Financial Sustainability Plan for the National Immunization
Program of Kyrgyzstan
Submitted to the GAVI Secretariat on November 28th, 2002
Bishkek, 2002
The Government of the Kyrgyz Republic
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Prepared by members of the national FSP Task Force: …………….. …………….. …………….. …………….. …………….. …………….. …………….. …………….. …………….. …………….. …………….. …………….. In addition to the above-listed individuals, the Government of Kyrgyzstan would like to thank the National Center for Immunoprophylaxis, Sotsium-Consult, UNICEF Office in Bishkek, and Abt Associates Inc. for their contributions to the financial sustainability planning in the National Immunization Program of Kyrgyzstan, as well as the ICC members for their endorsement of the plan and valuable commentaries in Section 7 of this document. The title page features a detail of a work by Kyrgyz artist Suyutbek Torobekov, posted on the Internet at: www.kyrgyzinvest.org/artgallery.
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Signatures of the Government The Ministry of Health and the Ministry of Finance of the Kyrgyz Republic commit themselves to providing sustainable financing to the National Immunization Program in accordance with the herein presented plan. The signatories of this document request other health financing agencies of Kyrgyzstan as well as international donor organizations to join their efforts in meeting the funding needs of the National Immunization Program by facilitating adequate and reliable allocations.
Minister of Health Minister of Finance
_____________________
_____________________
MYTALIP M. MAMYTOV
BOLOT E. ABYLDAYEV
“ “ November, 2002
“ “ November, 2002
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Table of Contents
Signatures of the Government ........................................................................................................ iii Table of Contents ........................................................................................................................... iv Executive Summary............................................................................................................. v Acronyms ..................................................................................................................................... viii Section 1. Macroeconomic and Public Policy Context .................................... 1
1.1 Baseline Trends ............................................................................................................... 1 1.2 Outlook .............................................................................................................................. 1 1.3 Uncertainties, Constraints, and Solutions................................................................. 2 1.4 Implications for NIP....................................................................................................... 3
Section 2. Healthcare Policy and Financing Context ........................................ 4 2.1 Health, Health Care and Financing Trends .............................................................. 4 2.3 Health Sector Reforms................................................................................................... 6 2.4 Implications for NIP....................................................................................................... 7
Section 3. NIP Characteristics, Strategies and Objectives ............................. 7 3.1 Program Definition and Scope .................................................................................... 7 3.2 Program Strategies and Objectives............................................................................. 7 3.3 Program Administration................................................................................................ 8 3.4 Program Quantitative Parameters ............................................................................... 8
Section 4. Current Program Costs and Financing ............................................... 8 Section 5. Initial Projection of NIP Financing.................................................... 14
5.1 NIP Priorities and Additional Needs........................................................................ 14 5.2 Projected Need for Funding ....................................................................................... 17 5.3 Funding Levels by Source, Financing Gap, and Reliability Assessment ...... 19
5.3.1 NIP Funding by Source ................................................................................................ 19 5.3.2 Reliability of NIP Funding and Financing Gap............................................................ 21
Section 6. Revised Projection of NIP Financing ............................................... 22 6.1 Strategies and Actions to Reduce Gap and Increase Reliability ...................... 22 6.2 Revised Reliability Assessment and Financing Gap ........................................... 25 6.3 FSP Monitoring Indicators ......................................................................................... 26
Section 7. Endorsement and Commentaries from ICC Members............. 27 Annexes .........................................................................................................................................A1
Annex A. Financial Sustainability Projections, 2003-08 ..........................................................A2 Annex A1. NIP Funding by Source and Function.................................................................A2 Annex A2. NIP Funding by Level of Reliability...................................................................A5
Annex B. Projected Financing by Select Function, Primary Tables: 2002-08 ..........................B7 Annex C. FSP Diagnostic Tool ...............................................................................................C13
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Executive Summary The National Immunization Program of Kyrgyzstan (NIP) encompasses and coordinates institutions, resources, and activities, intended to minimize illness, disability, and death from vaccine-preventable infections.
The NIP is a large-scale program, as the following 2001 data attest. NIP targets 879,000 persons that represent 18% of the nation’s population. Children of up to 16 years old account for 73% of the NIP target population. Of their number, newborns and infants account for 11%. NIP sustains high rates of immunization with EPI antigens: coverage with BCG, OPV and DTP vaccines, reportedly, exceeds 98%. Coverage with the newly introduced Hep.B vaccine grew to 57% in 2001 and is planned to reach a near-full level in 2002. Annual consumption of vaccines totaled at 2.15 million doses in 2001.
The Government of Kyrgyzstan (GoK) views the adequate and dependable financing of vaccine procurement and NIP infrastructure as the main objective towards the long-term national goal of attaining vaccine independence for the Kyrgyz Republic. By presenting this financial sustainability plan (FSP), the GoK makes a seminal stride towards a financially sustainable FSP.
Table A. NIP Costs by Program Function and Outlay (Include the unfunded depreciation of equipment): 2002, US$ 1,000
Baseline assessment: Table A summarizes the baseline 2002 program costs in a comprehensive function/outlay matrix. Aggregate NIP costs reached US$1,661,500 in 2002. Vaccines (58%) and wages, salaries and payroll taxes (18%) accounted for ¾ of Program costs. The following data characterize NIP financing by source: the national budget 25.5%, local budgets and MHI 26.4%, households 2%, JICA grant 23%, GAVI/VF 10.1%, UNICEF and other donors 7.8%, unfunded costs 5.2%. All domestic sources, thus, account for 53.9% of NIP expenditures, donors for 40.9%, while 5.2% of costs is not backed up with funding.
Projections: Accurately assessed NIP costs provided a statistical base line for FSP. This document contains two projections of NIP finances. The Initial Projection in Section 5 reflects NIP historical and additional needs, summarized in Subsection 5.1 from the NIP Strategy Document for 2001-05. The Initial Projection features a relatively large financing gap and a fairly low
Functions Outlays
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Vaccines 635.7 635.7 43%Immunization supplies 207.2 207.2 14%Cold chain equipment 7.3 30.0 65.8 103.1 7%Transportation 1.2 30.0 3.1 21.1 55.4 4%Basic and short-term training 30.9 9.3 12.4 3.1 3.1 61.9 4%Social mobilization, monitoring & surveillance, R&D, program administration
95.0 1.8 12.0 18.7 8.6 0.7 30.6 167.9 11%
Immunization services 132.1 2.6 71.9 37.1 243.8 17%TOTAL 259.2 13.7 842.9 42.0 110.2 41.7 127.9 33.7 1475.0 100%
Percent by outlay 18% 1% 57% 3% 7% 3% 9% 2% 100%
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reliability of program allocations. The Revised Projection replicates the aggregate amount of NIP expenditures from the Initial Projection, namely, US$2,627,800 in 2005 and US$4,590.3 in 2008, but strengthens it with more reliable allocations and reduced financing gap. Subsection 6.1 explains FS strategies and actions that the GoK will intend to implement in order to enable the Revised Projection. Both FS projections cover the time period of 2003-2008.
The NIP Strategy Document for 2001-05 sets out the following main objectives that stipulate NIP expansion and increased funding:
Vaccines: Secure adequate and sustainable financing of vaccine procurement for the growing NIP target population; complete transition to MMR vaccine by the end of 2003; expand immunization of hepatitis B from infants to 11-year-olds and medical workers in 2004; implement Hib vaccine in 2006, provided that the burden of disease study confirms the national need for Hib immunization; improve targeted immunizations of high-risk populations, e.g., refugees, migrants; sustain adequate levels of immunizations by epidemiological indications; hedge the national vaccine supply from financial instability by increasing the national contribution to UNICEF/VII. It is envisioned that UNICEF/VII would continue to supply EPI vaccines for infants and MMR vaccine for one-year-olds. GAVI/VF would provide Hep.B vaccine for infants and, hypothetically, would expand its support to Hib vaccine, starting in 2006. The national budget would stay the course of funding vaccines for the immunization of children of 2+ years of age and adults.
Immunization safety: Provide vaccines complete with solvents, AD syringes and, where apropriate, disposable syringes, as well as safety boxes; ensure refresher training for providers of immunization services on open vial handling, safe injection techniques, sharp waste disposal, and post-immunization monitoring for possible complications. Sustainable supply of AD syringes is the core requirement of the NIP safe injection strategy. While UNICEF/VII and GAVI/VF would continue to ensure a steady supply of AD syringes for primary immunizations over the near- and medium term, the GoK would fund AD syringes for immunizing 2+ year-old children and adults.
Cold chain: Enforce cold chain requirements and ensure proper maintenance of the cold chain equipment. Replace 240 dysfunctional refrigerators in the immunization posts and FGPs (US$23,000 per year); cold room at the Oblast SES in Osh (US$12,800 per year); and 30 refrigerators at the Oblast and, selectively, District SES levels (US$3,600 per year).
Subsection 5.1 provides the full list of NIP needs for additional resources and funding. If all those needs were indiscriminately factored in the NIP budget, the resulting financing gap (Subsection 5.3) would amount to 37% of the program cost in 2003-04 and would grow to 47% in 2005, after JICA grant is over. Starting in 2006, GAVI/VF may mitigate the shortage of funding if it chooses to supply Hib vaccine to Kyrgyzstan: the financing gap would decline then to 44% in 2006, 39% in 2007, and 37% in 2008.
Subsection 6.1 presents the list of strategies and actions with the dual purpose of reducing the initially projected NIP financing gap and raising the reliability of planned allocations:
To secure additional funds for NIP, the GoK will support NIP leaders in their intention to raise funds from the local governments to immunize 11-year-olds against Hepatitis B; introduce depreciation of cold chain equipment and vehicles as a budgeted cost; discuss with JICA the prospects for a follow-up grant, based on the KR commitment to co-financing towards grant’s full phase-over by the end of the grant period; apply to GAVI for an extended support with Hep.B and, possibly, Hib vaccine procurement, accompanied with realistically established and growing over time co-financing requirements; apply to UNICEF for renewed support with training, necessary during the introduction of new vaccines and major organizational changes in NIP; encourage NCI to seek partnerships and grant-based support for NIP-related medical training.
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To enable predictable allocations to NIP and timely disbursement of funds, the GoK will channel select NIP needs through the NSPR outlay plan; direct the Social Fund to renew transfers of MHI premium revenues to the National MHI Fund for targeted allocations to PHC; ascertain with IMF whether such policy may have negative implications for debt-relief under PRGF agreement.
To ensure efficient use of funds, the GoK will direct NIP leaders to tighten vaccine and immunization management in order to reduce vaccine waste according to the FSP schedule; monitor the national procurement of vaccines in order to avoid the recurrence of price-inefficient purchases; work with ADB to align the Bank’s intensions to support NIP with the national priorities and plans.
To control NIP needs at realistic levels, the GoK will not opt for unwarranted introduction of new expensive antigens and vaccine combinations, but instead will seek international funding and expertise for a competent study of epidemiological needs for new vaccines, particularly, Hib vaccine.
The implementation of the above-outlined FS action plan would reduce the financing gap, compared to the initial projection, by US149,000 in 2003, US$527,000 in 2005, and US$835,000 in 2008 (Subsection 6.2), in current prices, adjusted for 5% year-on-year growth. The financing gap as share of aggregate NIP costs would fall in 2003 from 37% under the initial projection to 25% under the revised projection; in 2005, respectively, from 47% to 26%, and in 2008, from 37 to 29%.
The revised projection, thus, indicates an increased level of financial self-reliance in the NIP of Kyrgyzstan.
The following four indicators are selected for FSP monitoring (Subsection 6.3): (1) NIP recurrent expenditures paid for with national resources in percent of total program-specific expenditures; (2) NIP aggregate expenditures: disbursed in percent of committed; (3) Price-efficient procurement of vaccines: percent share of vaccines, purchased at prices within 10% tolerance margin off the best prices, available under widely accessible procurement vehicles; (4) Vaccine wastage rates.
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Acronyms ADB AD syringes
The Asian Development Bank Autodisable syringes
BCG Bacille Calmette – Guerin vaccine (against tuberculosis) CIS Commonwealth of Independent States DSSEC The Department of State Sanitary-Epidemiological Control DTP Diptheria, tetanus and pertussis (vaccine) DT Diphtheria and tetanus (vaccine) EPI Expanded Program on Immunization FAPs Feldsher-midwife’s post FGPs FS
Family group practices Financial sustainability
FSP Financial Sustainability Plan (Planning) FTE Full-time equivalent GAVI The Global Alliance for Vaccines and Immunizations GAVI/FTF The Financing Task Force of GAVI GAVI/VF The Vaccine Fund of GAVI GDP Gross domestic product GoK Government of Kyrgyzstan Hep.B Hepatitis B Hib Haemophilus Influenzae Type b vaccine HIS Health Information System(s) ICC Inter-Agency Coordination Committee IEC Information, education, and communication (materials) IMF The International Monetary Fund I-NSPR The Interim National Strategy for Poverty Reduction JICA The Japan International Cooperation Agency KR The Kyrgyz Republic MHI Mandatory Health Insurance MMR Measles, Mumps, and Rubella MoF Ministry of Finance MoH Ministry of Health NCA National Control Agency NCI The National Center for Immunoprophylaxis NIP The National Immunization Program NIS National Immunization Schedule NSPR National Strategy for Poverty Reduction OPV Oral Polio Vaccine PHC Primary Health Care PIP Public Investment Program PRGF Poverty Reduction and Growth Facility R&D Research and development SES The Sanitary-Epidemiological Service Td Tetanus with reduced diphtheria (vaccine) UNICEF The United Nations Children’s Fund UNICEF/VII The Vaccine Independence Initiative of UNICEF in collaboration with WHO USAID U.S. Agency for International Development WHO The World Health Organization
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Section 1. Macroeconomic and Public Policy Context This section covers two topics that the Financing Task Force of GAVI (GAVI/FTF) set out in the Financial Sustainability Planning (FSP) Guidelines: (1) national economic growth and budget strengthening, and (2) national priorities, policies, challenges, and solutions. Both areas are relevant for NIP financial sustainability as they set external limits on FSP.
1.1 Baseline Trends In 2000-2001, Kyrgyz economy was recovering from the recession, triggered by the 1998 financial crisis in Russia. Strong macroeconomic performance over the past two years is expected to lead to steady economic growth in the medium term. Table 1 summarizes GDP, fiscal, and social growth trends and projections for the Kyrgyz Republic (KR).
Following the decline by 24% in 1999, dollar GDP resumed its growth in 2000. In 2002, it is expected to reach its pre-crisis 1998 level. Per capita GDP would rise to $329 in 2002 and surpass the pre-crisis level in 2003. Inflation subsided to a decade low 3.7% in 2001, compared to 40% in 1999. The nominal exchange rate stabilized over 2000-01, and short-term interest rates fell, indicating increased confidence in the som.
Fiscal adjustment was robust. The consolidated budget deficit (the aggregate deficit of the national, local and Social Fund budgets) declined in 1999-2001 from 12.7 to 5.2% of GDP. Public revenues grew by 53%, reflecting stronger fiscal bases and better tax enforcement and administration. The share of grants in budget proceeds declined from 11.9 to 4.7%, indicating greater reliance of public finances on internal resources. Public expenditures grew by 36% but fell in percent of GDP from 30.4% to 22.2%, thus, signaling fiscal stabilization. The share of public expenditures from “non-borrowed” resources increased markedly from 57% to 72%, due to a decline of the share of expenditures from external loans and grants, mainly, the foreign-financed Public Investment Program (PIP).
The balance of payment status exceeded expectations: the current account deficit narrowed from –14.7% of GDP in 1999 to –1.3% in 2001. The trade deficit gave way to a modest trade surplus. Economic growth and fiscal strengthening reduced the burden of debt service. External debt financing declined from 14.5 to 5.7% of GDP and from 39.3 to 18.1% in relation to exports.
Recent economic growth reduced poverty – a primary objective under the Interim National Strategy for Poverty Reduction (I-NSPR), adopted in May 2001. Poverty rate declined from 55.3% to 49.4%, and personal income grew steadily in real terms.
1.2 Outlook The GoK medium-term economic program targets four main goals: further macroeconomic stabilization, more focused structural reforms, better governance, and poverty reduction. Key policies and developments to achieve these goals include as follows: (1) fiscal consolidation, i.e., reduced tax brakes, optimized tax rates, improved tax enforcement, and increased receipts from privatization; (2) structural and institutional change, i.e., reforms in the banking, energy, and housing sectors; privatization of state monopolies; public governance reforms to increase transparency, attract investors, and reduce the cost of government; (3) The debt rescheduling agreement with the Paris Club in March 2002 will help improve the country’s prospects for growth and poverty alleviation. The agreement stipulates repayment of maturities over the next 20 years with 5-year grace period on commercial credits and 10-year grace period on Official
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Development Assistance credits. Debt relief is linked to the GoK ability to stay the course of the NSPR. The full NSPR, prepared in fall 2002, will update that course from the year-old I-NSPR. Table 1. Selected Economic and Social Indicators of the Kyrgyz Republic: Reported 1998-2001 with Projections for 2002-8
Reported Projected Indicators 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
GDP Nominal GDP, Million US$ 1646 1250 1370 1525 1654 1839 1991 2164 2388 2616 2859 Nominal GDP growth rate: % -24.0 9.5 11.3 8.5 11.2 8.3 8.7 10.4 9.5 9.3 Real GDP growth rate (unadjusted for changes in Som/US$ exchange rate): % 2.1 3.7 5.4 5.3 1.8 5.8 4.0 4.8
GDP per capita, US$ 343 257 279 308 329 361 387 417 449 485 523 PUBLIC FINANCES
Total revenue and grants1): % GDP 18.0 17.7 15.1 17.0 17.3 18.3 18.4 18.5 Total outlays (incl. net lending): % GDP 28.8 30.4 24.9 22.2 22.4 23.2 22.1 21.3 Incl.: 1) Public debt expenditures 2.5 3.7 3.2 1.9 1.9 1.7 1.3 1.8 2) Expenditures from external loans and grants -- foreign-financed PIP: % GDP 5.7 9.4 6.8 4.4 5.4 4.0 3.0
3) Non-borrowed domestic expenditures: % GDP 20.6 17.3 14.9 15.9 15.1 17.5 17.8 Non-borrowed domestic expenditures: % outlays 71.5 56.9 59.8 71.6 67.4 75.4 80.5 Financial balance: % GDP -10.8 -12.7 -9.8 -5.2 -5.1 -4.9 -3.7 -2.8
EXTERNAL SECTOR Export growth rate: % -11.5 -13.5 10.4 -6.0 4.7 1.1 1.1 5.3 5.1 5.4 5.7 Trade balance in % of GDP -13.4 -7.1 0.6 2.6 0.3 -1.7 -2.8 -2.8 -2.9 -3.6 -4.4 Current account balance in % of GDP -22.1 -14.7 -5.8 -1.3 -3.8 -5.4 -5.7 -5.4 -5.2 -5.5 -6.2 External debt outstanding in % of GDP 72.3 109.3 111.1 108.5 107.1 101.7 95.1 89.3 84.0 79.4 74.3 External public debt financing in % of GDP 8.9 14.5 8.8 5.7 8.2 6.3 4.2 2.4 External debt financing in % of export 27.4 39.3 23.7 18.1 29.7 23.0 16.3 9.4
SOCIAL INDICATORS Population, at year end, 1,000 4806 4867 4908 4947 5043 5111 5178 5246 5318 5390 5463 Poverty, in % of population 55.3 52.0 49.4 46.9 44.4 42.0 39.8 Unemployment, in % of population 12.0 12.0 11.0 10.6 10.2 9.9 9.6 1) Includng revenues of the national and local budgets, Social Fund, and grants
Sources: MoF, IMF, The KR National Committee for Statistics
Assuming successful implementation of the reviewed policies, GDP would grow at 4-5% annual rate in real terms in 2002-08; inflation rate would stay within 5%; consolidated budget deficit would decline in 2001-05 from -5.2 to –2.8% of GDP. Trade balance would evolve from the expected surplus of 0.3% to –2.8% of GDP in 2005 and –4.4% in 2008, reflecting reduced production and export of gold by the “Kumtor Gold Co.” joint venture, the ‘flag carrier’ of Kyrgyz exports. Current account deficit would stabilize at -5.4-5.7% over 2003-05 and would go up to -6.2% in 2008, as debt repayments intensify upon the expiration of the grace period, granted by the Paris Club in 2002. Poverty rate would decline in 2001-05 from 49.4% to 39.8%.
1.3 Uncertainties, Constraints, and Solutions The GoK will continue to closely monitor external and internal factors that may distort the KR macroeconomic performance and social stability.
Unwarranted refocusing of the economic policy from the established long-term strategy to politically motivated near-term measures, proliferation of political crises and military conflicts in
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the Central Asian region, and domestic instability are the main political threats, potentially disruptive to the achievement of the above-reviewed targets of economic growth.
Being heavily dependent on oil imports, the Kyrgyz economy will remain susceptible to price volatility on the global oil market. Gold prices will continue to bear on the KR receipts from exports, although the share of gold in the national exports will decline progressively from 38% in 2000 to a projected 30% in 2005 and 14% in 2008.
Kyrgyzstan will continue to rely on external financing, particularly on concessional facilities such as the IMF PRGF, designed for low-income CIS countries. Creditors and donors expect GoK to adhere to an agreed set of macroeconomic, structural, and social policies. Failure of Kyrgyzstan to comply with its commitments may result in reduced external allocations to the detriment of macro-financial stability. The GoK is concerned about its sub-optimal track record of providing co-financing under foreign-financed programs (81% compliance in 1999, 65% in 2000, and 91% in 2001).
Complex sets of conditions, attached to various programs of external support, occasionally come at a conflict with one another, resulting in reduced disbursements to Kyrgyzstan. For example, the PRGF arrangement imposed blanket restrictions on external financing that led to the reduction of PIP expenditures in 2001 from the planned US$88.4 million to US$66.3 million. It would take to extend PIP-financed projects by 3 to 4 years to use up the deferred amount. Both donors and contracting agencies turned reluctant to make the necessary adjustments in their budgets and activity plans. The GoK will have to prioritize among the projects, deciding on acceptable scale-backs in less important projects.
A substantial part of externally financed projects is not integrated into public budgets as bilateral donors tend to expend their grant funds independently, i.e., outside the Medium-term Budget Projection. Since the GoK is required to tighten restrictions on external financing, there is now an important need for aligning external projects with the national priorities and budget planning. A sector-wide approach to external project planning and fund management has, thus, become a topical issue. Integrating bilateral donors into PIP and reflecting grants on the Treasury accounts could help resolve it.
PIP funding accounts for 90% of public capital investment in the KR. Since 1993, massive investments from the program budget resulted in modernized infrastructure in many sectors of the national economy. Failure to provide adequate recurrent funding to maintain and depreciate newly installed or rehabilitated fixed assets will impede their efficient use and timely replacement, particularly after the international component of PIP is phased out. The MoF is developing a strategy that would balance capital investments with recurrent financing.
1.4 Implications for NIP As a publicly financed program in a country that seeks vaccine independence, NIP will benefit from the projected steady GDP growth, monetary and fiscal stabilization, reduced debt burden, and greater emphasis on social needs in the context of poverty reduction. Since NIP would continue to depend on external resources, the lack of policy and management coordination among the creditors and donors will imminently affect the program funding. The GoK determination to coordinate donor projects and allocations by integrating them into the national priority setting and budget planning process will benefit the high-priority programs and, likely, NIP among them. Government’s failure to comply with co-financing requirements will set an adverse environment for donor involvement in the NIP financing.
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Section 2. Healthcare Policy and Financing Context The NIP is an integral part of the national healthcare sector. The public finance system of Kyrgyzstan has just made an important transition to medium-term budget planning by sector-wide program. This new policy enabled block transfers to each social service sector and left intra-sectoral allocations at the discretion of the sectoral ministries. The GoK chose the healthcare sector to pioneer the sectoral budget programming in Kyrgyzstan, starting in 2003. The access of NIP to resources will directly depend on the priorities and strategies, formulated by the MoH. This section reviews health sector issues, policies and reforms in the KR with implications for NIP sustainable development and financing.
2.1 Health, Health Care and Financing Trends Select health status indicators. In 1996-2001, infant mortality declined from 25.9 to 21.7 per 1,000 live births (before transition to international reporting standards), and maternal mortality from 65 to 48.9 per 10,000 live births. Regional rates vary considerably: they have been much higher and grew further up in the areas of high migration. TB, brucellosis and echinococcal infections have been on the rise over the past three years. Viral hepatitis in its various forms represents an endemic problem, particularly in the southern regions and among medical workers.
Care delivery. Until 2001, healthcare facilities of 22 types provided personal health care in Kyrgyzstan, including 12 that specialized by clinical area and 3 on children. Four types of healthcare institutions carried out, predominantly, public health activities. Being a common feature of the former Soviet health care model, compartmentalized care, paired with excess
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Figure 1. Healthcare Financing in Kyrgyzstan
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capacity, contributed to low capacity utilization and redundant spending on fixed costs. The aforementioned inefficiencies, exacerbated by inadequately low allocations to the healthcare sector, resulted in meager spending on drugs, health supplies, and medical equipment, particularly in the primary care. Scarce funding, combined with indiscriminate admission of physicians to clinical practice, keep medical profession among the least paid in Kyrgyzstan. Workplace conditions remain sub-standard. Most medical buildings require capital repair. An attempted structural adjustment by administrative means produced only limited results over the 1990s. Supply of physicians and health personnel remained largely unchanged and, per comparable population, higher than in industrialized countries. The resulting scarcity of essential production means, depressed worker motivation, patient distrust, lack of attention to health risk management and prevention, and preponderance of specialty-driven interest groups with a consistently conservative stance on new care strategies, maintained throughout the 1990s a sense of urgency in designing and implementing health sector reforms in Kyrgyzstan.
Table 2. Health Financing in Kyrgyzstan: Reported 2000-01 with Projections Till 20051)
Reported Planned Projected Indicators 2000 2001 2002 2003 2004 2005 Health expenditure - Total, US$ 1,000 32217.8 33766.5 47163.3 55369.3 64525.6 74875.7Per capita health expenditure, US$, at nominal exchange rate 6.6 6.9 9.4 10.9 12.5 14.4
Health Expenditure as% of GDP 2.5 2.2 2.8 3.1 3.3 3.5Percent budgetary outlays (excl. co-financing of loan projects) 25.4 32.5 33.4 34.8 38.1
Real year-on-year growth, % 1.1 33.2 12.0 11.0 10.5 Financing by source, % -- total 100 100 100 100 100 100Central budget, incl. allocations to mandatory health insurance 27 25 23 24 25 26
Regional and local budgets 53 55 41 43 43 44Mandatory health insurance from payroll taxes 7 7 9 9 9 10User charges 6 7 10 10 10 9Loans (excl. bilateral loans) 7 5 17 14 13 111) Table 2 indicators are based on MoF-projected US$/Som exchange rate that slightly diverges from the IMF projections, reflected in Table 1.
Sources: MoF, 2002
Financing by source. The reported healthcare expenditure of US$6.9 per capita of resident population in 2001 came primarily from public funding: central budgets accounted for 25% and local budgets for 55% of the total. Mandatory health insurance (MHI) and user charges contributed each with 7%, and external loans with 5% of national health expenditure. The estimated share of operating expenses is 94%. Fixed investments account for the rest and are funded predominantly from external loans. Supplementary co-financing from the GoK varied over time but remained low: 4% of fixed investments in 1999, 16% in 2000, and 2% in 2001.
The national budget diversified its health financing roles. In addition to direct recurrent allocations to personal and public health, the central government enables 98% of capital investments from national sources, and, although with a considerable lag from the introduction of MHI in 1997, is beginning to finance insurance coverage of children and welfare beneficiaries. Central transfers enable a considerable part of decentralized financing, the latter, thus, appearing to be overstated in Table 2. Based on 1999 statistics, regional and local budgets finance 74% of on-budget recurrent allocations to healthcare providers and public health activities, and 92% of providers and services, associated with NIP. Although MHI funding from payroll taxes accounts
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for the limited 7% of the national health spending, qualitatively, it plays an important role, since it is used to support main reform areas, i.e., Family Group Practices (FGPs), performance-based provider financing, and selective contracting.
Financing by level of care. According to the MoF estimates, PHC accounts for 17%, secondary (primarily, hospital-based) care for 54%, tertiary care for 16%, public health for 7%, and healthcare administration and management for 6% of annual health expenditures.
2.3 Health Sector Reforms International and regional observers commended Kyrgyzstan for its leader status in health care and financing reforms among the CIS countries.
The change of care model stands at the heart of national health sector reforms. The newly created 800 FGPs have become the locus of patient-centered care for voluntarily enrolled populations. At their full clinical and organizational strength, FGPs will integrate health promotion, disease prevention, curative and rehabilitative services across individual, household and community levels; provide first-contact services for a wide range of symptoms and complaints; refer to, and coordinate care with, higher-level providers; manage provider/patient contacts in a pro-active and flexible manner.
Starting in 2002, the typology of providers was streamlined to 6 categories: (1) FGPs; (2) Family Medicine Centers (for outpatient specialty consultations and routine-to-mid-level diagnostics, not yet internalized by FGPs); (2) hospital outpatient departments, to be managed and funded separately from the hospitals (for consultations in complex cases, high-tech and pre-admission diagnostics, ambulatory surgery); (4) general hospitals; (5) dental polyclinics or departments of family medicine centers; (6) ambulance.
As FGPs take on their comprehensive responsibilities, the share of PHC in aggregate health expenditures will grow progressively from 17% in 2001 to 35% in 2005.
An overhaul in the health sector policy and administration is designed to support the intended bold structural shift toward PHC. Provider network rationalization, assisted by the first round of provider licensing and accreditation, led to cutbacks in the hospital sector: in 1996-2001, the number of hospitals declined from 335 to 244, bed capacity by 19%; number of admissions dropped by 11% compared to 1997, when the hospital caseload crested out, and by 8% in 2000-01 alone; ALOS fell from 16.4 to 13.3 days in 1998-2001. The December 1998 and April 2002 Decrees of the GoK mandated the reinvestment of savings, resulting from eliminated hospital overcapacity, into provider physical plant and human resources.
A shift away from guaranteed financing of providers is expected to turn structural adjustment into an ongoing process. Open enrollment and prospectively established capitation rates will define budgets of FGPs and family medicine centers. Number of patient discharges and casemix rates will determine hospital financing. Competitive facilities will enter into purchaser/provider contracts, thus, agreeing to comply with standards of care and efficiency, set out by MOH and the MHI Fund. The contracted providers will have autonomy over their clinical and financial resources, e.g., itemized budget control will be abolished.
In 2002-05, MHI will expand purchaser/provider contracts to the entire PHC provider network. MHI will be extended to all population groups. The central budget will contribute for children below 16 years of age. FGP patients will have access to essential drugs, funded at 50% through MHI allocations as part of the capitation rate, and at 50% through user charges. Low-income patients will be exempt from drug co-payments.
7
The MHI Fund, Integrated Billing Center, and providers of patient care will become the main users of an integrated Health Information System (HIS), currently under development at the MHI Fund.
2.4 Implications for NIP The GoK is determined to integrate immunization services into the FGP care model, currently being rolled-out from two pilot regions to the rest of Kyrgyzstan. This will lead to the elimination of most immunization posts. The baseline assessment (Section 4) and both projections of NIP resources (Sections 5 and 6) took this organizational change into account.
FGPs as the main providers of immunization services will rely on regional government funding with increased support from the MHI Fund, particularly as children become integrated in MHI. Regional governments and the MHI Fund should be regarded among the key contributors to the NIP sustainable financing.
Section 3. NIP Characteristics, Strategies and Objectives
3.1 Program Definition and Scope The National Immunization Program of Kyrgyzstan (NIP) encompasses and coordinates institutions, resources, and activities, intended to minimize illness, disability, and death from vaccine-preventable infections. The term NIP, customary in the GAVI setting and for that reason used throughout this report, is a close substitute for the “National Program on Immunoprophylaxis”, the official title of NIP in Kyrgyzstan.
NIP vaccines and immunizations. The NIP of Kyrgyzstan covers (1) EPI vaccines; (2) mumps and rubella antigens, added to the national immunization schedule in 2001; (3) Hepatitis B vaccine, implemented in 2000 with 5-year funding from the GAVI /VF; and (4) vaccines against rabies, typhoid, pest, tularemia, brucellosis, anthrax, and encephalitis, covered by the blanket term “vaccine by epidemiological indications”. Immunizations against the latter group of diseases are limited to endemic and epizootic areas, and account for a moderate share of NIP efforts. The introduction of Hib and meningococcal vaccines, although contemplated by the NIP leaders in Kyrgyzstan, would be deferred until burden-of-disease data become available to ascertain the epidemiological need.
NIP functions. Consistent with the “National Program on Immunoprophylaxis for 2001-2005”, the FSP addresses procurement of vaccines and immunobiologicals, injection and other immunization supplies, cold chain, transportation, short-term and long-term (basic and post-graduate) training of personnel; ‘general functions’ that include social mobilization, monitoring and surveillance, R&D, program administration and management; as well as immunization and related medical services.
3.2 Program Strategies and Objectives The laws “On the Health Protection of the People of KR”, “On the Sanitary-Epidemiological Well-being of the KR Population”, and “On the Immuno-prevention of Infectious Diseases” mandate free basic immunization services for children and other target populations of Kyrgyzstan. NIP enables this key social entitlement.
The NIP of Kyrgyzstan relies on the following policy principles:
• Immunization services are a public good.
• NIP is a major contributor to poverty reduction.
8
• The NIP design is intended to combine best practices of Kyrgyzstan with the WHO new global health policy “Health for All in the 21st Century”.
• A centralized approach to managing and delivering immunization services shall continue to play an important role in providing effective and equitable access to immunizations.
The NIP of Kyrgyzstan pursues the following national epidemiological goals:
Control the incidence rates of pertussis at 2 cases and diphtheria at 0.2 cases per 100,000 population; prevent epidemic outbreaks of mumps and reduce its incidence to isolated cases; decrease the incidence of measles to one case per 100,000 population and avoid the epidemic outbreaks of measles; limit the incidence of Hepatitis B in children below 5 years old to isolated cases; prevent incidence of poliomyelitis from wild strains; promptly localize and eliminate foci of poliomyelitis in the event of their emergence on the KR territory; reduce the incidence of purulent meningitis and pneumonia, caused by Hemophilus influenzae type b; reduce the incidence of rubella; prevent the incidence of tetanus in neonates; limit the incidence of disseminated forms of tuberculosis and tuberculous meningitis in infants.
3.3 Program Administration The coordination of NIP at the national level is bestowed on the First Deputy Health Minister / the Chief Sanitary Physician of the KR, who also heads the Department of State Sanitary-Epidemiological Control (DSSEC); at sub-national levels on Chief Sanitary Physicians of the oblasts, districts, and cities, who also head Sanitary-Epidemiological Services (SES) in their geographic jurisdictions. DSSEC is a quasi-autonomous department of MoH. It manages NIP with active participation of the National Center of Immunoprophylaxis (NCI) and its regional chapters. An MoH Decree vested NCI with the powers of “managerial, coordinative, organizational, methodological, consultative, and auditing institution, in charge of the design and implementation of the entire complex of measures of disease-specific prevention”.
3.4 Program Quantitative Parameters The NIP of Kyrgyzstan is a large-scale program. In 2001, it targeted 879,000 persons that represent 17.9% of the nation’s resident population. Children of up to 16 years old account for 73% of the NIP target population, including 11% newborns and infants. NIP sustains high immunization rates on EPI antigens: coverage with BCG, OPV and DTP vaccines, reportedly, exceeded 98% in 2001. Coverage with the newly introduced Hep.B vaccine was 57.3% in 2001 and is planned to attain a near-full level in 2002. Annual consumption of vaccines reached 2.15 million doses in 2001.
Until recently, vaccines were administered to the patients in 1,605 fixed-facility immunization posts, set up in the outpatient health centers (polyclinics), maternity homes, rural feldsher-midwife posts (FAPs), rural ambulatories, and rural hospitals. An additional 749 immunization posts were deployed in 2001 for the national campaign of immunizations against measles and rubella. Under an all-encompassing shift toward the family medicine, FGPs become the main providers of immunization services: an estimated 1,432 FGPs would immunize children and adults as part of their commitment to integrated PHC (this number includes FAPs, rural ambulatories and hospitals, currently under conversion into FGPs); 54 immunization posts would function in the Family Medicine Centers, i.e., successors to polyclinics, and 119 in maternities.
Section 4. Current Program Costs and Financing This section provides information on NIP current costs and funding.
9
The NIP costs and expenditures are estimated for FSP by outlay (cost category) and program function. The list of FSP outlays presents a slightly modified official classification of budgetary outlays and comprises wages, salaries and payroll taxes; business travel; pharmaceuticals and medical supplies; meals; transportation (i.e., fuel and lubricants, and the total cost of transportation services, unrelated to vaccine delivery); utilities (i.e., water, electricity, heat, gas, and communications); maintenance and repair; and depreciation of equipment. The functional layout of NIP costs and expenditures follows the list of program functions, displayed in Subsection 3.1. Table 3. Vaccine Procurement in the NIP of Kyrgyzstan: Current Volumes, Prices, and Annual Cost, 2001-02 *) , US$ 1,000
*) In 2002, the NIP of Kyrgyzstan functioned on the surplus of DTP vaccine, accumulated over the previous two years. Table 3 presents the annual cost of vaccines, procured for the NIP of Kyrgyzstan in 2001-02. Tables 4-9 detail non-vaccine resources and costs of NIP, estimated for 2002. Table 10 aggregates function-specific costs into a function/outlay matrix. The narrative, interspersed among the tables, provides more detail on the methodology of, and findings from, these baseline estimations.
Prices of vaccines in Table 3 are inferred from the reported annual expenditures on specific vaccines and numbers of procured doses. According to UNICEF/Kyrgyzstan, the twofold price hike on the BCG vaccine and a measurable price increase on the OPV vaccine, both reported in 2002, reflect price variability not uncommon of the procurement conditions under UNICEF/VII. Immunization supplies (Table 4) consist of two categories: (1) injection supplies, i.e., syringes and safety boxes; and (2) a standard toolkit that an immunization post uses in immunization-related procedures, i.e., tourniquet, forceps, spatulae, and miscellaneous (cotton, alcohol, etc.). Some of the items in the latter category have useful life over one year, yet are considered
Doses, 1,000
Prices, c.i.f., US$/dose
Cost, US1,000
Doses, 1,000
Prices, c.i.f., US$/dose
Cost, US1,000
BCG 230.0 0.070 16.1 200.0 0.143 28.6OPV 690.0 0.099 68.3 500.0 0.112 56.0DTP 690.0 0.085 58.7 0.0 0.000 0.0DT 136.4 0.133 18.1 128.0 0.139 17.8Td 203.6 0.137 27.9 387.2 0.119 46.1Measles 230.0 0.154 35.4 0.0 0.000 0.0Mumps 107.3 0.605 64.9 0.0 0.000 0.0MMR 0.0 0.000 0.0 125.0 1.650 206.3Hep.B 479.0 0.361 173.0 375.5 0.373 140.0Rabies 46.6 1.900 88.5 46.6 1.900 88.5Immunoglobuline anti-rabies 0.0068 2629.000 17.9 0.0068 2629.000 17.9
Encephalitis 2.0 1.660 3.3 2.0 1.660 3.3Immunoglobulin against encephalitis 0.5 3.470 1.7 0.5 3.470 1.7
Anthrax 13.5 0.570 7.7 13.5 0.570 7.7Pest 57.5 0.380 21.9 57.5 0.380 21.9TOTAL 2886.4 603.5 1835.8 635.7
2001 2002Vaccines and other immunobiologicals
10
Table 4. Immunization Supplies in the NIP of Kyrgyzstan: Volumes, Prices, and Annual Cost, 2002, US$ 1,000
Table 5. Cold Chain Equipment in the NIP of Kyrgyzstan: Inventory, Prices, and Annual Cost, 2002, US$ 1,000
recurrent resources because of their low unit price. Such items account for 35% of the total annual cost of immunization supplies, assuming they are replaced annually. Since in practice, they may serve for 2-3 years, the need for immunization supplies, stated in Table 4, may be overestimated by 10 to 20%.
Immunization suppliesUnits per immuni-
zation post
Immuniza-tion posts Units total Som/ unit US$/ unit
Annual Cost, US$
1,000Syringes 0.5ml, autodisable 1500000 0.070 105.0Syringes for BCG, disposable 100350 0.050 5.0Reconstitution syringes, 5 ml, disposable, for BCG, MMR, MR 34950 0.036 1.3Safety boxes, 1/100 16310 29.76 0.620 10.1Tourniquet 2 1605 3210 41.40 0.863 2.8Dressing forceps 2 1605 3210 291.80 6.079 19.5Emergency aid kit 1 1605 1605 852.00 17.750 28.5Scissors 2 1605 3210 98.76 2.058 6.6Mouse-tooth forceps 4 1605 6420 20.70 0.431 2.8Thumb forceps 2 1605 3210 110.10 2.294 7.4Spatulae 5 1605 8025 30.36 0.633 5.1Miscellaneous supplies (cotton, alcohol, etc.) 13.2TOTAL 207.2
Natio
nal
Regi
onal
Dist
rict
Prov
ider Units -
TotalDepre-ciation
Mainte-nance and
repair
Electri-city TOTAL
Cold room, 53 m3 1 1 50000 12 2.75 4.167 2.500 0.117 6.8Cold room, 16 m3 1 1 20000 12 0.90 1.667 1.000 0.038 2.7Freezers, 460 l 2 8 10 515 12 0.12 0.429 0.258 0.051 0.7Freezers for ice 2 7 9 1240 12 0.24 0.930 0.558 0.092 1.6Freezers, 264 l 8 42 100 150 362 12 0.11 4.525 2.715 0.703 7.9Freezers, 188 l 5 51 56 505 12 0.08 2.357 1.414 0.191 4.0Refrigerators, 204 l 1 17 18 664 12 0.07 0.996 0.598 0.054 1.6Refrigerators, 40 l 10 356 366 509 12 0.07 15.525 9.315 1.091 25.9Refrigerators (household type) 1165 1165 200 12 0.10 19.417 11.650 4.961 36.0
Cold boxes, 23.1 l 1 15 134 150 362 10 5.430 0.000 0.000 5.4Cold boxes, 20.0 l 22 108 130 65 10 0.845 0.000 0.000 0.8Cold boxes, 5.0 l 16 134 150 107 10 1.605 0.000 0.000 1.6Cold boxes, 4.4 l 20 1104 1124 24 10 2.698 0.000 0.000 2.7Cold boxes, 1.6-3 l 14 91 2209 2314 14 10 3.240 0.000 0.000 3.2Cold packs 26423 1 10 2.008 0.000 0.000 2.0TOTAL 65.8 30.0 7.3 103.1
Number of units by NIP organizational level Annual Cost, US$ 1,000
EquipmentBook value,
US$/unit
Useful life,
years
Power supply,
KW-hour
11
The inventory of cold chain equipment (Table 5) relies on the census of cold rooms, freezers, refrigerators, cold boxes, and cold packs, conducted at all administrative levels of the NIP of Kyrgyzstan. The following assumptions underlie the estimation of cold chain costs:
• Depreciation: straight-line accrual, based on book value, over useful life of 10-12 years; • Maintenance and repair: annual cost at 5% of the book value; • Electricity: 7 hours per day with electric engine on.
It should be noted that depreciation of the cold chain equipment as well as of all other fixed assets is an unfunded cost in the NIP of Kyrgyzstan.
Table 6. Transportation Services in the NIP of Kyrgyzstan: Resources and Annual Cost, 2002, US$ 1,000
The transportation appears in the composition of NIP costs both as a function and an outlay. Transportation services as a function are displayed in Table 6, and reflect the transportation of vaccines and other NIP cargo. Transportation as an outlay reflects general transportation costs (i.e., the ones associated with NIP administration, disease monitoring and surveillance, social mobilization, and R&D). Table 8 reflects these costs. The micro-study of NIP transportation services in Chui Oblast has produced evidence on travel distances, frequency of trips, types of cars used, driver salaries, and gas and lubricant consumption and prices. Respective estimates were extrapolated to the national level and, thus, resulted in the NIP transportation costs. Table 6 summarizes the related estimates, assumptions, and output numbers.
The costs of basic and short-term medical training (Table 7) are estimated according to the information provided by the national Medical Academy and the Institute of Continuing Medical Education.
Cost estimations in Table 8 cover a conglomerate of NIP ‘general functions’, i.e., social mobilization, epidemiological monitoring and surveillance, research and development, and program administration. These numbers reflect the funded expenditures of the NIP institutions, grouped by administrative level: the local and regional institutions comprise the Oblast and City
Indicators Values Annual travel distance between warehouses, round-trip, km - Total 110706 Including:To national warehouse 7690To regional warehouses 7710To local warehouses 9194To providers 86112Annual distance per car, at estimated capacity utilization 15000FTE cars 7.38Average book value, US$ 20,000Useful life, years 7Car maintenance and repair, in percent of operating expenses 10%Fuel and lubricants, average consumption, l/km 0.2Fuel and lubricants, average cost, US$/km 0.27Driver salary with payroll taxes, US$/year 158Annual cost, US$ 1,000Car depreciation 21.1Car maintenance and repair 3.1Fuel and lubricants 30.0Driver salaries 1.2TOTAL 55.4
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of Bishkek SES; the national institutions include DSSEC and NCI. These organizations form their budgets from on-budget allocations and paid services. Both amounts were taken into account only partially in order to exclude the financing of activities, unrelated to NPI, and the financing of functions, accounted separately, such as procurement of vaccines, immunization supplies, and transportation of vaccines and other NIP cargo (see Tables 3, 4 and 6). As a result of these adjustments, only 16% of the Oblast SES budgets and 49% of the DSSEC and NCI budgets were reflected in Table 8. Donor funding included the US Red Cross expenditure on social mobilization in the amount of US$100,000, CDC allocations to UNICEF for rubella studies in the KR in the amount of US$21,300, and the UNICEF-funded training on Hep.B vaccine implementation and in preparation of the national measles and rubella campaigns.
Table 7. Basic Medical and Short-term Training for the NIP of Kyrgyzstan: Funded Costs, 2002, US$ 1,000
Table 8. ‘General Functions’ (Social Mobilization, Monitoring and Surveillance, R&D, and Program Administration) in the NIP of Kyrgyzstan: Funded Costs, 2001, US$ 1,000
The costs of immunization services, net of the previously accounted costs of vaccines, immunization supplies, provider-level cold chain equipment, and transportation, are displayed in Table 9. The in-depth study of the immunization budget of Chui Oblast that accounts for approximately 17% of the national NIP expenditures, informed the nationwide assessment of the immunization service costs. The new model of primary health care provision drove the oblast-level study of immunization costs. In 2002, 1,394 out of 1,605 fixed-facility immunization posts
NIP admini-strative level TOTAL
Wages and
salaries
Payroll taxes
Busi-ness travel
Equip-ment
Pharmaceu-ticals & medical supplies
Food Trans-port
Utili-ties
Other exp-
enses
Capital repair
Local and regional 73.2 10.9 2.2 0.6 0.3 8.5 0.0 10.0 2.2 30.0 8.6
National 128.3 63.5 18.4 1.2 0.4 25.6 0.6 2.0 16.4 0.0 0.0
Donors 121.3
TOTAL 322.7 74.4 20.6 1.8 0.7 0.6 12.0 18.7 30.0 8.6
Training programs Class, persons
Classes per year
Annual cost per student, US$
Total annual, cost, US$1,000
Medical AcademyMedical training in Sanitary and Hygiene 20 5 500 50.0Post-Graduate training in Sanitary and Hygiene 4 1 600 2.4
The Institute of Continuing Education of Physicians and Mid-level Health Personnel
Immunologists 20 1 33.3 0.7General practitioners (physician staff of Family Group Practices) 70 7.1 0.4 0.2Nurses 15 2 33.3 1.0
UNICEF-sponsored training 7.6TOTAL 61.9
13
were integrated in FGPs. The staffing schedule and immunization delivery protocols, designed for FGPs, determine immunization labor costs.
Depreciation of equipment (other than previously counted depreciation of refrigerators and cold boxes) was estimated, based on the standard equipment of a traditional immunization post (six sterilization boxes and a bactericide lamp).
Table 9. Immunization Services in the NIP of Kyrgyzstan: Estimated Current Costs, 2002, US$ 1,000
Utility costs were accounted directly, based on the following micro-estimates: • Electricity (per immunization post): daily consumption is 2.4 KWt, electricity tariff is US$0.02 per KWt-Hour, days in operation 365 per year;
• Heating (per immunization post): average floor space is 12 sq.m, heating cost per 1 sq.m/day is US$0.1335, heating season lasts 150 days annually.
With the integration of most immunization services into the FGP-based primary care, most immunization posts no longer have designated space. Concurrently, the current estimates include neither depreciation nor maintenance of the floor space of immunization posts.
The structure by outlay of the immunization service costs, observed in the 297 immunization posts of Chui Oblast was extrapolated to other regions. The levels of outlay-specific expenditures were prorated in each region proportionately to the total NIP regional expenditures. Thus, a region with the NIP budget 1.5 times higher than in Chui Oblast, will have outlay-specific NIP expenditures 1.5 times higher. The NIP total expenditures were estimated by region according to their uniform share in the reliably reported regional health budgets. According to the estimation for Chui Oblast, the NIP budget equaled 4 to 4.5% of the health budget over the past 4 years. For 2002, the share was estimated at 4.04% and uniformly applied to all regions. Finally, Table 10 integrates the estimated function-specific expenditures from Tables 3 to 9 into a consolidated function/outlay matrix. The breakdown by outlay of the aggregate basic and short-term training costs is notional. All other functional expenditures are assigned to outlays, consistently with the numbers, reflected in Tables 3 to 9.
Phys
ician
s
Nurs
es
Othe
r
Wat
er
Elec
tricit
y
Heat
ing
Com
mun
icatio
ns
Othe
r
Bishkek 21.9 8.2 10.1 3.6 5.5 14.9 0 6.3 8.6 0 0 0.5 1.0 43.7Chui Oblast 18.1 6.8 8.4 3.0 4.5 12.3 0 5.2 7.1 0 0 0.5 6.9 42.3Issyk-Kul Oblast 8.2 3.1 3.8 1.3 2.0 5.6 0 2.3 3.2 0 0 0.2 3.0 19.0Naryn Oblast 6.6 2.5 3.1 1.1 1.7 4.5 0 1.9 2.6 0 0 0.2 2.4 15.4Talas Oblast 4.5 1.7 2.1 0.7 1.1 3.1 0 1.3 1.8 0 0 0.1 4.6 13.5Dzhalalabad Oblast 15.8 5.9 7.3 2.6 4.0 10.8 0 4.5 6.2 0 0 0.4 8.1 39.0Osh Oblast 24.0 9.0 11.1 4.0 6.0 16.3 0 6.9 9.5 0 0 0.6 6.7 53.7Batken Oblast 6.5 2.4 3.0 1.1 1.6 4.4 0 1.9 2.6 0 0 0.2 4.4 17.2TOTAL 105.7 39.5 48.8 17.4 26.4 71.9 0 30.3 41.6 0 0 2.6 37.1 243.8
TOTA
L
Depr
eciat
ion
of
equi
pmen
t
Subt
otal
Payr
oll t
axes
Busin
ess t
rave
l
UtilitiesIncluding:
Wages and Salaries
Subt
otal
Including:
Region
14
Table 10. Consolidated Recurrent Costs in the NIP of Kyrgyzstan by Program Function and Outlay (Include the unfunded depreciation of equipment): 2002, US$ 1,000
Section 5. Initial Projection of NIP Financing This document contains two projections of NIP finances. The Initial Projection reflects NIP historical and additional needs, summarized in Subsection 5.1 from the NIP Strategy Document for 2001-05. The Initial Projection features a relatively large financing gap and a relatively low reliability of program allocations (Subsection 5.3). The Revised Projection features the same aggregate amount of NIP expenditures as the Initial Projection but strengthened with more reliable allocations and reduced financing gap. Subsection 6.1 explains FS strategies and actions that the GoK will intend to implement in order to enable the Revised Projection.
Both FS projections cover the time period of 2003-2008. The near-term indicators for 2003-2005 are more robust, as they were derived from multiple projections, e.g., three-year rolling projections of macroeconomic indicators, budget revenues and expenditures, prepared by MoF and required for reviews under the IMF Poverty Reduction and Growth Facility; health care allocations, planned for 2003-05 under the National Strategy for Poverty Reduction, the MoF/MoH medium-term Health Care Financing Strategy for 2003-05, projections of NIP growth and resource needs in the National Program “Immunoprophylaxis 2001-2005”. The IMF long-range projections of economic and fiscal trends, long-term demographic outlook and planning, initiated in the context of a Comprehensive Development Framework with the help of the World Bank [National Strategy, 2010], informed NIP forecasting beyond 2005.
5.1 NIP Priorities and Additional Needs The National Program “Immunoprophylaxis 2001-2005” (subsequently termed the NIP Strategy Document) sets out the following priorities and activities that will increase program costs and stipulate the need for additional program funding:
1. Secure adequate and sustainable financing of vaccine procurement for the growing NIP target population. Expand immunization of hepatitis B from infants to 11-year-olds and to medical workers in 2004. Implement Hib vaccine in 2006, provided that the burden of disease study confirms the national need for Hib immunization. Hedge the national vaccine supply from
Functions Outlays
Wag
es sa
laries
, and
pa
yrol
l tax
es
Busin
ess t
rave
l
Phar
mac
eutic
als an
d m
edica
l sup
plies
Tran
spor
t (pr
imar
ily,
fuel
and
lubr
icant
s)
Utilit
ies
Main
tena
nce a
nd
repa
ir
Depr
eciat
ion
of
equi
pmen
t
Othe
r exp
ense
s
TOTA
L
Perc
ent b
y fun
ction
Vaccines 635.7 635.7 43%Immunization supplies 207.2 207.2 14%Cold chain equipment 7.3 30.0 65.8 103.1 7%Transportation 1.2 30.0 3.1 21.1 55.4 4%Basic and short-term training 30.9 9.3 12.4 3.1 3.1 61.9 4%Social mobilization, monitoring & surveillance, R&D, program administration
95.0 1.8 12.0 18.7 8.6 0.7 30.6 167.9 11%
Immunization services 132.1 2.6 71.9 37.1 243.8 17%TOTAL 259.2 13.7 842.9 42.0 110.2 41.7 127.9 33.7 1475.0 100%
Percent by outlay 18% 1% 57% 3% 7% 3% 9% 2% 100%
15
financial instability by increasing the national public contribution to UNICEF/VII progressively from US$36,000 in 2001 to $84,000 in 2005. The currently dominant JICA contributions to UNICEF/VII on behalf of Kyrgyzstan would be phased out by 2005, replaced with allocations from the national budget and, in part, with contributions from the yet to be determined sources. UNICF/VII would continue to supply EPI vaccines for infants, and MMR vaccine for one-year- olds. GAVI/VF would provide Hep.B vaccine for infants and, prospectively, would expand its support to Hib vaccine. The national budget will stay the course of funding vaccines for the immunization of children of 2+ years of age and adults.
2. Compliant with the previous item, use donor funds to complete transition to MMR vaccine by the end of 2003. Such transition enables two NIP priorities: supporting the nationwide measles elimination campaign and sustaining high levels of coverage with immunization against rubella, as a follow-up on the campaign, launched in 2002.
3. Ascertain the epidemiological need for, and if found necessary, introduce Hib vaccine. A yet undetermined donor would provide funding for the burden of disease study on Hib that may take 2 to 3 years to complete. Thus, a large-scale implementation of Hib vaccine is projected for 2006.
4. Substitute domestic funding (under the 2:1 split between the national and regional budgets) for GAVI/VF allocations in a phase-over process that would take 5 to 8 years.
5. Improve targeted immunizations of high-risk populations, e.g., refugees, migrants; sustain adequate levels of immunizations by epidemiological indications. The projected near-full rates of coverage with EPI vaccines and steady supply of vaccines and biologicals against rabies, encephalitis, anthrax and pest in line with aggregate population growth will answer these needs.
6. To prevent the recurrence of epidemic outbreaks, set up a 30-percent national reserve of vaccines. The year-end stocks of vaccines tend to vary widely in Kyrgyzstan: from zero to a year-worth of vaccine consumption, as was the case with DTP vaccine at the beginning of 2002. To bring the national reserves to a consistent 30% across all vaccines would require increasing the stock on some antigens and reducing it on others. This round of FSP assumes the zero vector sum of the 30-percent reserve policy.
7. The NIP monitoring, surveillance, and research agendas would focus on a burden of disease study on Hib (mentioned also under item 3), sero-prevalence monitoring of rubella and congenital rubella syndrome, measles control, and cost-effectiveness studies of vaccine-prevention in the KR. TBD donors are expected to contribute with 99% of the annual funding of US$96,000, required for research over 2003-05, while the national budget would contribute with one percent worth of funding for routine monitoring and surveillance.
8. Design and implement an integrated computer network and health information system for the bottom-up reporting of immunization coverage rates, vaccine stocks, and disease incidence. In 2001, WHO provided computers and peripherals as part of its aid to the measles elimination campaign. The national budget is expected to fund the design of the “National Epidemiological Surveillance Guidelines” in the amount of US$2,700. The World Bank and/or other donors would provide an additional US$50,000 in annual expenses over the next three years, but no commitments were documented to date.
9. Set up a National Control Agency (NCA) and a National Control Laboratory to monitor the quality of, and license, vaccines and biologicals on behalf of MoH. This activity would require an estimated US$52,270 in annual funding, of which amount the national budget would cover 1/3 in wages and salaries, while donors would provide for the rest. The GoK stays non-committal to creating NCA in the near term and plans to continue importing WHO-certified vaccines.
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10. Immunization safety is a new chapter in the NIP strategy of Kyrgyzstan. In addition to uninterrupted supply of quality vaccines, the NIP strategy document sets forth the following policies and practices: vaccines will be provided complete with solvents, AD and, where appropriate, disposable syringes, as well as safety boxes; providers of immunization services will undergo refresher training on open vial handling, safe injection techniques, sharp waste disposal, and post-immunization monitoring for possible complications. Sustainable supply of AD syringes is the core requirement of the NIP safe injection strategy. While UNICEF/VII and GAVI/VF would continue to ensure a steady supply of AD syringes for primary immunizations over the near- and medium term, the GoK would fund AD syringes for immunizing 2+ year-old children and adults: the Fall 2002 NPRSP envisions annual budgetary allocation of US$17,000 for this purpose over 2003-05.
11. Enforce cold chain requirements and ensure proper maintenance of the cold chain equipment. With that purpose in mind, create a national cold chain equipment database, strengthen maintenance services and supply of spare parts. This FSP envisions the introduction of depreciation as a reimbursable cost, to secure funding for the modernization of cold chain, transportation, and select medical equipment. According to the depreciation schedule, presented in Table 4, the NIP should expect to receive $50,000 in annual depreciation of cold rooms, freezers, and refrigerators. This amount would enable the annual financing of US$39,400 over the next three years, earmarked in the NPRSP for the following three purposes: (1) replacement of 240 dysfunctional refrigerators in the immunization posts and FGPs (US$23,000 per year); (2) replacement of the cold room at the Oblast SES in Osh (US$12,800 per year); and (3) gradual replacement of 30 refrigerators at the Oblast and, selectively, District SES levels (US$3,600 per year). The NIP Strategy Document set out priorities with reference to the cold chain that would cost US$194,000 per year over the next 3 years (including the cost of power generators from item 12). This number significantly exceeds the US$103,100 in cold chain recurrent expenditures (to cover depreciation, maintenance and repair, and electricity costs), estimated at the base line (see Table 4). It seems that the latter, more realistic number could accommodate basic needs of cold chain maintenance and modernization without imposing an additional burden on the donors. Domestic funding agencies, however, would have to commit more resources to sustainable funding of the NIP cold chain in order to cover depreciation, maintenance and electricity costs.
12. Equip Oblast, City and District SES with autonomous sources of power supply. WHO declined to cover this expense, projected to amount to US$37,750, or US$7,550 per year if implemented on a 5-year schedule. NIP leaders expect the national budget to pick up the cost. No commitment has been stated so far.
13. The Governmental Decree №517 of September 4th, 2001, directs the National Airline Company of the KR to ensure prompt transportation of immunobiologicals to three mountainous regions of Kyrgyzstan as a matter of national priority and at no charge to NIP. There are no estimations of the imputed value of this service to NIP. The cost of ground transportation of vaccines is presumed to remain unchanged over the projection period.
14. The national budget would provide funding for the NIP monitoring and evaluation effort in the annual amount of US$1,407 over the next three years.
15. Strengthen basic and postgraduate medical training on immunology and vaccine-preventable diseases: introduce a mandatory “Immuno-prevention” course in the curricula of the schools of medicine and nursing; develop certified programs of continuing medical education in immunology for the faculty, NIP managers and practitioners; develop training and examination materials for various levels of certified training. The national budget would provide 20% and donors 80% in the additional annual funding of US$31,400, planned for the aforementioned innovations over the next three years.
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Table 11. Projected Vaccine Costs in the NIP of Kyrgyzstan: 2002-08, US$ 1,000
16. Improve social mobilization to meet increased demand of NIP for public support, in particular, ascertain current levels of public knowledge of immunization benefits and the consequences of insufficient immunity; evaluate comparative effectiveness of alternative media of social campaigning; formulate new strategies and messages to sustain public demand for immunization services and develop a sensible attitude toward post-vaccination complications; engage school teachers, clergy, students, and other community and professional groups in social mobilization; continue the production of IEC materials with funding from the national budget and donor grants. The national budget would commit 25% and hope that prospective donors would provide 75% of the total annual expenditure of $7,950, planned for the next three years.
5.2 Projected Need for Funding The following methodological clarifications are important for understanding the content of this subsection:
• All monetary value indicators reflect a 5% year-on-year price growth that the RWG/Afro FSP Workshop in Nairobi, Kenya (July 2002) recommended to factor in FS projections. The uniform application of this approach to all outlays may impact on projection accuracy, e.g., newer vaccine costs tend to decline rather than grow over time.
• The 2002 values, involving the cost of vaccines, are different in Section 4, compared to Subsection 5.2, because in this subsection the numbers reflect the annual need for vaccines, while in Section 4 they reflect the actual amount of vaccines purchased.
• Tables in this subsection represent extractions from the primary tables in Annex B.
Vaccine funding. Besides the introduction of MMR and Hep.B vaccines in 2001-02, two events would contribute to growing vaccine costs in Kyrgyzstan: the expansion of immunizations against hepatitis B to children of age 11, projected for 2004, and the introduction of Hib vaccine in 2006-07. According to Table 11, the annual need for vaccine funding would grow from US$868,600 in 2002 to US$1,331,100 in 2005 and US$3,501,500 in 2008. Vaccine funding needs would double over 2002-05 and would increase by 2.3 times over 2005-08, for the aggregate growth of 3.5
Vaccines and biologicals 2002 2003 2004 2005 2006 2007 2008BCG 27.2 29.2 30.8 31.5 33.2 34.2 36.1OPV 71.8 75.4 78.8 79.3 83.2 82.9 87.8DTP 42.4 44.2 46.8 47.5 50.1 50.7 53.6DT 20.1 19.7 19.8 19.6 20.3 18.7 20.0Td for children 26.9 28.6 33.0 33.8 35.9 36.8 37.1Td for adults 14.0 18.8 32.5 35.9 38.8 42.2 45.1MMR 353.5 405.1 448.2 458.1 477.9 462.1 490.7Hep.B for children 171.5 409.9 432.5 447.5 473.9 488.0 495.9Hep.B for adults 0.0 0.0 60.4 6.8 7.2 7.7 8.2Hib 0.0 0.0 0.0 0.0 760.2 1382.2 1570.9Other vaccines& biologicals (mostly for adults) 141.2 151.2 160.9 171.1 182.0 193.8 206.2
TOTAL 868.6 1182.0 1343.5 1331.1 2162.7 2799.3 3051.5Of that number, vaccines for:
Children 713.4 1012.1 1089.8 1117.3 1934.7 2555.6 2792.01.1 BCG, OPV, and DTP group 188.5 197.0 209.1 211.7 222.7 223.3 234.61.2 Hib, Hep.B, MMR vaccines 525.0 815.0 880.6 905.6 1712.0 2332.3 2557.4 Adults 155.2 169.9 253.7 213.8 228.0 243.7 259.5
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times over 2002-08. The share of children’s vaccines would rise over 2002-08 from 82 to 91%. The share of traditional vaccines (BCG, OPV, and DTP group) would decline in the total value of children’s vaccines from 26 to 8%, while the share of new and underused vaccines (Hib, Hep.B and MMR) would rise from 74 to 92% in 2002-08. Table 12. Projected Costs of Immunization Supplies in the NIP of Kyrgyzstan: 2002-08, US$ 1,000
Table 13. Projected Costs of Cold Chain Equipment in the NIP of Kyrgyzstan: 2002-08, US$ 1,000
Immunization supplies. Immunization supply costs would increase from US$197,700 in 2002 to US$286,300 in 2005 and to US$377,600 in 2008. Costs would grow by 1.4 times in 2002-05 and 1.3 times in 2005-08, for the aggregate growth of 1.9 times over 2002-08 (Table 12). Projected growth looks moderate, compared to that of vaccine costs. While the costs of syringes, safety boxes, and ‘miscellaneous immunization supplies’ (cotton, alcohol) would grow in line with the increased number of immunizations, the costs of medical devices (tourniquets, forceps, emergency aid kits, etc.) are expected to remain steady.
Cold chain equipment. Table 13 summarizes the projected costs of cold chain equipment. The existing capacity, as long as it is properly maintained and replaced in a timely manner, will be sufficient for enabling the sustainable use of traditional and newer vaccines, such as Hep.B and MMR vaccines. However, the implementation of Hib vaccine, projected to start in 2006, would require an additional capacity for cold storage in the temperature range beyond freezing point. Eight 204-liter refrigerators would be installed in the oblast Centers for Immunoprophylaxis and in the national store to accommodate the new need. The total cold chain equipment cost would grow from US$103,100 to US$149,900 over 2002-08. Depreciation would continue to be the main cost, although its share will decline in 2002-08 from 64 to 59%, while the share of maintenance and repair would increase from 29 to 34%, and the share of electricity would remain steady at 7%.
Indicators 2002 2003 2004 2005 2006 2007 2008AD hypodermic syringes, 0.5 ml 96.3 132.8 157.2 158.0 186.7 208.9 220.5BCG syringes disposable 5.2 5.6 5.9 6.2 6.6 6.9 7.3Reconstitution syringes, 5 ml disposable, for BCG, MMR and MR 1.0 1.2 1.3 1.3 1.4 1.4 1.5
Safety boxes 9.4 12.7 14.9 15.0 17.6 19.6 20.7Other immunization supplies 85.8 94.4 101.6 105.7 113.8 121.3 127.5TOTAL 197.7 246.7 280.9 286.3 326.1 358.2 377.6
Equipment by category 2002 2003 2004 2005 2006 2007 2008Cold rooms 9.5 10.0 10.5 11.0 11.5 12.1 12.7Freezers 14.2 14.9 15.7 16.5 17.3 18.2 19.1Refrigerators 63.6 66.8 70.1 73.6 78.3 82.2 86.3Cold boxes and packs 15.8 24.9 26.2 27.5 28.9 30.3 31.8
TOTAL 103.1 116.6 122.4 128.6 136.0 142.8 149.9
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Table 14. Projected Costs of ‘General Functions’ and Immunization Services in the NIP of Kyrgyzstan: 2002-08, US$ 1,000
‘General Functions’: Table 14 displays projected costs of transportation, basic medical and short-term training, social mobilization, monitoring and surveillance, R&D, program administration, and immunization services. The numbers in this table reflect new needs, defined and estimated for costs in Subsection 5.1. Table 15. Projected Aggregate Costs and Their Breakdown by Function in the NIP of Kyrgyzstan: 2002-08, Percent
Finally, Table 15 presents the total amount and functional composition of NIP costs. NIP aggregate costs are projected to grow from US$1,853,300 in 2002 to US$2,627,800 in 2005 and to US$4,590,300 in 2008. Projected growth would amount to 1.4 times in 2002-05, 1.75 times in 2005-08, and 2.5 times over the entire projection period of 2002-08. The share of vaccines and biologicals would increase from 47 to 66% with the advent of new, more expensive vaccines, the share of ‘general functions’ (social mobilization, monitoring and surveillance, R&D, program administration) would decline from 17 to 11%, and the share of immunization services from 13 to 7%, in 2002-08.
5.3 Funding Levels by Source, Financing Gap, and Reliability Assessment Subsection 5.3.1 projects NIP financing by source, regardless of the level of reliability of source-specific allocations. Subsection 5.3.2 classifies allocations by three levels of reliability.
5.3.1 NIP Funding by Source The NIP funding relies on the following officially defined sources (see also Figure 1 in Subsection 2.1):
Functions 2002 2003 2004 2005 2006 2007 2008Transportation 55.4 58.1 61.0 64.1 67.3 70.6 74.2Long- and short-term training 61.9 96.3 101.2 106.2 111.5 117.1 123.0
Social mobilization, monitoring & surveillance, R&D, program administration 322.7 390.7 425.4 429.3 390.7 477.0 487.4
Immunization services 243.8 256.0 268.8 282.3 296.4 311.2 326.8TOTAL 683.8 801.2 856.4 881.8 865.9 975.9 1011.3
Functions 2002 2003 2004 2005 2006 2007 2008Vaccines & biologicals 47% 50% 52% 51% 62% 65% 66%Immunization supplies 11% 11% 11% 11% 9% 8% 8%Cold chain equipment 6% 5% 5% 5% 4% 3% 3%Transportation 3% 2% 2% 2% 2% 2% 2%Long- and short-term training 3% 4% 4% 4% 3% 3% 3%Social mobilization, monitoring & surveillance, R&D, program administration 17% 17% 16% 16% 11% 11% 11%
Immunization services 13% 11% 10% 11% 8% 7% 7%TOTAL percent 100% 100% 100% 100% 100% 100% 100%
TOTAL value, US$1,000 1853.3 2346.5 2603.2 2627.8 3490.8 4276.2 4590.3
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• The national budget: allocations, accounted under this category flow directly to NIP and to UNICEF/VII. General revenues and the ‘Special fund’, formed of revenues from user-billable services and co-payments in the healthcare sector, serve as the primary budgetary sources for these allocations. The projection does not rely on budgetary allocations from the Public Investment Program (PIP), since PIP does not expend its resources on NIP. In 2002, the national budget provided for 25% of aggregate program spending by allocating funds to the centralized procurement of vaccines and NIP ‘general functions’. The share of the national budget (see Table 16) would grow to 51% in 2005, after JICA completes its grant and the GoK becomes the sole contributor to UNICEF/VII. By 2008, the share of the national budget would decline to 33%, if expensive Hib vaccine is implemented and GAVI/VF resources become available to procure it for Kyrgystan. The hypothetical growth of on-budget allocations to NIP would reflect, also, the introduction of depreciation of cold chain equipment and vehicles, a cost that the government would have to finance.
• Local budgets (predominantly of the oblast level) and mandatory health insurance funds, expended on primary health care: Local budgets and MHI allocate funds to providers of immunization services and account for 26% of the total NIP expenditure. The amounts of these allocations would remain steady over the projected period of time, but their share would decrease to 18% in 2008 owing to the dramatic growth of spending on Hib vaccine from other sources.
• Households: According to circumstantial evidence and statistical assessments, households spend on syringes, primarily, to immunize two-year and older children, and adults. Personal expenditure accounted for an estimated 27% of the injection supplies funding in 2002, and would remain at approximately the same level. Table 16. Projected Funding by Source in the NIP of Kyrgyzstan: 2002-08, Percent
• Donors: JICA would continue to allocate its grant funds to UNICEF/VII through the end of 2004 to ensure supply of EPI and MMR vaccines to Kyrgyzstan. Given that the share of these vaccines in the aggregate NIP spending would be declining, and insofar as the GoK phases out JICA resources by resuming its allocations to UNICEF/VII in compliance with JICA co-financing schedule, the share of JICA would decline from 23% in 2002 to 10% in 2004. GAVI/VF would maintain its share in the NIP financing at 10-11% over 2002-2005. The share would grow to 23% in 2006 and 35% in 2008, assuming that GAVI/VF fully covers the need of Kyrgyzstan for Hib vaccine over the first three years of its implementation. UNICEF would continue to fund ad hoc training activities, contributing with less than 1% to aggregate NIP financing. ‘Other donors’ included the US Red Cross and CDC in 2002, and provided one-time allocations to the social mobilization and epidemiological studies. The share of ‘other donor’ funding would vary in the range of 5 to 9% over 2002-08. The NIP expects the yet to be determined donors to pick up the cost of additional activities (see Subsection 5.1), related to NIP training and general functions.
Funding Sources 2002 2003 2004 2005 2006 2007 2008National budget 25 28 35 51 41 35 33Local budgets and MHI 26 29 28 29 23 19 18Households 2 2 2 2 2 1 1JICA 23 11 10GAVI/VF 10 11 10 11 23 34 35UNICEF 0 0 0 0Other Donors 7 9 9 8 5 6 7Unfunded costs 5 10 6 -2 6 5 5TOTAL 100 100 100 100 100 100 100
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• Unfunded costs include depreciation of cold chain equipment and vehicles in 2003, when depreciation is projected to become a reimbursable cost, but the GoK would not have time to integrate it into the budgets for the upcoming fiscal year. Starting in 2004, annual depreciation would be transferred under the responsibility of the national budget. The ‘Unfunded costs’ line also absorbs the statistical discrepancy between the function-specific sum of funds and NIP total funding. This discrepancy originates in the ‘Vaccine Procurement’ line-item due to a differential between the need for vaccines, tabulated in the annex spreadsheet B1, and the total of vaccine funding expected from domestic and external sources.
5.3.2 Reliability of NIP Funding and Financing Gap
The projection distinguishes among three levels of reliability:
1 – Reliable funding, i.e., funding from established sources at historical levels, adjusted for general price growth, and/or under clearly stated commitments. The national budget would continue to cover the costs of DT and Td vaccines, and vaccines for immunizations by epidemiological indications; maintenance and repair of cold chain equipment at the current limited levels; support short-term and long-term training by sustaining historical levels of funding of medical training institutions; provide resources to NIP ‘general functions’ by budgeting NIP agencies and organizations. The local budgets, increasingly supported by MHI financing, would continue to fund providers of immunization services, including paying for electricity that the cold chain equipment consumes, fuel and lubricants for vehicles that transport vaccines and other NIP cargo, and immunization supplies other than syringes and safety boxes. Households would continue to bear their historical share of injection supplies costs. JICA would contribute to UNICEF/VII on behalf of Kyrgyzstan till the end of 2004. In October 2002, GAVI Secretariat sent a letter to Bishkek that confirms the GAVI/VF commitment to the financing of Hep.B vaccine and related injection supplies for infants through 2005. UNICEF would continue to fund ad hoc training activities at historical levels.
2 – Probable funding, i.e. the one that relies on mission-driven commitments of the funding agencies but have not been translated into specific commitments to Kyrgyzstan. GAVI/VF support with the procurement of Hib vaccine is in this category.
3 – Unreliable funding, i.e. the one that reflects officially stated and projected NIP needs, not backed up with credible financing or even without an identified source of funding. The GoK’s persistent difficulty with matching the JICA grant with national co-financing over the past three years explains the classification of the required but unpaid contributions to UNICEF/VII into this category. Also in the third category are: the total of EPI and MMR vaccine costs that would remain without funding upon the expiration of JICA grant (given unclear prospects for a phase-over to the national or alternative international sources); the EPI and new/underused vaccine costs that reflect the excess of need-based costs (see annex Table B1) over the funding from the existing sources; depreciation of cold chain equipment and vehicles; additional allocations for training and ‘general functions’ (i.e., social mobilization, monitoring and surveillance, R&D, and program administration) that the priorities and activities, stated in the NIP Strategy Document for 2001-05 and reviewed in Subsection 5.1 would require.
This projection equates unreliable funding to NIP financing gap. As illustrated in the left part of Figure 2 (see Subsection 6.2), the financing gap would account for 37% of the NIP need for funding in 2003-04. In 2005, the gap would grow to 47% after JICA grant is over. Starting in
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Table 17. Funding by Level of Reliability in the NIP of Kyrgyzstan, 2003-08: Initial Projection
2006, GAVI/VF would mitigate the shortage of funding by supplying Hib vaccine to Kyrgyzstan: the financing gap would decline to 44% in 2006, 39% in 2007, and 37% in 2008. The share of unreliable domestic resources in the financing gap would grow over 2003-05 from 49% to 86% and decline by 2008 to 68%.
Section 6. Revised Projection of NIP Financing This section presents the revised projection of the NIP financing gap and reliability of allocations. It explains strategies, priorities, and actions towards the attainment of financial sustainability by the NIP of Kyrgyzstan. In particular, it sets out the achievement of national vaccine independence as the strategic goal, and outlines an agenda for stakeholder dialogue that would lead to increased and more reliable allocations to NIP, more efficient use of resources in program activities, and more restrained approach to NIP expansion.
The GoK views the adequate and dependable financing of the vaccine procurement and NIP infrastructure as the main objective towards the long-term national goal of attaining vaccine independence for the Kyrgyz Republic.
Subsection 6.1 provides the list of 12 strategies and actions that, if implemented, will enable progress towards NIP financial sustainability. The overarching purpose of the contemplated measures is twofold: (1) to reduce the NIP financing gap, and (2) raise the reliability of planned allocations (see Subsection 5.3 for the initial projections of the gap and reliability levels). Subsection 6.2 presents the revised reliability assessment and financing gap, based on the assumed successful implementation of the proposed measures.
6.1 Strategies and Actions to Reduce Gap and Increase Reliability To secure additional funds for NIP:
1. The GoK will support NIP leaders in their intention to raise funds from the local governments of Kyrgyzstan to immunize 11-year-old children against Hepatitis B. The option to co-finance through user charges will receive careful consideration.
Level of Reliability 2003 2004 2005 2006 2007 2008
Reliable funding from external sources 515.1 536.1 291.7Reliable funding from national sources 970.6 1099.0 1098.3 1164.9 1196.8 1247.5Probable funding from external sources 787.7 1433.0 1629.4Unreliable funding from national sources 425.4 579.3 1060.6 1138.8 1160.8 1166.6Unreliable funding from external sources 435.6 388.8 177.2 399.4 485.6 546.7
TOTAL 2346.6 2603.2 2627.8 3490.8 4276.2 4590.3
Reliable funding from external sources 22% 21% 11%Reliable funding from national sources 41% 42% 42% 33% 28% 27%Probable funding from external sources 23% 34% 35%Unreliable funding from national sources 18% 22% 40% 33% 27% 25%Unreliable funding from external sources 19% 15% 7% 11% 11% 12%
TOTAL 100% 100% 100% 100% 100% 100%
US$1,000
Percent of the total
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2. The GoK will make a stride toward NIP financial sustainability by introducing in 2004 the funding of cold chain equipment and vehicle depreciation. In the foreseeable future, depreciation will not fund the replacement of buildings or structures. The intended change in NIP financing will showcase the implementation of the IMF guidance towards more sustainable financing of capital investments in Kyrgyzstan.
3. The GoK will bring to the attention of JICA the need for a follow-up grant to sustain supply of EPI antigens and MMR vaccine over 2005-08. Under the current grant, the GoK is determined to renew co-financing in 2004 and contribute to UNICF/VII at the level, scheduled for that year. The GoK will exert every effort to comply with a co-financing schedule that JICA may want to propose for the new grant. The GoK is proposing to co-finance 20% of the annual grant funding in 2005, 40% in 2006, 60% in 2007, 80% in 2008, for the full phase-over in 2009. It is assumed that annual allocations under a new grant would be sufficient to cover the need-based cost of EPI and MMR vaccines.
4. A realistic medium-term projection of budgetary revenues attests to the lack of public funding for even a partial replacement of GAVI/VF allocations with national resources in 2003-05. The phase-over of the current JICA grant will be the priority for the next two years, since it facilitates the procurement of core, EPI vaccines, including antigens that determine Kyrgyzstan’s compliance with its international commitments to sustaining the nation’s polio eradication status, advancing toward measles elimination, and building the nation’s immunity against rubella. However, the GoK is mindful of its phase-over obligations in the context of GAVI/VF support and will allocate funds for that purpose that may become available under favorable conditions of economic growth. More specifically, the GoK will consider the priority allocation to NIP of the surplus of national budget revenues over the projected amounts, derived from the macro-economic forecast in Table 1. Alternatively, the better-than-expected trade balance may present a financial basis for additional allocations to NIP. Despite its willingness to enable one of the proposed allocation mechanisms, the GoK cannot control multiple uncertainties that surround respective allocations and, therefore, finds it appropriate to keep the projected amounts at sensibly modest levels, e.g., 20% co-financing rate on the hypothetically extended GAVI/VF support with Hep.B vaccine in 2006, 30% in 2007, and 40% in 2008. If Hib vaccine is introduced and GAVI/VF decides to assist Kyrgyzstan with its procurement, the GoK will pledge resources at 5% co-financing rate for 2007 and 10% in 2008. Projected allocations are rated “3” because of their particularly high exposure to macroeconomic uncertainties.
5. The GoK will apply to UNICEF for renewed support with training that would precede the implementation of new vaccines and other major changes in the scope and organizational parameters of immunizations, e.g., expansion of Hep.B vaccine to 11-year-olds, introduction of Hib vaccine, integration of vaccine-based prevention into the new model of primary care in Kyrgyzstan. Judging from the experience of recent immunization campaigns that UNICEF supported with highly dependable allocations for training, the GoK has rated “1” the projected UNICEF funds. The GoK will direct NCI to partner with an American medical training institution and apply for a grant under the partnership grant program, managed by the American International Hospital Alliance (AIHA) and financed by USAID. Kyrgyzstan would aspire to cover 100% of its increased needs for funding and capacity building in the area of basic and postgraduate medical training in immunology and vaccine-preventable diseases from this grant or a similar grant from a to-be-determined partner, starting in 2004. The rating of grant-based donor funding is raised from “3” to “2” in the revised projection. Kyrgyzstan is confident in its ability to replicate its positive 1990’s experience of competing for grants and collaborating under the AIHA/USAID partnership program. However, in the event of program expiration, NCI may have difficulty identifying a new partner and/or grantor.
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To enable predictable allocations to NIP and timely disbursement of funds:
6. The GoK will look for a balanced approach to including NIP needs in NSPR, assuming that the latter will present a robust platform -- politically and financially -- for increased and predictable on-budget allocations to NIP. The NIP application for funding, included in the Fall 2002 version of NSPR, provides for US$174,400 dollars of additional annual allocations over 2003-05. The aforementioned amount covers: (1) US$51,000 for the injection supplies to immunize two-year and older children, and adults. Since this amount is included in NSPR, it is upgraded from “3” to “1” in the revised projection, given that Kyrgyzstan is well placed to qualify for debt relief under the signed PRGF deal. (2) US$123,400 per year to modernize cold chain equipment. The GoK places its main hopes regarding the introduction of reimbursable depreciation (see item 2) on dependable allocations from NSPR.
7. The GoK will seek clarification on the IMF standing requirement of zero arrears on the social benefit payments, as a prerequisite for debt write-off/restructuring under PRGF. The GoK’s current reading of the IMF guidance has resulted in the redirection of the MHI part of the Social Fund revenues from MHI to the financing of pension benefits. The draught of resources that ensued in MHI and continued for a year has exacerbated the under-funding of primary care in Kyrgyzstan with a clearly negative impact on the financing of immunization services. The original assessment of the financing gap in Subsection 5.3 was based on the assumption that the Social Fund resumes transferring MHI premium revenues to the National MHI Fund and the latter allocates them at the established levels to PHC, thus, budgeting up to one third of labor and drug costs to FGPs, i.e., the main providers of immunization services in Kyrgyzstan. The GoK is determined to unblock MHI funds and, thus, prevent the NIP financing gap from growing beyond the initially projected level.
To ensure efficient use of funds:
8. The GoK will direct NIP leaders to tighten vaccine and immunization management in order to reduce vaccine waste. The government envisions the reduction in the BCG wastage factor from 2.0 in 2002 to 1.95 in 2005 and 1.9 in 2008.The wastage factor for OPV will decline from 1.3 to 1.25 and 1.2 in the same years, for DTP and MMR vaccines from 1.3 to 1.25 and 2, respectively. Wastage rates for Hep.B and Hib vaccines are not to exceed 10% and 5%. The GoK challenges NIP leaders to identify the reasons for inexplicably wide regional spreads of vaccine wastage rates. The analyses, conducted in preparation of FSP, do not support the conventional view that regional levels of vaccine waste vary in direct proportion to the shares of rural populations and inversely to population density. Notably, the above-outlined targets for reduced vaccine waste have already been factored in the initial projection. Thus, the attainment of these targets will not contribute to further reductions in the NIP financing gap, but will play an important role in containing the gap within the projected level.
9. The GoK will monitor the national purchasing of vaccines for compliance with the public procurement policies and procedures in order to avoid the recurrence of price-inefficient purchases. The initial projection in Section 5 is based on the assumption that most vaccines will be procured through UNICEF/VII, while DT, Td vaccines, and vaccines for immunizations by epidemiological indications will be procured under truly competitive contracts. Failure to sustain these assumptions will result in a greater financing gap than was initially projected.
10. The GoK will work with the Asian Development Bank (ADB) to ensure that the recently stated interest of ADB in providing selective funding for children’s immunizations in Kyrgyzstan results in viable actions, aligned with the national priorities in NIP development and financing. The Government orders NIP leaders to promptly clarify the conceptual and operational approach of ADB, specifically, the rationale for targeting support to four out of eight regions and limiting it
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to select localities within those regions. Based on the preliminary evaluation of ADB plans, the MOH will hold discussions with ADB/Kyrgyzstan to coordinate and, if necessary, reconcile priorities of both parties involved.
To control NIP needs at realistic levels:
11. The GoK will seek international funding and expertise for a competent study of epidemiological needs for new vaccines, particularly, Hib vaccine. Support from CDC will be highly desirable, based on the recent positive experience of collaborating on the rubella study. The MoH will not opt for unwarranted introduction of new expensive antigens and vaccine combinations. An unambiguously established need and adequate financial and infrastructural supports will be viewed as the enabling factors of utmost importance. The GoK will ascertain the conditionality of, and medium-term prospects for, GAVI assistance with supplying Hib vaccine to Kyrgyzstan. The currently envisioned introduction of primary immunization with Hib vaccine in 2006 and re-vaccination of one-year-olds in 2007 may be reconsidered, if the forthcoming epidemiological evidence does not support immunizations against Hib in the KR. Table 18. Revised Reliability and Gap Projection in the NIP of Kyrgyzstan: 2003-08
12. The GoK will request NIP leaders to critically examine priorities and activities, set out in the NIP Strategy Document for 2001-05 and reviewed in Subsection 5.1. In particular, the funds, programmed for 2007 and 2008 to found an NCA and a National Control Laboratory could be used, alternatively, to advance the phasing out of GAVI/VF support with Hib vaccine and/or Hep.B vaccine procurement, if the latter is extended beyond 2005. Under the revised projection, these funds are suspended from the 2007-08 NIP financing plans. If available, they would be used to compensate for the likely shortfall of allocations, proposed under item 4. The GoK will command NIP leaders to stipulate the financing of several other program needs by the availability of funding and scale back the commitment to meeting those needs over the medium term.
6.2 Revised Reliability Assessment and Financing Gap The above-reviewed FS actions may be grouped into three overlapping categories: (1) actions 1 to 7, 9 and 12 will make NIP allocations more reliable; (2) actions 7 to 10 are aimed at preventing the NIP financing gap from growing beyond the initially estimated levels; (3) actions 3, 4, 11, and 12 have a potential for reducing the gap below its initially estimated level. This subsection
Level of Reliability 2003 2004 2005 2006 2007 2008
Reliable funding from external sources 515.1 536.1 418.3 99.9 67.1 35.5Reliable funding from national sources 1246.6 1500.8 1504.9 1628.9 1704.0 1798.1Probable funding from external sources 26.4 27.7 768.2 1329.6 1424.8Unreliable funding from national sources 149.4 177.5 527.4 618.6 725.0 835.5Unreliable funding from external sources 435.6 362.4 149.5 375.1 450.5 496.5
TOTAL 2346.6 2603.2 2627.8 3490.8 4276.2 4590.3
Reliable funding from external sources 22% 21% 16% 3% 2% 1%Reliable funding from national sources 53% 58% 57% 47% 40% 39%Probable funding from external sources 1% 1% 22% 31% 31%Unreliable funding from national sources 6% 7% 20% 18% 17% 18%Unreliable funding from external sources 19% 14% 6% 11% 11% 11%
TOTAL 100% 100% 100% 100% 100% 100%
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summarizes the revised projection of the funding reliability and gap, based on aggregate impact of the above-presented FS action plan.
The comparison of statistics from Tables 17 and 18 (i.e., without and with the implementation of the proposed action plan) supports the following observations:
• The composition of NIP funding by source will become more diversified due to steadier presence of the reliable and probable financing from external sources.
• The share of the reliable financing from national sources will vary, according to the revised projection, from 53% of the NIP total financing in 2003 to 57% in 2005 and 39% in 2008, compared, respectively, to 41%, 42% and 27% according to the initial projection.
• The financing gap will decline by US149,000 in 2003, US$527,000 in 2005, and US$835,000 in 2008, according to the revised projection. The financing gap as share of aggregate NIP costs will fall from 37% to 25% in 2003, from 47% to 26% in 2005, and from 37 to 29% in 2008.
The revised projection, thus, indicates a considerably higher level of financial self-reliance in the NIP of Kyrgyzstan (compare left and right parts of Figure 2).
Figure 2. Funding by Level of Reliability, and Financing Gap in the NIP of Kyrgyzstan, 2003-08, US$1,000: Initial (Left) and Revised (right) Projections
6.3 FSP Monitoring Indicators This subsection outlines FSP monitoring indicators. The FSP Guidelines from GAVI/FTF informed the following selection of indicators for Kyrgyzstan:
1. Indicator title: NIP recurrent expenditures paid for with national resources in percent of total program-specific expenditures. Application: assessment of self-sufficiency in NIP financing. Aggregation level: national. Reporting periods: annual and three-year rolling average. Data elements: funding by function – vaccines, injection supplies, cold chain equipment, short-term training; funding by outlays – all costs, including depreciation of equipment. Sources of primary data: DSSEC, NCI, including the Center’s regional chapters (part of regional SESs). Desirable dynamic: steady growth. Target values: TBD, based on the approved parameters of the Action Plan from Subsection 6.1.
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2. Indicator title: NIP aggregate expenditures -- disbursed in percent of committed. Application: assessment of reliability of NIP allocations. Aggregation level: national aggregate, and sub-grouped for domestic and international sources of funding. Reporting periods: annual and three-year rolling average. Data elements: funding by function – vaccines, injection supplies, cold chain equipment, short-term training, immunization services approximated by allocations to PHC; funding by outlays – all costs, including depreciation of equipment and fixed investment. Sources of primary data: DSSEC, donor offices. Desirable dynamic: steadily high levels. Target values: to be set in the process of stakeholder dialogue, aimed to validate the parameters of the Action Plan from Subsection 6.1.
3. Indicator title: Price-efficient procurement of vaccines -- percent share of vaccines, purchased at prices within 10% tolerance margin off the best prices, available under accessible procurement vehicles. Application: assessment of efficient use of NIP resources. Aggregation level: national aggregate, and sub-grouped for domestic and international sources of funding. Reporting periods: annual and three-year rolling average. Data elements: prices by vaccines with the emphasis on EPI, underutilized, and new vaccines for children. Sources of primary data: DSSEC, donor offices. Desirable dynamic: steadily high levels. Target values: TBD in the process of stakeholder dialogue, aimed to validate the parameters of the Action Plan from Subsection 6.1.
4. Indicator title: Vaccine wastage rates -- the factors that shows excess consumption of vaccines due to waste (are greater than unity). Application: assessment of efficient use of NIP resources. Aggregation level: national and regional. Reporting periods: annual and three-year rolling average. Data elements: Wastage by vaccine and vaccine presentation with the emphasis on EPI, underutilized, and new vaccines for children. Sources of primary data: DSSEC. Desirable dynamic: declining nationwide averages with reduced spread by region. Target values: national averages as factored in the initial projection.
Section 7. Endorsement and Commentaries from ICC Members We, the undersigned members of the Inter-Agency Coordinating Committee endorse the proposed Financial Sustainability plan with the herein documented commentaries:
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Commentaries: MoF
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Annex A. Financial Sustainability Projections, 2003-08
Annex A1. NIP Funding by Source and Function Replace this page with 3 pages from “Fund sources”.
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Annex A2. NIP Funding by Level of Reliability Replace this page with 2 pages from “Fund Sources 2”
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Annex B. Projected Financing by Select Function, Primary Tables: 2002-08 Replace this page with Table B1 – 2 pages from “Proj-Vaccines”, then With Table B2 – 2 pages “Proj-Cold Chain”, then With Table B3 2 1 page from “Proj-Immun.Supplies”
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Annex C. FSP Diagnostic Tool Print out the FSP diagnostic tool, if needed, from the Annex C file. Through out the first (portrait) page of that printout, attach the rest.
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