to assess their achievement.