40
Domestic Resource Mobilization GFF Country Workshop, January 28 – February 1, 2018
Domestic Resource
Mobilization
GFF Country Workshop, January 28 – February 1, 2018
© GFF 2018 2
How the GFF drives results
fina
ncin
g a
nd
imp
lem
en
ting
Accelerate
progress now on the health
and wellbeing of women,
children, and
adolescents
Drive longer-
term, transformational
changes to health systems, particularly on
financing
2. Coordinated
Co
un
try
ow
ne
rsh
ip a
nd
le
ad
ers
hip ► Identifying priority
investments to achieve RMNCAH outcomes
► Identifying priority health financing reforms
► Coordinated implementation
► Reforming financing systems:
§ Complementary financing
§ Efficiency§ Domestic
resources§ Private sector
resources► Strengthening
systems to track progress, learn, and course-correct
1. Prioritizing
3. Learning
2. Coordinated
fina
ncin
g a
nd
imp
lem
en
ting
© GFF 2018 3
Results
► Better sustainable RMNCAH-N outcomes § Strengthening systems to sustain RMNCAH-N outcomes
► Increased value-for-money and total volume of financing from:§ Domestic resources
§ Financing from IDA and IBRD
§ External Financing
§ Private sector resources
► Impoverishment prevented in case of illness
© GFF 2018 4
► I. Importance of Domestic Resource Mobilization
© GFF 2018 5
Importance of Domestic Resource Mobilization (DRM)
► Health expenditure per capita is still too low to ensure universal coverage with a core package of needed health services, including RNMCAH – N services
§ McIntryre and Meheus estimated $89 per capita needed in 2014
5
12.44 12.49
31.36
43.50
49.7254.27 55.75 56.47
80.55
105.45
32
88
0
20
40
60
80
100
120
Madagascar Central
African
Republic
Burkina
Faso
Malawi Rwanda Cambodia Haiti Afghanistan Cote
d'Ivoire
IndonesiaTHEpercapita2014,constant$(2010)
Totalhealthexpenditurepercapita2014(constant2010US$)
THEpercapita2014,constant$(2010) LICAverage LMICAverage
36
52
22
49
2921
3848 53
38
0
3
4
3
6
45 1
2
33
28
64
39
74
46
51
35
47 41
11
28
0 2 0 1 3 0 2 5 2 5
Afghanistan Burkina
Faso
Cambodia Central
African
Republic
Côte
d'Ivoire
Madagascar Malawi Rwanda Haiti Indonesia
SourcesofTheTotalHealthExpenditures2014
Privateinsurance
Outofpocketexpenditure
Non-profit institutions servinghouseholds (e.g.NGOs)
Generalgovernmentexpenditure onhealthSource: WHO GHED 2015
Source: : WHO GHED 2015
© GFF 2018 6
DAH constitute a small part of total health expenditure overall, although it varies across countries: lower income countries tend to have a large share
Source: WHO GHED (2017)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Averagecurrenthealthexpenditurebysourcesforlowermiddle
incomecountries
Government Private Externaldonors Otherdomesticrevenues
Source: WHO GHED (2017)
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Average current health expenditure by sources for low income countries
Government Private OtherDomesticrevenuesn.e.c. Externaldonors
© GFF 2018 7
Domestic resources tend to be more predictable, less volatile than external aid, and promotes debt sustainability
Source: WHO GHED (2017) Source: WHO GHED (2017)
$0
$10
$20
$30
$40
$50
$60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Developmentassistancepercapita, inconstant(2010)US$
Afghanistan
BurkinaFaso
Cambodia
CentralAfrican
RepublicCôted'Ivoire
Haiti
Indonesia
Madagascar
Malawi
Rwanda
$0
$10
$20
$30
$40
$50
$60
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Domestichealthexpenditure percapita, inconstant(2010)US$
Afghanistan
BurkinaFaso
Cambodia
CentralAfrican
Republic
Côted'Ivoire
Haiti
Indonesia
Madagascar
Malawi
Rwanda
© GFF 2018 8
► As countries grow, the composition of finance changes with a shift away from DAH and out-of-pocket to domestic, prepaid and pooled financing
LOW INCOME
LOWERMIDDLEINCOME
UPPERMIDDLEINCOME
HIGH INCOME
Prepaid and pooled(domestics resources)
External resources
020
4060
80
250 500 1000 2500 10000 35000 100000GNI per capita, US$
NOT AUTOMATIC!
IMPLEMENTATIO
N OF RIGHT HF
REFORMS NEEDED
© GFF 2018 9
► II. DRM an Important part of Fiscal Space for Healththe following slides are from Ajay Tandon et al. from JLN DRM collaborative
© GFF 2018 10
DRM is part of the 5 pillars of fiscal space for health
► Fiscal Space “…room in a government´s budget that allows it to provide resources for a desired purpose without jeopardizing the sustainability of its financial position or the stability of the economy.” [Heller (IMF, 2005)]
► Domestic resource mobilization (DRM) refers to public financing from domestic resources.
► DRM is a sub-component of fiscal space.
Conducive macroeconomic
conditions
Reprioritization of health in the
budget
Sector-specific domestic
revenue sourcesExternal sources
Efficiency
DRM
DRM
DRM
© GFF 2018 11
Mathematics of Public Spending on Health
GDP
per
Capita
© GFF 2018 12
Mathematics of Public Spending on Health
Public
Expenditure
Share of GDP
GDP
per
Capita
X
© GFF 2018 13
Mathematics of Public Spending on Health
Health Share of
Public
Expenditure
Public
Expenditure
Share of GDP
GDP
per
Capita
X X
© GFF 2018 14
Mathematics of Public Spending on Health
Health Share of
Public
Expenditure
Public
Expenditure
Share of GDP
GDP
per
Capita
X X =
Public Expenditure
on Health per
Capita
© GFF 2018 15
Mathematics of Public Spending on Health
Health Share of
Public
Expenditure
Public
Expenditure
Share of GDP
GDP
per
Capita
Health
Outputs and
Outcomes
X X =
Sector-Specific
Government Revenues
General Government
Revenues
Development Assistance Deficit Financing Other
Determinants
Public Expenditure
on Health per
Capita
© GFF 2018 16
Mathematics of Public Spending on Health
Health Share of
Public
Expenditure
Public
Expenditure
Share of GDP
GDP
per
Capita
X X =
Example from Vietnam
14% X 27% X US$2,050 = US$74
Public Expenditure
on Health per
Capita
Health
Outputs and
Outcomes
© GFF 2018 17
► Sustained Economic Growth
► Increases in General Government Expenditure§ New Taxes and Revenue Sources
§ Increasing the revenue base of these taxes
§ Improving the effectiveness of tax collection
I. Conducive Macroeconomic Conditions
© GFF 2018 18
Conducive Macroeconomic Conditions
Health Share of
Public Expenditure
Public Expenditure
Share of GDP
GDP
per
Capita
X X =
Public Expenditure
on Health per
Capita
Health
Outputs and
Outcomes
Example from Vietnam
14% X 27% X US$2,050 = US$74
14% X 27% X US$4,000 = US$151
© GFF 2018 19
GDP Per Capita, 1995-2015
GDP per Capita (Constant 2010 US$)
Source: WDI 2017
-
100
200
300
400
500
600
700
800
900
2000 2002 2004 2006 2008 2010 2012 2014 2016
GDPperCapita(Constant2010US$)inLow- incomecountries
Afghanistan BurkinaFaso CentralAfricanRepublic
Haiti Madagascar Malawi
Rwanda
Source: WDI 2017
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
2000 2002 2004 2006 2008 2010 2012 2014 2016
GDPperCapita(Constant2010US$)inLowermiddleincome
countries
Coted'Ivoire Indonesia Cambodia
© GFF 2018 20
General Government Revenues
► “Direct” taxes (generally more progressive)§ Personal income taxes.§ Corporate taxes.§ Property/wealth taxes.
► “Indirect” taxes (generally less progressive)§ Sales/excise taxes.§ Value-added taxes.§ Import/export taxes.
► Other sources of government revenue§ Natural resources.§ Grants (e.g., foreign aid).§ Public enterprises.
Income
classification
Total
revenue
Direct
taxes
Indirect
taxesGrants
Low income 21% 7% 9% 4%
Lower middle
income30% 9% 12% 2%
Upper middle
income32% 10% 12% 2%
High income 39% 19% 12% 0.2%
© GFF 2018 21
Government expenditure as a share of GDP
0
20
40
60
80
100
120
140
160
Nig
eriaD
RC
Bangl
adesh
Gui
nea-Biss
au
Uga
nda
Sierr
a Le
one
Sri L
anka
Indon
esia
Unite
d Rep
. of T
anza
nia
Nep
al
Chad
Côte d
'Ivoire
Zam
bia
Hai
ti
Comor
os
Kenya
El S
alva
dor
Lao P
eopl
e's
Dem R
epM
ali
India
Sao T
ome
and P
rinci
pe
Hon
duras
Uzb
ekist
an
Burundi
Gui
nea
Gha
na
Syria
n A
rab R
epubl
ic
Kyrgy
zsta
n
Gam
bia
Mor
occo
Bhutan
Papua
New
Guin
ea
Plur i
nat.
Stat
es of B
olivia
Republic
of M
oldo
va
Nig
er
Sam
oa
Congo
Tim
or-L
este
Leso
tho
GGE as % of GDP (2014)
Median: 28.5%
© GFF 2018 22
Conducive Macroeconomic Conditions
Health Share of
Public Expenditure
Public Expenditure
Share of GDP
GDP
per
Capita
X X =
Health
Outputs and
Outcomes
Public Expenditure
on Health per
Capita
Example from Vietnam
14% X 27% X US$2,050 = US$74
14% X 27% X US$4,000 = US$151
14% X 35% X US$4,000 = US$196
© GFF 2018 23
Five Pillars of Fiscal Space for Health
Conducive macroecono
mic conditions
Reprioritization
Sector-specific domestic revenue sources
External sources
Efficiency
© GFF 2018 24
► Increasing the share of government expenditures on health -- often a key signal of overall government commitment to health – can be key for fiscal space.
► Pits health against competing priorities: e.g., other sectors such as education, infrastructure, agriculture, etc.
► Key challenge being that health is often perceived by ministries of finance/planning as being inefficient and non-productive.
II. Reprioritizing Health
© GFF 2018 25
Government priority to health: GGHE/GGE – a few GFF countries spend less than the median in LMICs
0
5
10
15
20
25
30
Tim
or-L
este
Mya
nmar
Yem
en
Camero
on
Syria
n A
rab R
epubl
ic
India
Nig
er
Indon
esia
Mau
ritan
ia
Cambodia
Gha
naM
ali
Côte d
'Ivoire
Togo
Sene
gal
Zim
babwe
Congo
Chad
Guy
ana
Benin
Phil ip
pines
Uzb
ekist
an
Sierr
a Le
one
DRC
Sri L
anka
Zam
bia
Rep o
f Cabo
Verd
e
Liber
ia
Afghan
ista
n
Sao T
ome
and P
rinci
pe
Kenya
Burundi
Djib
outi
Viet N
am
Gam
bia
Ethio
pia
El S
alva
dor
Gua
tem
ala
Mic
ronesia
GGHE as a % GGE in 2014
Median: 9.7%
© GFF 2018 26
Reprioritization
Health Share of
Public Expenditure
Public Expenditure
Share of GDP
GDP
per
Capita
X X =
Health
Outputs and
Outcomes
Public Expenditure
on Health per
Capita
Example from Vietnam
14% X 27% X US$2,050 = US$74
14% X 27% X US$4,000 = US$151
14% X 35% X US$4,000 = US$196
20% X 35% X US$4,000 = US$280
© GFF 2018 27
Five Pillars of Fiscal Space for Health
Conducive macroecono
mic conditions
Reprioritization
Sector-specific domestic revenue sources
External sources
Efficiency
© GFF 2018 28
Sector-Specific Revenue Sources for Fiscal Space
Sector-specific earmarks
Public expenditure on health
per capita
GDP per capitaGDP per capita
Governmentexpenditure share of
GDP
© GFF 2018 29
Sector-Specific Sources of Revenue: Earmarked Payroll Taxes
§ Social health insurance (SHI) often introduced as a way to collect additional revenues for health, especially from employers.
§ Increasing contribution rates from formal sector often a key fiscal space question.
§ Challenge in implementing mandates and collecting contributions in economies with large levels of informality.
§ Interplay: social health insurance and informality.
Social health insurance share of
total health spending
Monaco 87%
Czech Republic 78%
Croatia 78%
Netherlands 73%
Japan 72%
France 71%
Estonia 69%
Slovenia 69%
Luxemburg 68%
Germany 68%
© GFF 2018 30
Sector-Specific Sources of Revenue: Non-Payroll Earmarks
► Use of “sin taxes” on tobacco and alcohol increasingly prevalent for financing health.
► Justified often both from a health and fiscal perspective, despite being regressive.
► Other forms of innovative “financing”: earmarking of other taxes such as VAT; natural resource revenue earmarks, etc.
► Impact on revenues can vary, dependent on elasticity of response, including impact on smuggling.
§ Impact on revenues can vary, dependent on “elasticity” of response.
§ Not clear what is behind growing trend towards earmarking revenues, especially in health sector; earmarking revenues to reprioritize sector?
§ Most forms of earmarking unpopular with ministries of finance: introduces rigidities in allocations across sectors.
© GFF 2018 31
Examples of “Innovative Financing”
Option Countries
Tax on remittances Mexico, Kenya
Financial transaction tax Argentina, Brazil, Zambia
Value-added tax Ghana
Turnover tax on mobile phones Gabon
Airline ticket levy
Cameroon, Congo,
Madagascar, Mali, Mauritius, Niger
Excise tax on extractive industries Botswana (mining)
Sin taxes Philippines, Thailand,
© GFF 2018 32
► III. Potential for DRM in your Country
© GFF 2018 33
Potential for DRM in your Country
© GFF 2018 34
Potential for DRM in your Country
34
Côte d'Ivoire Afghanistan
© GFF 2018 35
Potential for DRM in your Country
© GFF 2018 36
Potential for DRM in your Country
Haiti Indonesia
© GFF 2018 37
Where might there be room to increase the public budget? – 5 minute discussion in your table
§ Raise more government revenue?
§ Allocate more of the government budget to
health?
§ Ask people to contribute?
§ Get more health out of the existing resources?
© GFF 2018 38
► IV. Examples in other GFF Supported Countries
© GFF 2018 39
Reforms that Prioritize Health in the Budget
► DLIs or funded activities in GFF/World Bank IDA projects linked to maintaining and increasing share of government budget allocated to health:
§ Mozambique: Domestic health expenditures as a percentage of total domestic government expenditures (stable first 3 years, then increasing).
§ Tanzania: Recipients have achieved all of the Program annual 6 results in institutional strengthening at all levels (national, regional, LGA and facilities).
- Share of health in total government budget
§ Kenya: Counties receive resources from the project if the share of the county budget allocation (for Year 2) and expenditure (for Years 3–5) for health (excluding conditional grants for health) is higher than the previous year, but no less than 20 percent.
► Use of buy-down resources for health:
§ Guatemala: Government doubling buy-down amount (US$9M) and committed to invest this amount (US$18M) in Conditional Cash Transfer program
39
© GFF 2018 40
Strategic Planning
► Development of health financing strategies and implementation plans:§ Cameroon
§ Senegal
§ Kenya
§ Uganda
§ Ethiopia (including customized regional versions)
§ Myanmar
§ Sierra Leone
