DESK REVIEWS | 02.02.04.03. What is the process for deciding how much funding is available for health service provision?
DESK REVIEW | 02.02.04.03. What is the process for deciding how much funding is available for health service provision?
The Constitution of 1988 defines the key planning and budgeting instruments as: (a) the Pluriannual Plan (Plano Plurianual – PPA), which is formulated over the first year of a presidential mandate and covers a period of 4 years; (b) the Law of Budgetary Guidelines (Lei de Diretrizes Orçamentárias – LDO) to be passed every year to define the key parameters and policy directives that will orient budget formulation; and (c) the annual Budget Law (Lei Orçamentária Anual – LOA). The PPA is meant to define objectives and targets for national, regional, and sectoral government plans and programs, while LDOs and LOAs are supposed to translate these into yearly priorities and activities. The Ministry of Planning reviews and updates the budget for health as part of the process for formulating the PPA. At the beginning of each PPA cycle, the ministry of planning defines the programs that outline the government’s agenda for each area of public policy, including health policies (International Budget Partnership, 2018).
International Budget Partnership. (2018). Defining and managing budget programs in the Health Sector: The Brazilian Experience. https://www.internationalbudget.org/wp-content/uploads/case-study-health-budget-programs-in-brazil-ibp-2018.pdf
In Hong Kong, the control and management of the public finances are governed by the Public Finance Ordinance. The preparation of the estimates of the Government’s revenue and expenditure for the upcoming financial year is under the responsibility of the Financial Secretary while the approval of the Budget rests with the Legislative Council (Legislative Council Secretariat, 2019b). The budgetary process follows the following cycle: 1) In every August / September, the Chief Executive conducts the first round of Budget consultations on expenditure for the next year’s Budget as part of the Policy Address consultations; 2) In September / October, the Financial Secretary gives out operating expenditure envelopes to bureaux and departments; 3) In October, it is the beginning of the new legislative session. The Chief Executive delivers the Policy Address; 4) from October to February, the Financial Secretary conducts the second round of Budget consultations on revenue for next year’s Budget; 5) In February, the Financial Secretary introduces the Appropriation Bill and the Estimates of Expenditure into the Legislative Council. First and Second Reading of the Appropriation Bill; 6) from February to March, the President of the Legislative Council refers the Estimates of Expenditure to the Finance Committee for examination. The Finance Committee examines the Estimates of Expenditure. The Appropriation Bill is debated and passed by the Legislative Council. Resumption of Second Reading debate and Third Reading of the Appropriation Bill. After passage of the Appropriation Bill, the Finance Committee examines the Government’s proposals to change the approved Estimates of Expenditure; 7) end of March is the end of financial year; and 8) in June/ July, the Financial Secretary or the Secretary for Financial Services and the Treasury introduces the Supplementary Appropriation Bill to seek approval of a supplementary appropriation for the services of the Government.
Legislative Council Secretariat. (2019b). Legistrative Council in Brief No. 8 – How does the Legistrative Council approve public expenditure. Hong Kong: Legislative Council, HKSAR Retrieved from https://www.legco.gov.hk/education/files/english/Factsheet/Factsheet8.pdf.
The central government presents its budget estimates for each of the sectors, including the health sector, in its Annual Financial Statement (traditionally in February) – also called the Union Budget of India. The budget is prepared mainly in the Ministry of Finance after detailed consultations with major stakeholders, including other ministries. Thus, the Ministry of Health and Family Welfare’s inputs are critical. However, the National Institute for Transforming India (NITI) Aayog (the policy think tank of the government, which provides technical advice to both central and state governments), which replaced the former Planning Commission, also plays an important role especially in terms of new initiatives and can influence the budget, including the health budget (Government of India, 2018a).
Government of India. (2018a). NITI Aayog holds Dialogue on Health System for New India. Available from: http://pib.nic.in/newsite/PrintRelease.aspx?relid=186039
Every five years, the Ministry of National Development Planning (BAPPENAS) issues a medium-term national spending plan (Rencana Pengeluaran Jangka Menengah Nasional (RPJMN)). Based on this and taking into consideration the macroeconomic framework as well as the president’s instructions, the ministries, including the Ministry of Health have to submit an annual work plan (Rencana Kerja Pemerintah (RKP)), along with their budget to the Ministry of Finance. The combined budgets are then discussed and approved by the legislative body (Dewan Perwakilan Rakyat (DPR)). This process occurs annually between October and November for the following year (Kementrian Keuangan, 2015).
The previous RPJMN covered the years 2014 to 2019. From 2020 onwards the RPJMN 2020-2024 will be the reference for upcoming budgets (Kementrian PPN/BAPPENAS, 2019).
Kementrian Keuangan. (2015). Pedoman Proses Perencanaan, Penganggaran, dan Pelaksanaan APBN. http://www.anggaran.depkeu.go.id/content/publikasi/buku pedoman perencanaan.pdf
Kementrian PPN/BAPPENAS. (2019). Rancangan Teknokratik Rencana Pembangunan Jangka Menengah Nasional 2020 – 2024.
Half of the total national health budget is allocated to three referral hospitals while resource allocation to the 47 counties is provided in block grants and is based on a resource allocation formula that takes into consideration factors such as the population, poverty levels, land share etc. The counties then decide the amount to be allocated to health. (Health Policy Project, 2016). Although the proportion of total government budget allocation to health (national and county) has increased over the past few years (7% in Financial Years (FYs) 2017/18 to 9.2% in FYs 2018/19) (Ministry of Health, 2018), it is still below the Abuja Declaration level of 15% .
During the financial year 2014/15, 38 of the 47 counties allocated at least 15% of the total county budget to health, with a larger share of the health budget given to conditions with a high burden (Health Policy Project, 2016). These allocations increased from 27% in FY 2016/17 27.2% in FY 2017/18 which is still below the pre-devolution level of 35% (Health Policy Plus, 2019). In Kenya, the financial year begins on 1st July of the present calendar year and ends on 30thth June of the following year. The budget making process in each county is a cycle (each cycle contains four financial quarters of three months each) with four quarters as follows (Githinji, 2019):
- First Quarter (1st July to 30th September): Each county treasury to issue every county department and the public with a circular on the budget process guidelines for the following financial year
- Second Quarter (1st October to 31st December): The county treasury tables the county budget reviews before the county assembly and the county governments to publish first quarter implementation reports.
- Third Quarter (1st January to 31st March): The county governments publicize and publish second quarter implementation reports. The county treasury tables, publishes, and publicizes the County Fiscal Strategy Paper for approval by the county assembly.
- Fourth Quarter (1st April to 30th June): The county governments publicize and publish third quarter implementation reports and the county treasury submits the budget estimates to the county assembly who will pass the appropriation bill.
Githinji, G. (2019). The County government budget process in Kenya. https://afrocave.com/county-government-budget-process/#the-budget-process-for-county-governments-in-kenya
Health Policy Plus. (2019). Kenya’s Health Sector Budget An Analysis of National and County Accounts for Fiscal Year 2018/19. Washington DC. http://www.healthpolicyplus.com/ns/pubs/11306-11586_KenyaBudgetAnalysis.pdf
Health Policy Project. (2016). Health Financing Profile: Kenya. Washington DC. https://www.healthpolicyproject.com/pubs/7887/Kenya_HFP.pdf
Ministry of Health. (2018). National and county health budget analysis FY 2018/19. Nairobi, Kenya. http://www.healthpolicyplus.com/ns/pubs/11306-11563_NationalandCountyBudgetAnalysis.pdf
While each sub-system has a particular process for planning and allocating funds, as with all policies and programmes financed with public funds, the budget process starts in June with the elaboration of the Annual Operation Programmes (Programa Operativo Annual, POA). These plans are presented by sector or Ministry to the Ministry of Finance, which makes the ultimate decisions on how funds are allocated. This gets integrated into the Federal Budget (Presupuesto de Egresos de la Federación, PEF) initiative that then goes to Congress for final approval. According to the Budget and Expenditure Legislation, the Federal Budget initiative has to be submitted no later than September 8 of each year to the Chamber of Deputies, which has the exclusive power to approve it no later than November 15 and then be published in the Official Gazette of the Federation no later than 20 calendar days after its approval (Ley Federal de Presupuesto y Responsabilidad Hacendaria).
The country’s national and provincial budget process runs from April to March on an annual basis. The table below describes the budget process for South Africa (adapted from source, Public Education Office, 2015):
Table 10: National and provincial budget process
|March to June||1. Parliament deliberates and adopts a fiscal framework for the upcoming year
2. Hearings begin on the Division of Revenue Bill;
3. Division of Revenue Bill is passed in Parliament
|April||Departments submit requests for roll over budget of qualifying unspent funds from the previous financial year. This is submitted at the end of April and assessed by National Treasury.|
|May to June||If submissions are approved, Treasury issues roll over allocation letters and the Medium-Term Expenditure Framework (MTEF) budget guidelines to departments.|
|July||1. During July, departments submit the details about their expenditure estimations (to Treasury) for the upcoming budget. Treasury analyses these, recommends changes to budget programme structures, and provides approval during this time;
2. July is also a time where policy priorities and implementation considerations are discussed;
3. The Appropriation Bill is passed by Parliament (National Assembly votes to pass the budget via this Bill)
4. Funds allocated to Departments on a monthly basis
|August||The MINCOMBUD (i.e., the Ministers’ Committee on the Budget) approves the fiscal framework, division of revenue and the sectoral budget priorities.|
|September||1. Recommendations of budget allocations for key priorities are presented by the Medium-Term Expenditure Committee (MTEC) to the MINCOMBUD;
2. Final recommendations are taken to Cabinet for approval;
3. September is also the time of the year for any Adjustment budget processes to begin for unforeseeable and unavoidable expenditures.
|October to November||1. Adjustment budget allocations are appropriated during October;
2. Parliament tables the following during this period:
· The key government priorities stated in the Medium-Term Budget Policy Statement (MTBPS);
· Size of the budget envelope for the next MTEF period;
· Proposed division of revenue
· Major provincial and local government allocations
3. Finalisation of the allocations to National departments and proposed to Cabinet (mid-November)
4. Cabinet sends out approval letters for allocations.
|December to February||1. Parliament provides the Minister of Finance with a budget review and recommendations report on the:
· Fiscal framework;
· Division of Revenue
2. Minister of Finance analyses these reports during this period, finalises all budget related information, and tables in Parliament.
Public Education Office. (2015). How the Budget works for us. www.parliament.gov.za