Structured Abstract
| Document Title: | GFATM tracking study: Macroeconomics and sector background paper. TANZANIA, January 2004 |
| Institution: | London School of Hygiene and Tropical Medicine |
| Authors: | Sally Lake |
| Study commissioned by: | A team from the Department of Public Health and Policy at the London School of Hygiene and Tropical Medicine and funded by : Danish Agency for Development Assistance, the UK Department for International Development, Development Cooperation Ireland (DCI), and the Netherlands Directorate-General for International Cooperation (DGIS). |
| Objectives: |
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| Methods: | Combination of methods: document review, in-country fieldwork, separately commissioned desk studies on specific areas. This descriptive qualitative study forms part of a series of four country background papers in order to support an 18-month Tracking Study. |
| Results: | The paper describes the macroeconomic situation in Tanzania, the government budgetary framework, including details on health sector organisation, planning and financing, both generally and in relation to GFATM target disease-related activities. It discusses issues specifically related to the GFATM proposals in the country, in terms of potential levels of funding and the macroeconomic impact, and in terms of sectoral effects and their relationship to existing strategies. Key issues, and specific areas for the second phase of the tracking study to follow up, are then presented. (see Summary of key issues and areas for Phase Two tracking). |
Summary
Summary of key issues and areas for Phase Two trackingTanzania is currently benefiting from relatively strong economic performance, with consistently high growth rates in recent years, with real GDP growth reaching 6.2% in 2002 and positive per capita GDP growth over the last five years. The country has also successfully contained inflation which fell below 5% in 2002, reaching 4.2% in March 2003. Foreign reserves have grown substantially in recent years, reaching the equivalent of almost nine months of imports in 2002.
Fiscal policy is considered broadly sound, with the government meeting its recent targets in terms of domestic revenue performance, reduction in the fiscal deficit, and zero domestic borrowing. With no major turbulence to throw the planned expenditure programme under the PRSP off-course, expenditure levels have been maintained even in the face of shortfalls in project funding. One outstanding problem is the poor quality and consistency of data recording budgets and expenditures which has made trend analysis of allocations to priority sectors and priority areas difficult, but these are recognised and are being given attention.
Government policy towards external finance is clearly stated in the Tanzanian Assistance Strategy, and the move towards general budget support by a number of key partners is continuing, with harmonisation of World Bank and bilateral support structures and processes. The annual budget support review process appears to be functioning well.
In regard to GFATM target diseases, roles and strategies are being clarified, with the establishment and continued strengthening of TACAIDS as the body responsible for coordinating the multisectoral response to HIV/AIDS, and planned restructuring within MOH to better manage the health sector response under the recently approved Health Sector HIV/AIDS Strategy. The malaria proposal clearly fits within the existing strategy, facilitated by a well-supported technical programme at national level.
Macroeconomic issues for follow-up
- GDP performance
Continued positive real GDP growth will be required to help balance additional planned inflows to the health and HIV/AIDS sectors if the latter are not to distort inter-sectoral allocations, particularly in terms of PRS priorities. Despite positive achievements in terms of increasing public expenditure, the health sector remains under-funded in terms of achieving national coverage with priority interventions, and a constant or increasing share of overall public expenditure in a climate of positive economic growth is one way in which the gap can be closed.
- Domestic revenue performance as % GDP
The Tanzanian government has indicated that improved domestic revenue performance is the chosen strategy for eventually reducing the share of the budget and the PRSP which are currently externally funded. The extent to which targets in this area are being met should be monitored.
- Sectoral allocations as % of total government budget
GFATM funding is intended to be additional to other sources of funding, and as such should alter the inter-sectoral allocation of budgetary resources. The total volume of resources available to government, together with its allocation between sectors should therefore be tracked. Monitoring this remains problematic in the Tanzanian context, not least as HIV/AIDS is defined as a priority sector in its own right, but with substantial overlap with the health sector, in terms of reporting on PRSP-related expenditure. The ongoing improvements in financial reporting in this area, and a planned analysis of flow of funds to HIV/AIDS should facilitate this task.
- General budget support as % of total revenues
- Loans versus grants
- Budgeted versus actually disbursed
Sector issues for follow-up
- Timing and level of GFATM inflows
The disbursement of external funding through any source has been an issue in the past for Tanzania, whether due to problems on the part of the funder or the recipient. To the extent that GFATM funding has been programmed into the MTEF, release of such funding according to schedule and subsequent spending thereof, will impact upon stated programme objectives and sectoral targets. Where this is due to delays on the part of the Principal Recipient, it may reflect absorption constraints.
- Reporting of GFATM budgets and expenditures included in MTEF
In Tanzania GFATM funding is currently programmed for channelling through three separate MDAs, MOH for malaria, and TACAIDS and PORALG for HIV/AIDS. A detailed MTEF is available for the central level MOH only at this point. The contribution of GFATM funding to sectoral MTEFs is worth tracking both in terms of the size of contribution and in terms of the intra-sectoral allocation of resources. Although there is no routine mechanism for tracking project funding expenditures at present, this may be further developed during the course of the study, in which case comparison of GFATM funding as a proportion of budgeted and actual expenditure should be tracked. This should of course be possible through other sources of accounting data for GFATM funding, but the extent to which the funding is harmonised in emerging government and sector-wide systems is worth tracking per se. This should include any successful third round funding. Where possible, divergence between expenditure and budget should be explored to determine the extent to which it reflects genuine absorption capacity constraints rather than bureaucratic hurdles.
- Sectoral additionality
Current financial reporting makes it relatively difficult to accurately determine the extent to which GFATM funding can be additional due to changing PRSP definitions of the health sector, and identification of HIV/AIDS as a "sector" in its own right. However, it should be possible to track, albeit imperfectly, spending on HIV/AIDS activities over the period of the GFATM funding, and to determine which are funded by GFATM as the activities are relatively easily identified, and thereby to assume some level of additionality where total spending in the health sector has risen more than projected in the past. However, it should be borne in mind that this definition of "additionality" is to a large extent artificial as the majority of funds are fungible, and other sources may still have reduced in response to GFATM inflows, hence the need to monitor the overall government resource envelope as indicated above.
- Absorption capacity
Concerns have been raised regarding the capacity of the health/HIV/AIDS sector to effectively absorb the new, large inflows of which the GFATM funding is one. The recently completed HIV/AIDS PER update for FY04 indicates that there have been some improvements in TACAIDS ability to use available resources. However, the large increases in multiple sources of funding for HIV/AIDS are likely to present a continued challenge in absorption, with limited human resources and existing co-ordination problems, for example with the recently approved GFATM proposal and planned inflows under the Clinton Foundation Care and Treatment Plan. There are indications already that the performance-related disbursements of funds under the World Bank TMAP are behind schedule for this reason.
- Impact on private sector activity
As the malaria funding is largely to be channelled to subsidies to enable uptake of bednets provided through private sector activity, it would be useful if possible to monitor the extent of any such increase in private sector activity. This is likely to be beyond the remit and capacity of the tracking study as a primary data collection exercise but is being undertaken separately by the Malaria Control Programme (with LSHTM input), and any available information should therefore be solicited.
- Convergence between stated priorities and GFATM activities
The comment has been made that the HIV-related GFATM proposals have been developed in parallel to existing strategies and ongoing activities, at least in part due to time constraints, ie the need to submit the proposal at a time when the Health Sector HIV/AIDS Strategy was not finalised. Although the malaria proposal is consistent with existing strategies, it has not been possible to check consistency of the other proposals due to non-availability of the TB medium-term plan or the HSHS. This remains to be done during Phase 2 of the study. In addition, both HIV-related proposals to date refer to expanding certain activities to a number of districts, without there being any clearly identified strategy for taking those activities to national scale. Further information on such strategies would be welcome.
- Extent to which GFATM funding contributes to systems strengthening
It has not been possible to analyse the extent to which the GFATM proposals approved to date contribute to general systems strengthening, or to which they have freed up more flexible budgetary funds to address such issues. Based on the (incomplete) proposals viewed, it would appear that they are largely targeted at vertical programme activities. One problem here is the lack of useful costing in the sector permitting estimates of sectoral investments necessary to achieve targets in terms of the Essential Health Package more generally.
- Budgetary versus project funding in the sector
The extent to which funding to a given sector is funded through general budgetary resources including external budget support, rather than through earmarked project funds, will influence the degree of flexibility which government has in allocating funds between priority uses within that sector. For example, if GFATM or other project funds pick up direct costs of specific interventions, budgetary funding can be deployed towards broader system strengthening activities. The balance between recurrent and development (largely foreign project funding) in the health sector is currently expected to change substantially in FY05, but it is not clear to what extent this might reflect project funding for HIV/AIDS.
- Proportion of GFATM funding at central versus local government level
With the ongoing decentralisation and continued capacity strengthening of local government authorities who are mandated to deliver essential services including those addressing GFATM target diseases, it will be interesting to track the extent to which funding is channelled directly, or in terms of drugs/supplies to the council level over the course of the study.
