Home » Health » Cost of Reduced Budgetary Support to Health Sector

Fiscal space refers to the financial resources that are available to government resulting from concrete policy actions for increasing resource mobilisation, and the reforms necessary to secure the enabling governance, institutional and economic environment for these policy actions to be effective, for a specified set of development objectives.

The future of the Zimbabwean economy, in particular the key social sectors is uncertain. The economic growth that the country has been experiencing since the adoption of the multi-currency system, which reached a peak of 11,9 percent in 2011, has been weakening.

Economic growth projections for 2015 are around 3,2 percent.

Related to the slow economic growth is the slow growth in domestic budget revenues. According to the ZIMRA Revenue Performance Report for the year ending December 2014, revenues were suppressed by liquidity challenges, company closures and scaling down of operations.

Net ZIMRA revenue collections for 2014 amounted to US$3,6 billion, 6 percent lower than the target of US$3,82 billion. The disparity between target and actual revenue collection was wider in the fourth quarter of the year. The revenue collection of US$996,94 during that quarter was 10 percent lower than the target of US$1,1 billion showing signs of a shrinking fiscal space.

These developments are occurring at a time when support from development partners under the Transition Funds for health, education and WASH, is coming to an end. These sectors have benefited from pooled funds under the UNICEF support, targeting non-wage expenditures such as procurement of drugs, maternal health, procurement of textbooks, cash transfers and drilling of boreholes.

With the imminent termination of these programmes, there is a real possibility that the country may witness a reversal in the achievements made in the health and education sectors – hence the need for innovative ways of maintaining support to these sectors and reducing dependency on donor funding.

Health is a human right enshrined in the UN’s Universal Declaration of Human Rights, the African Charter on Human and People’s Rights and the International Covenant on Economic, Social and Cultural Rights, among other things.

It is an important component of quality of life and every human being has the right to the highest attainable standard of physical and mental health, without discrimination. This includes access to adequate health care (curative, preventive rehabilitative or palliative), nutrition, sanitation, clean water and air, and occupational health.

The right to health is very important to a person’s life and well-being, and is necessary to enable them to enjoy other rights.

Universal health care tops the global health policy agenda and calls for health systems in which everyone has access to the services they need and universal financial protection from the costs of using those services.

Section 2 (29) of the new Constitution of Zimbabwe states that:

(1) The State must take all practical measures to ensure the provision of basic, accessible and adequate health services throughout Zimbabwe.

(2) The State must take appropriate, fair and reasonable measures to ensure that no person is refused emergency medical treatment at any health facility.

(3) The State must take all preventive measures, within the limits of the resources available to it, including education and public awareness programmes, against the spread of diseases.

From the above it is clear that the spirit of the Constitution of Zimbabwe is that the Government has the ultimate responsibility to ensure that all its citizens have access to adequate health services.

However, the situation alluded to earlier on, that is seeing the levelling off in the growth of Government revenues at a time that extra budgetary support from development partners is ending, brings serious challenges to the capacity of Government to meet its health obligations that are outlined in the Constitution.

The question that arises is what impact will reduced financial resource allocations to the health sector have on the health sector itself and on the economy at large?

Further, what innovative ways can be introduced to improve national health funding?

Investment in health affects economic growth and poverty reduction in a positive way, both directly and indirectly.

Healthy workers tend to be more productive over the course of longer lives. Improving maternal health is an investment that benefits not only the mother, but also the unborn child. According to the World Bank Growth Report of 2008, it has been established that when children are undernourished in the womb or in infancy, their cognitive development is retarded, and this can have permanent consequences, reducing their ability to benefit from education and reducing their productivity and hence negatively affecting long-term prospects of their countries. Under-investment in health will therefore have the effect of compromising long-term economic growth due to an eventually “lower quality” and less productive human resource base.

Further, the country will continue to exhibit, income inequalities with the poor segments of the population finding difficulties to break out of the poverty trap – opportunities which could be afforded by access to health and education.

Long-run economic growth is key in informing all types of economic policy choices, including budgetary allocations.

The UN System Task Team on the Post-2015 UN Development Agenda (2012) argued that ensuring people’s rights to health and education, is vital for inclusive social development and requires investment to “close the gaps in human capabilities that help perpetuate inequalities and poverty across generations”.

The UNDP 2013 Human Development Report also noted that inclusive economic development requires investment in people’s capabilities through public spending on social services, particularly health, education and nutrition.

Public spending on social services is a means of income redistribution and contributes to sustained inclusive economic development.

To see the effects of reducing budgetary support to health, on the health sector itself one needs only to rewind and review the situation that prevailed during the hyper-inflationary period that was concluded with the adoption of the multi-currency system in 2009. Of course the challenges rooted in that era were so deep that some of them continued and still manifest themselves to date.

The entire social service delivery system including the health sector was crippled. There was deterioration of health infrastructure and a widespread shortage of essential medical supplies such as drugs and consumables. Many Zimbabwean women were opting to give birth at home despite the obvious dangers. There was poor remuneration of health workers leading to emigration and the brain drain of qualified and experienced health personnel.

Child health status indicators such as infant and under five mortality rates deteriorated. There were disruptions even in transport and telecommunications, which compromised several programmes including patient transfers, malaria indoor residual spraying, drug distribution and supervision of districts and rural health centres. The country also experienced a number of outbreaks of diseases and of note is the cholera outbreak of 2008.

The government has made significant progress in addressing some of these challenges and a decrease in health funding is likely to reverse its efforts. This is particularly important for infectious diseases such as HIVAIDS, TB and malaria whose treatment plays an important role in their control.

With the imminent conclusion of the Health Transition Fund (HTF) support programme, and the prevailing national budgetary situation the next question that arises is what can government do to increase fiscal space in order to increase funding for health services? This is particularly important given the fact that more than 70 percent of the country’s population relies on the public sector for health care services – and hence the need for it to be adequately funded. Given the significance of public investment in enhancing the prospects for equitable, inclusive economic growth and social development, it is imperative that the government explore options to increase social spending and employment-generating economic investments – that is creating fiscal space for these activities.

This article does not at this stage attempt to come up with answers on how to increase fiscal space for social sectors, including health in Zimbabwe. It concludes by simply stating some of the major options that have been raised in literature for increasing fiscal space, in order to provoke thoughts and debate on the options for further exploration within the context of Zimbabwe. These include the following: a) re-allocating re-prioritizing public expenditures, b) increasing tax revenues, c) lobbying for increased aid and transfers, d) tapping into fiscal and foreign exchange reserves, e) borrowing and restructuring existing debt, and f) adopting a more accommodative macroeconomic framework. These and other fiscal space options need to be examined carefully taking into consideration the potential risks and trade-offs associated with each opportunity.

Benson Zwizwai is a Lecturer of Macroeconomic Theory and Policy, and Development Economics in the Economics Department of the University of Zimbabwe.

Source : The Herald