EQUITABLE GROWTH, FINANCE & INSTITUTIONS H E A LT H , N U T R I T I O N & P O P U L AT I O N Myanmar Improving Public Financial Management for Health Services Challenges and Opportunities for Improving Service Delivery in the Wake of COVID-19 © 2021 International Bank for Reconstruction and Development /The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. 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Attribution—Please cite the work as follows: World Bank. 2021. “Improving Health Services in Myanmar through Public Financial Management Reform.” Equitable Growth, Finance & Institutions, Health, Nutrition & Population, World Bank, Washington, DC. >>> Contents Acknowledgments 7 Abbreviations and Acronyms 9 Executive Summary 12 1. Introduction 26 1.1 Rationale and Purpose of the Review 26 1.2 Management and Quality Assurance of the Review 26 1.3 Methodology for the Review 27 2. Country Background Information 29 2.1 Economic, Social, and Political Country Situation 29 2.1.1 Country Context, Geography, and Population 29 2.1.2 The Myanmar Economy 30 2.1.3 Health Status and Disease Prevalence 30 2.1.4 Other Risks - Climate Change and Natural Disasters 32 2.2 The Health Sector 32 2.2.1 Overview 32 2.2.2 Health Financing and Pooling Arrangements 33 2.2.3 Trends in Health Sector Resource Provision and Expenditure 35 2.2.4 Health Sector Reforms, Ongoing and Planned 36 2.2.5 The Evolving Impact of COVID-19 on the Health Sector 37 2.3 The National PFM System 37 3. Review of PFM Functions Affecting Health Service Delivery 39 3.1 Strategic Planning 39 3.1.1 Sector Planning and Coordination (H1) 39 3.1.2 Sector Plan Costing and Financing (H2) 41 3.1.3 External Funding of the Sector (H3) 41 3.2 Budget Preparation 42 3.2.1 Annual Budget Preparation Process (H4) 42 3.2.2 Budget Classification (H5) 44 3.2.3 Forecasting of Earmarked Revenue (H6) 44 3.2.4 Medium-Term Perspective in Expenditure Budgeting (H7) 45 3.2.5 Transfers to Subnational Governments (H8) 45 3.3 Flow of Funds 45 3.3.1 Predictability of In-year Resource Allocation (H9) 46 3.3.2 Collection of Earmarked Revenue for Health (H10) and Accounting for Health Sector Revenue (H11) 46 3.3.3 Strategic Purchasing Arrangements (H12) 47 3.3.4 Payroll Controls (H13) 48 3.3.5 Internal Controls of Non-Salary Expenditure (H14) 52 3.3.6 Internal Audit (H15) 58 3.4 Management of Physical Inputs 58 3.4.1 Staff Recruitment (H16) 58 3.4.2 Staff Performance Management (H17) 62 3.4.3 Procurement Management (H18) 63 3.4.4 Public Investment Management (H19) 65 3.4.5 Physical Assets Management (H20) 69 3.5 Accounting and Reporting 70 3.5.1 Accounting, Recording, and Reconciliation (H21) 70 3.5.2 Financial Reporting and Budget Execution Reports (H22) 71 3.6 Oversight and Transparency 72 3.6.1 External Audit (H23) 72 3.6.2 Public Access to Health Finance Information (H24) 73 4. Summary of Key Bottlenecks and Recommendations 74 ANNEXES 75 Annex 1: Summary of PFM in Health Bottlenecks and Recommendations 76 Annex 2: Bibliography 93 Annex 3: PFM Functions in the Health Sector 96 Annex 4: Survey Sample Selection and Survey Process 97 Annex 5: List of MoHS Entities and Facilities Surveyed 101 Annex 6: Questionnaires Used for Survey 105 Annex 7: Joint Task Force Members 106 Annex 8: The Health Sector in Myanmar 107 Health Sector Goals, Priorities, and Service Delivery Approach 108 Legal and Regulatory Arrangements of the Health Sector 108 Institutional Arrangements for Health 109 The Unfolding Impact of the COVID-19 Pandemic on the Health Sector 110 Annex 9: The National PFM System 111 Overview 111 Legal and Regulatory Provisions for PFM 111 Institutional Arrangements for PFM 112 Key Features of the PFM System 113 PFM Reforms, Ongoing and Planned 115 Annex 10: Procurement Steps Required for Average Construction Project 116 Annex 11: Alternative Arrangements for Procurement During Travel Restrictions Due to Spike in Corona Virus (COVID-19) in Myanmar 118 Annex 12: Note on Myanmar Budget Flexibilities to Deal with Shocks, Such as COVID-19 121 Tables Table 1. Selected Health Outcome Indicators: Myanmar Versus Comparator Countries 2015 31 Table 2. Stockouts - Percentage of Facilities Experiencing Stockouts in Previous 6 Months 64 Table 3. Stockouts - Percentage of Hospitals by Type Experiencing Stockouts in Previous 6 Months 65 Table 4. Actual Capital Expenditure as Percentage of Original and Adjusted Budgets 66 Table 5. Structure of Public Sector by Number of Entities and Scale of Financial Turnover 114 Figures Figure 1. Comparison of Four Categories of Financial Bottlenecks in MoE (2019) and MoHS (2020) 23 Figure 2. Consolidated Cause and Effect Analysis of Underlying Causes of PFM Bottlenecks 25 Figure 3. Myanmar Health Indicator Trends 31 Figure 4. Increase in Health and Other Sector Spending 33 Figure 5. Various Estimates of External Financing 34 Figure 6. Health Budget as a Share of Budget and of GDP, 2014–2020 36 Figure 7. Budgets Not Well Linked to NHP Planning Priorities 40 Figure 8. Amounts Budgeted for Temporary Labor Hire (0301); and Temporary Labor as a Percentage of Payroll 49 Figure 9. Budget Lines Most Often Underspent in 2018/19 - Percentage of Surveyed Entities or Hospitals 50 Figure 10. Amount of Underspend for Payroll Only for MoHS as a Whole 51 Figure 11. Amount of Underspend by Budget Line for MoHS as a Whole 51 Figure 12. Payroll Underspend - Contributing Factors 52 Figure 13. Average Underspend by Facility Type by Budget Line - Recurrent Only 55 Figure 14. Operating Budget Underspend - Possible Causes 56 Figure 15. Budget Norms Restricting Outreach Travel - Number by Type of Facility Surveyed 57 Figure 16. Sanctioned, Filled, and Vacant Positions in Entities and Facilities Surveyed (%) 60 Figure 17. Vacancy Rates for Sanctioned Positions by Facility Type; DPH/DMS Vacancy Rates by Level 60 Figure 18. Vacancy Rates for Finance-Related Positions (Branch Clerks and so On) 62 Figure 19. MoHS - Rate of Budget Execution (Recurrent + Capital) 66 Figure 20. Capital Construction Budget Underspend - Possible Causes 68 Figure 21. Contributors to Delayed and Limited Value Budget Execution Reports 72 >>> Acknowledgments This assessment has been undertaken by a joint World Bank team from the Economic Growth, Finance and Institutions (EFI) and the Health, Nutrition, and Population (HNP) Global Practices, in close cooperation with the Government of Myanmar. The report was prepared by a World Bank team led by Fabian Seiderer (Lead Public Sector Specialist) and Nang Mo Kham (Senior Health Specialist) and including Manoj Jain (Lead Financial Management Specialist and Task Team Leader of the Global Flagship - PFM in Health), Srinivas Gurazada (Head, PEFA Secretariat), Bonnie Ann Sirois (Senior Financial Management Specialist), Pike Pike Aye (Public Sector Specialist), and Anthony Higgins (lead PFM Consultant), Thanapat Reungsri (Economist), Ildrim Valley (Consultant, Economic), Tom Trail (Consultant, Health Economics), Saw Thu Nandar (Financial Management Consultant), and Dr. Win Thu (PFM Consultant). The team was supported by Kay Khine Win (Program Assistant). The team is grateful to Fily Sissoko (GOV Practice Manager EEAG2), Aparnaa Somanathan (HPN Practice Manager), Hnin Hnin Pyne (HD Program Leader) and Hans Beck (EFI Program Leader) for their guidance. The team thanks the peer reviewers Ajay Tandon (Lead Economist, Health, Nutrition and Population Global Practice, World Bank); Mohan Gopalakrishnan (Senior Financial Management Specialist, World Bank); and Tom Coward (Team Leader, Foreign, Commonwealth & Development Office FCDO) for their review and comments. The study was conducted jointly with the Ministry of Planning, Finance and Industry (MOPFI) as well as with the Ministry of Health and Sports (MoHS). The team is grateful to His Excellency Dr. Myint Htwe, the Union Minister MOHS and to His Excellency U Maung Maung Win, Deputy Minister, MOPFI (Chair, PFM Executive Reform Team), for their support and for the substantial and valuable contribution of their Ministries’ officials. The assessment received the full support and cooperation of Joint Task Force Members from MOPFI and MoHS. They were Daw Naw Wilmar Oo (Director, Budget Department, MOPFI); Daw San Thida (Director, Budget Department, MOPFI); Daw Nyunt Nyunt Shwe (Director, Planning Department, MOPFI); Daw Kyi Cherry (Director, Planning Department, MOPFI); Dr. Thant Sin Htoo (Director, Asst. Permanent Secretary, NIMU, MoHS); Dr. G Seng Taung (Director, Planning, IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 7 DPH, MoHS); Dr. Win Yee Mon (Director, Planning, DMS, MoHS); U Win Oo (Director, Finance, DMS, MoHS); Daw Khine Khine Kyi (Director, Finance, DPH, MoHS); Dr. Ye Min Htwe (Deputy Director, NIMU, MoHS); Dr. Maung Maung Htay Zaw (Deputy Director, Planning, DPH, MoHS); Daw Yamin Nwe (Deputy Director, Budget, DMS, MoHS); and Daw Sandar (Deputy Director, Finance, DPH, MoHS). The following MOPFI Planning Officers participated in the survey and interview of officials from health departments and facilities: Daw Nwe Nwe Aye, Assistant Director, Planning Department, Mandalay; U Shwe Nyein, Assistant Director, Planning Department, Magway; Daw Nwe Hnin Ei, Staff Officer, Planning Department, Mon State; Daw Nwe Nwe Soe, Assistant Director, Planning Department, Shan East; Daw Myint Myint Win, Staff Officer, Planning Department, Shan East; Daw Khin Moe Win, Assistant Director, and U Kyaw Khaing Oo, Assistant Director, Planning Department, Ayeyarwaddy. Other MoHS officials provided valuable input to the development of the survey questionnaire and participated in focus group discussions during the development of the survey instrument. These included Dr. Moh Moh Win, Assistant Director, Planning, DPH; Dr. Phyu Win Thant, Assistant Director, NIMU; Dr. Khin Thu Htet, Assistant Director, NIMU; Dr. Wit Yee Win, Medical Officer, NIMU; Daw Nang Nwe Ni, Staff Officer, Finance, DPH; Daw Yi Yi Naing, Staff Officer, Finance, DPH; and Daw Su Myat, Staff Officer, Finance, DMS. The Assessment Team would also like to thank the many other MOPFI and MoHS officials who participated in focused discussions to identify potential PFM bottlenecks. The team is grateful for the support from the Myanmar Multi Donor Trust Fund and the global Multi Donor Trust Fund for Universal Health Coverage (financed by Australian Government) which financed this work. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 8 >>> Abbreviations and Acronyms AF Additional Financing BE Budgeted Estimates BY Budget Year CBM Central Bank of Myanmar CBO Community-based Organization CCM Country Coordinating Mechanism CERP COVID-19 Emergency Response Project DHS Demographic and Health Survey DL Drawing Limit DMS Department of Medical Services DPH Department of Public Health EHO Ethnic Health Organization EHSAP Essential Health Services Access Project EPHS Essential Package of Health Services ERT Executive Reform Team FBPS Fiscal Budget and Policy Statement FIRST Financial Information Reporting System FMIS Financial Management Information System FRRs Financial Rules and Regulations GAS Government Accounting System GAVI The Vaccine Alliance GDP Gross Domestic Product GFATM Global Fund against AIDS, Tuberculosis, and Malaria GFS Government Finance Statistics GNI Gross National Income GoM Government of Myanmar HCI Human Capital Index HFS Health Financing Strategy HFSA Health Financing System Assessment HMIS Health Management Information System HNP Health, Nutrition, and Population HR Human Resources HRH Human Resources for Health IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 9 IBP International Budget Partnership ICT Information and Communication Technology IDA International Development Association IFMIS Integrated Financial Management Information System IHME Institute for Health Metrics and Evaluation IMF International Monetary Fund IMR Infant Mortality Rate INFORM Index for Risk Management JEE Joint External Evaluation JICA Japan International Cooperation Agency JTF Joint Task Force MD Ministry Department (bank accounts) MDG Millennium Development Goal MEB Myanmar Economic Bank M-HSCC Myanmar Health Sector Coordination Committee MMR Maternal Mortality Rate MNHP Myanmar National Health Policy MoE Ministry of Education MoHS Ministry of Health and Sports MOPFI Ministry of Planning, Finance and Industry MPFMP Myanmar Modernization of PFM Project MSDP Myanmar Sustainable Development Plan MS-NPAN Multi-Sectoral National Plan of Action for Nutrition MTBF Medium-term Budget Framework NCD Noncommunicable Disease NGO Nongovernmental Organization NHA National Health Accounts NHP National Health Plan NIMU National Health Plan Implementation Monitoring Unit NLD National League for Democracy NUPI Norwegian Institute of International Affairs OA Other Account OAGM Office of the Auditor General of Myanmar OOP Out of Pocket PA Published Actual PAPRD Project Appraisal and Progress Reporting Department PEFA Public Expenditure Financial Accountability PFM Public Financial Management PHD Public Health Department PI PEFA Indicator PIP Public Investment Plan PSD Procurement, Supply, and Distribution RE Revised Estimates RHC Rural Health Center IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 10 SAA Self Administered Area SC Sub Rural Health Center SCG Sector Coordination Group SDG Sustainable Development Goal SEE State Economic Enterprise SHI Social Health Insurance SSB Social Security Board TB Tuberculosis TMO Township Medical Officer TWG Technical Working Group U5MR Under-five Mortality Rate UFA Union Fund Account UHC Universal Health Coverage UN United Nations UNOPS United Nations Office for Project Services USAID United States Agency for International Development USDP Union Solidarity and Development Party WHO World Health Organization IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 11 >>> Executive Summary 1. As the Ministry of Health and Sports (MoHS) continuity plans, leveraging technology. Proposals pursues a national priority of achieving universal are made in the report to increase budget flexibility, health coverage (UHC), there are significant emergency financing and emergency procurement for challenges that need to be addressed. The National such situations. It is complemented by the MOPFI ICT Health Plan (NHP), 2017–2021, identifies important strategy, with recommendations to improve automation challenges in Myanmar’s health systems, including in and remote connectivity for critical PFM functions its public financial management (PFM) systems. This to support public service delivery, including in times PFM in Health Assessment systematically analyzes of crisis. and documents the main PFM bottlenecks that adversely affect health service delivery and makes 3. The COVID crisis has also highlighted the low recommendations on how the binding constraints level of funding for critical public health services. can be addressed. The assessment identifies PFM Although the government has a costed National Action bottlenecks and constraints in MoHS’ own PFM systems Plan for Health Security since 2018, implementation2 and where MoHS has scope to implement its own is far from adequate, notably due to insufficiency reforms. It further identifies national PFM bottlenecks of financial and human resources and inadequate and reforms led by the Ministry of Planning, Finance prioritization. This situation has been aggravated by and Industry (MOPFI) that can be leveraged to support COVID which required significant additional resources the delivery of critical public services, such as health. for the health sector. The Government and its partners have responded swiftly by reallocating important 2. The emerging COVID-19 pandemic early in 2020 has resources to the sector and COVID response, further exposed and exacerbated these financial including through budget reallocations, the COVID management challenges to effective health service fund, the World Bank’s COVID Emergency Response delivery. As assessed by the Joint External Evaluation Project and Additional Financing of the Essential (JEE) and the Global Health Security Index1, Myanmar Health Services Access Project (EHSAP)3 and the IMF lacks preparedness and readiness to prevent, detect, emergency assistance among others. While these and respond to disease outbreak and pandemics. efforts help to mitigate the short-term impacts of the Likewise, its PFM and ICT systems have been stressed crisis, it is important to sustain this increased financing by the pandemic and public health measures, such for the health sector over the long term, in line with the as the travel restrictions and remote work to contain National Health Financing Strategy as discussed in the the spread of the virus. This situation has affected report. Furthermore, this sudden increase in demand the functioning of critical financial and public health and resources have exacerbated pre-existing and services at times of great demand. It underscores deeper-rooted implementation bottlenecks, analyzed in the need to develop crisis management and business this study. Sections 3 and 4 of the report indicate which 1. According to the JEE, Myanmar had an average score of 2.2 out of 5.0, compared to the global average of 2.8. On the Global Health Security Index, Myanmar ranked 72 out of 195 countries with an overall score of 43.4 out of 100 (https://www.ghsindex.org/). 2. The financing shortfall is discussed further in section 2.1.1 3. The EHSAP Additional Financing (AF) project has been approved by the World Bank Board on May 29, 2020. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 12 bottlenecks and recommendations are most relevant to providers and stewards for the health of communities the COVID-19 response and resilience. in these areas is integral to improving the inclusion, responsiveness and outcomes of Myanmar’s health 4. The impact of the COVID-19 pandemic on system. In the meantime, and where feasible, some Myanmar’s economy is severe. Gross domestic of the planning and PFM reforms recommended product (GDP) growth for FY2019/20 is estimated under this assessment offer opportunities to increase to decline by 2 to 3 percent in place of the expected coordination and cooperation with EHOs. For instance, increase of 6.3 percent for 2018/19 and revenues in the development of inclusive Township health could decline by up to 11 percent4. The downgrade plans, a more iterative and bottom up budgeting and reflects impacts in all sectors, driven by a slowdown in prioritization process or capacity building programs domestic demand and significant trade, tourism, and represent mutually beneficial areas for cooperation to supply chain exposure to China and the rest of the East improve health service delivery and outcomes. Asia region. In the years before 2020 and the impact of COVID-19, strong economic growth has translated into 7. While health outcomes in Myanmar have improved reduced overall levels of poverty. The proportion of the substantially and steadily over the last few decades, population living under the national poverty line halved they are now threatened by COVID. Life expectancy from 48.2 percent in 2005 to 24.8 percent in 2017 but at birth has risen steadily from just 42 years in 1960 to these gains are now threatened. While the impacts of 67 years in 2020. However, there are wide variations COVID-19 are fluid and difficult to forecast, they are in health outcomes and access to health services expected to be deep and wide. The tourism, service, across the country based on geography, gender, and manufacturing, and agriculture sectors are particularly income. The infant mortality rate (IMR) across states hit. These sectors are labor intensive and therefore and regions ranges from 37 per 1,000 live births in affect especially the poor and vulnerable groups. Mon State to 80 in Bago Region6. The same degree of variation is observed for neonatal mortality rates 5. In Myanmar, the challenge of health service delivery and under-five mortality rates (U5MRs). Populations is better appreciated in light of the scale of its in urban areas also consistently fare much better than geography and ethnic diversity, as well as its recent rural residents—neonatal mortality in urban areas is 18 political and economic history. Myanmar is a lower- per 1,000 live births, while it is 36 in rural areas; under- middle-income economy with a gross national income five mortality is 42 per 1,000 live births in urban areas, (GNI) per capita of US$1,310 in 20185. It is the second while it is 80 in rural areas (Myanmar DHS, 2015-16). largest country in Southeast Asia and has a population of around 53 million. Myanmar is one of the world’s 8. Significant gender gaps in terms of access to most disaster-prone countries, exposed to multiple quality health care also persist. In Myanmar, the hazards, including floods, cyclones, earthquakes, Human Capital Index (HCI) is slightly higher for females landslides, and droughts and now a pandemic. (49 percent) than for males (45 percent) but remains low compared with other South East Asian countries7. 6. Myanmar has suffered a prolonged history of The Myanmar Demographic and Health Survey (DHS) internal ethnic conflict which has had an ongoing 2015–16 noted that 57.9 percent of boys between 12 impact on the political, social, and economic and 23 months of age receive all basic vaccinations, situation since the country gained independence compared with 50.9 percent of girls. In addition, when in 1948. The conflict-affected areas provide a further it comes to seeking advice or treatment from a health challenge to the provision of health and social services. facility or provider for symptoms of acute respiratory In some conflict affected and non-government- infection, 64.8 percent of boys under 5 years of age controlled areas, ethnic health organizations (EHOs) received advice or treatment compared with only 47.6 have been providing essential health services for local percent of girls. communities. Recognition and inclusion of EHOs as 4. Myanmar Economic Monitor, The World Bank, June 2020. 5. Country Partnership Framework for Myanmar For the Period of FY 20-23, World Bank 6. Myanmar Demographic and Health Survey, 2015-16 7. Human Capital Index, World Bank: https://data.worldbank.org/indicator/HD.HCI.OVRL.UB?end=2020&locations=MM&start=2017 IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 13 9. Efforts are being made to help understand and control their own budgets, together with the sub address the persistent gender gaps. This includes rural health centers (SCs) and rural health centers programs to institutionalize gender responsive (RHCs) which are financed from township health budgeting (GRB) supported by the Joint Task Force of departments. All of these departments and facilities Gender Responsive Budget Working Group Committee form part of the deconcentrated structure of the Union (MoPFI/MoSWRR/MoE/ WB/UN WOMEN and EU). level MoHS. Although there are state and regional They consist of capacity building for gender budget governments in Myanmar, they do not currently have a analysis in three priority sectors of social welfare, significant role in financing subnational service delivery education, and health in a phased manner to put in in health and education (see H8, H12). place mechanisms for collection of sex-disaggregated data on budgetary preferences at union and sub- 13. Government provided health services remain national levels, and developing rules and procedures highly centralized. Responsibilities of subnational for gender responsiveness in budgeting processes. governments in the health sector, which hold basis in These efforts are also supported by the forthcoming Schedule 2 of the Constitution, are both vague and World Bank Public Finance Management (PFM-II) incomplete. Developmentally and fiscally important project and the Government’s PFM Academy. responsibilities in the health sector are retained at the Union and therefore subject to the Union budget 10. Frontline health service providers in Myanmar process. For example, there is no role yet for township face a range of financial management bottlenecks offices in staff assignment, transfer or promotion, other which constrain their ability to respond to local than reporting on vacant posts. Union holds the sole health needs and priorities. While some bottlenecks responsibility for the management of doctors and are outside of MoHS’ control, some are not. Even for technical staff. However, since 2012 responsibilities those outside of MoHS’ direct control, the ministry is for some functions have been deconcentrated to state/ in a position to take its own actions to significantly region health departments. Primarily this includes mitigate the impacts on service delivery. In the case procurement of medicine and materials and a role in of some national PFM bottlenecks, short-term actions transfer of doctors, nurses and pharmacists within taken now by MoHS in partnership with MOPFI led the same state or regional health department, though reforms could improve not only health service delivery decisions about the hiring itself are done by the Union. but also Myanmar’s COVID-19 emergency response Some spending from the devolved Parliamentary funds and improve the preparedness of Myanmar’s health can be directed towards health but spending is not system for future public health emergencies. always coordinated with ministry plans due to a lack of time in the budget preparation cycle. Subnational 11. In addition to those financial management governments are also mandated to “inspect, supervise challenges, the health sector remains underfunded and coordinate” the functions of all union ministries, meaning that financial costs and risk lands on including of health. This role has not been substantively citizens. Even beyond the bottlenecks identified here, tested and could be strengthened. Myanmar needs to increase its funding and make changes to the way that funding is used. The out of pocket expenditures in Myanmar are very high and Overview of Assessment represent an important burden for the poor and the vulnerable, whose income has been further affected Findings on PFM Bottlenecks and by COVID. New approaches have been planned in Recommendations the Health Financing Strategic Directions, including demand side financing approaches, and there are hopes to enact legislation codifying this in the 14. Methodology: this assessment used the World coming years. Bank’s FinHealth: PFM in Health Toolkit8 to analyze 24 PFM functions in health (H1 to H24 - see Annex 3). 12. In Myanmar the frontline providers are the township This approach involved extensive use of focus group hospitals and township health departments that discussions and a field survey of 60 health facilities 8. The Toolkit and FinHealth methodology and the approach to this assessment are discussed in detail in section 1. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 14 and 35 state, region, district, and township level health Strategic Planning and Budget departments (see methodology in section 1.3). The bottlenecks and recommendations summarized below Formulation are based on the PFM cycle and focus on the most significant bottlenecks affecting service delivery (see section 3). 17. Bottleneck 1 (BN1): Annual budget preparation by subnational units of MoHS is not well linked 15. Structure of the assessment: each PFM in health to NHP objectives or programs and is not guided bottleneck (BN) below is numbered and cross by early advice on ceilings within a medium-term referenced to the relevant PFM in health function budget framework (MTBF) (H1, H4, H7). Without number, that is H1 to H24, in the same order as the these links, MoHS budget proposals continue to be stages of the PFM cycle, that is, Strategic Planning/ prepared on the basis of historic allocations rather than Budget Formulation, Budget Execution, Recording/ needs and NHP priorities, undermining the allocative Reporting, Audit. Further analysis and discussion can efficiency of scarce resources as confirmed by survey then be found in section 3 under the heading of that respondents. The 2020 Public Expenditure & Financial PFM in health function number. Each BN is followed Accountability Assessment (PEFA) highlighted the by one or more recommended actions to address it. need for implementation of a set of MTBF reforms at All of these bottlenecks and recommendations are Union level across all sectors, providing all budget summarized in a table in section 4 and Annex 1. entities with policy based recurrent/capital ceilings much earlier in a revised annual budget calendar. 16. Action Plan. Consistent with the FinHealth Toolkit Currently the spending agencies have around 4 weeks approach, this PFM in Health assessment is carried to prepare their budget estimates, which is short. It out in conjunction with other PFM analytical and is recommended to provide spending units at least advisory work, including the 2020 PEFA assessment, 6 weeks and to issue an integrated budget circular the PFM capacity assessment and the Modernization and ceilings covering both the current and the capital of PFM Project (MPFMP) policy dialogue and technical budget. The PFM II project and new PFM legislation assistance. The approach also envisages that will support these reforms. following the completion of the assessment, and after consultation with all stakeholders, an implementation Recommended Action. Until MOPFI led PFM law action plan will be developed including sequencing, and MTBF reforms are able to provide more timely, resourcing, technical assistance needs, development integrated and reliable budget ceilings (see BN2 below), partner support and timeframes. This which will notably MoHS could still pursue a needs-based approach to inform the work of the joint MOPFI-MoHS -MOE task annual budget allocations by using its own internal force foreseen under the PFM II project. As a first step ceilings and providing these early to subnational units towards development of an action plan, each of the to ensure they are able to prepare realistic proposals recommended actions below is followed by a table based on agreed NHP needs and priorities. MoHS can summarizing: the timeframe9 for the action; whether it make marginal adjustments for priority activities when is a new or existing action; which other bottlenecks (if the annual ceiling is informed by the MoPFI. any) this action is dependent10 on; and which ministry is responsible for leading implementation. Where MOPFI 18. Bottleneck 2 (BN2): lack of medium-term funding are responsible for leading implementation of a reform predictability and need for a MOPFI-led reform to action, the sequencing will follow the MPFMP and institutionalize a Cabinet-endorsed fiscal budget MOPFI’s PFM Strategy. This includes the development and policy statement (FBPS), a Medium-Term of a new PFM Law, which is already underway. Fiscal Framework (MTFF) and a Medium-Term 9. Timeframes used here and in Annex 1 are: Immediate - within 6 months; Short term - less than 1 year; Medium term - less than 3 years; Long term - 3 years or more. 10. Where the action is not dependent on prior actions and can be immediately implemented, it is labelled as a ‘quick win’. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 15 Budget Framework (MTBF) approach (H1, H2, subnational level, that is, funds not optimally allocated H7). The survey shows that the lack of a government for local service delivery, and which are difficult to (Cabinet) approved FBPS and MTBF is a contributing change during budget execution (see inflexible budget factor to many of the bottlenecks identified in this rules, BN9 below). assessment. While MOPFI has started producing an MTFF it would benefit from more explicit and costed Recommended Action. MoHS could switch to an fiscal policy statement upstream and from a MTBF with electronic budget preparation process and evaluate sector allocations downstream. Key service delivery which of the tools currently available (whether Excel, ministries such as health and education, which have to web based or Commercial software) best meet implement medium term public policies and strategies MoHS and MOPFI immediate requirement for rapid require greater certainty or predictability in the medium- consolidation of subnational budget proposals based term funding of their priority programs and construction on needs or NHP priorities and also supports Union- projects. This level of certainty or predictability can level DPH/DMS final budget submissions consistent only come from the early participation of Cabinet in with MOPFI guidelines and templates. the setting of national policy priorities over the medium term, including health priorities, and making a political 20. Bottleneck 4 (BN4): Difficulties to track and report commitment to finance agreed national strategic government and external financing on health priorities.This need is exacerbated by the COVID by program and location (H3, H5), which is an emergency response which led to a significant budget explicit requirement for the COVID emergency increase unlikely to be sustained. financing. The current chart of accounts includes fields for administrative units of ministries and budget Recommended Action. Building on the MTFF lines down to 4-digit level. For the health sector, it is prepared by MoPFI, an MTBF could be prepared important to be able to allocate and track domestic and for the social sectors and approved by Cabinet to external resources by program/activity (for example, ensure alignment with policy priorities and medium- COVID response, malaria, HIV, TB, immunization, term funding commitments. Such a Cabinet policy nutrition, and so on), as well as by geographic location driven, rolling MTBF could be used to decide annual (for example, state/region, district, township). This will ceilings in a budget calendar that communicates these provide a greater level of assurance to MOPFI and ceilings to line ministries at least 6 weeks ahead of the to development partners that resources are being budget submission. allocated and spent effectively and efficiently based on the priorities of the NHP, health needs, and any HFS. 19. Bottleneck 3 (BN3): Top-down and manual, paper- based, cumbersome budget preparation practices Recommended Action 1. As part of a strategy to reduce time available for realistic subnational encourage development partners to make greater participation in budget preparation, and further limit use of MoHS PFM systems, in the short term MoHS links to NHP objectives and programs (H4). Survey could undertake a resource tracking11 exercise to results confirm MoHS subnational units manually better understand and analyze external assistance prepare paper-based budget proposals which do not for health and its own allocations by program and significantly influence the allocations that are decided geographic location. by Union-level MoHS departments to meet the tight MOPFI calendar. Union-level DPH/DMS departments Recommended Action 2. In the medium to longer base their submissions to MOPFI on historic actual term, MoHS could include program and geographic spending levels for the (part) current year and two location codes in its own budget preparation and immediate prior years, that is, without sufficient time to reporting tools and work closely with MOPFI to ensure consult with their subnational budget units. Survey data consistency with the revision of the unified chart confirms that this results in ‘misaligned’ budgets at the of accounts. 11. The Global Financing Facility has a resource tracking tool that can be adapted for this exercise. As part of the IMF COVID emergency financing, MOPFI committed to expenditure tracking and reporting. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 16 Supplementary Budget and a more efficient response to local needs. This level of budget autonomy or flexibility would improve Contingency Funds the level of readiness and resilience of subnational providers for emergencies such as COVID-19. The HFS will need to include costings for frontline health 21. Bottleneck 5 (BN5): The routine use of providers and also for budget-funded suppliers such Supplementary Budget and Contingency Funds as Union MoHS departments or for any autonomous has diminished their strategic value for disaster purchasing authority. It further needs to include sub- readiness and response (H9, H14). In response to the national governments, whose transfers and capacity COVID-19 emergency, the Supplementary Budget in are increasing, as well as non-government health 2019-20 has shown that it can be used as intended, i.e. care providers. The role of the state and regional to reallocate budgets to address genuine unforeseen governments in basic health service delivery may disasters. Tools such as the Contingency Fund could also need to be reviewed as part of the development be properly treated as an emergency or disaster fund of HFS, as is the trend in the South East Asia region and not routinely pre-allocated to states, regions, and (see H12). Experience in other countries points to a ministries (see discussion for H14). In June 2020 the strong partnership between MoHS and MOPFI and World Bank prepared a note on “Myanmar budget eventually subnational governments, as a critical flexibilities to deal with shocks such as COVID-19”, success factor for ensuring integration of an HFS into (a copy is attached as Annex 12). The recommended government fiscal strategies and PFM systems. actions below are consistent with that note. Recommended Action. MoHS could finalize and Recommended Action 1. As the COVID-19 crisis seek GoM endorsement of the proposed HFS in continues to develop in the short term, The MOPFI close partnership with MOPFI, relevant government budget department could continue to engage with agencies12, and development partners. MOPFI’s other ministries and budget-funded agencies to commitment is essential for any change in purchaser/ identify savings that can be reappropriated to MoHS provider budget allocation processes, treasury and reallocate to COVID high-priority activities or arrangements for purchasers and providers, and townships/districts, in line with the CERP. financial reporting/accountability responsibilities of health service providers. Recommended Action 2. MOPFI could work with the Government to ensure the Contingency Fund is 23. Bottleneck 7 (BN7): Decentralized payroll and enhanced and treated as an emergency fund, and centralized (but fragmented) HR management not routinely pre-allocated, including through any reduce reliability of budget forecasts at the necessary amendments to PFM law and regulations subnational level and contribute to underspending (see detailed recommendations in annex). of the payroll budget. MoHS payroll management is decentralized and paper based at the subnational level. But the HR information about staffing levels, Budget Execution – Flow of Funds vacancies, recruitment plans and so on, needed to prepare budget plans for payroll, is held by multiple Union-level MoHS departments. Payroll budgets for 22. Bottleneck 6 (BN6): The new Health Financing subnational budget units are therefore prepared by the Strategy (HFS) needs to be developed in close Union-level departments on behalf of the subnational cooperation with MOPFI, Cabinet, and development budget units in October, that is, after the financial partners (H12) to ensure collective appropriation year13 has already commenced, and after MoHS and feasibility. MoHS is currently consulting widely is advised of its approved budget by MOPFI. Also, on the development of an HFS that will identify new during payroll budget preparation overly optimistic sources of financing and options for more flexible assumptions are made about the number and timing of funding channels for health providers such as hospitals vacancies to be filled. Both of these factors contribute or township/district managed health centers, allowing to an overestimation of the payroll budget. Tracking of 12. For example, the Social Security Board 13. The Government financial year in Myanmar runs from 1 October to 30 September. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 17 actual payroll spending is also paper based. Accurate existing financial management trainings and trainers information about the rate of spending and possible can be adapted to the specific needs of clerical and underspending can be delayed, making budget accounting staff at subnational level, and where transfers between budget units difficult to coordinate possible leveraging the PFM Academy. and effect late in the financial year. This can also result in significant levels of underspending for payroll Recommended Action 2. In the medium term MOPFI budgets. Underspent payroll represents an opportunity could institutionalize the PFM capacity building for all cost of service delivery and idle resources and could sectors and ministries, through the PFM Academy, be minimized. with modules that are appropriate to the needs of clerical finance staff at the subnational MoHS level. Recommended Action. MoHS could continue MOPFI could work in partnership with MoHS to adapt implementing two existing strategies: creating a the PFM Academy materials and modality to suit sub centralized HR unit and database in the minister’s office national requirements. with its own dedicated resources; and implementation of an Excel-based recording and reporting system 25. Bottleneck 9 (BN9): Operating budget can be (see H22). significantly underspent because of inflexible budget rules, exacerbated by the lack of up-to- 24. Bottleneck 8 (BN8): Officials who are responsible date reporting of spending against budgets (H14). for financial management of departments and Union level MoHS departments control operating hospitals at subnational level do not have budget at the 4 digit budget line level which leaves sub relevant qualifications or skills (H14, H16). Survey national budget unit managers with little flexibility to results confirm that neither the directors/managers use their budgets to deliver the best service for local of subnational departments and hospitals nor their needs (especially where original budgets are already clerical/accounting staff have relevant or sufficient skills misaligned with local needs (see BN3 above). Directors to manage or account for budgets on behalf of MoHS. of sub national budget units currently rely on delayed The directors or Township Medical Officers (TMOs) paper-based financial management reports, and then who hold the drawing limits (DLs, i.e. budget releases) need to pursue time-consuming approvals from the are almost always from medical backgrounds. These Union level departments to transfer budgets between skills mismatches combined with very high vacancy budget lines, which survey results suggest can take rates for clerical and accounting positions (see H16 and from four weeks to two months. This can have dire BN14 below) weaken financial management capacity consequences for time sensitive and emergency health and reduce accountability for service delivery outputs services. Sub-national Directors need up-to-the-day and outcomes. budget execution reports and they need the authority to shift recurrent (non-payroll) budgets around to the Lack of financial management qualifications and skills inputs needed to optimize local service delivery and, is common across most government sectors including importantly, to respond quickly to health emergencies health. In the medium to long term, it will be more such as COVID-19. effective for MOPFI to institutionalize PFM capacity building for all ministries. The PFM Academy can Recommended Action 1. MoHS could provide clear support MOHS training efforts of its facility managers guidelines to accelerate approval of budget transfer and clerical-level staff, including at the subnational requests from sub national budget units (and continue level, through customized training modules and rollout of the Excel-based budget recording and training of trainers (see also BN19 below on HR reporting system – see H22 below). related solutions). Recommended Action 2. Union MoHS to consider Recommended Action 1. There is clearly a need using the discretion they already have under financial for further basic bookkeeping, accounting, and rules and regulations (FRRs) to control recurrent financial reporting training at state, region, township, (non-payroll) budgets only at the 2-digit level, giving and hospital finance unit level, supported with written subnational entities and directors freedom to move standard operating procedures. In the short term, funds around at the 4-digit level. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 18 26. Bottleneck 10 (BN10): Rigidities in MOPFI budget decisions are delayed in the absence of standard norms for travel allowances constrain service operating procedures to guide decision makers. delivery by MoHS and other ministries, particularly in remote areas. Survey respondents indicated that In FY 2019/20, MoHS had planned to pilot the the current level of budget norms for travel allowance centralizing of a large percentage (40 percent) of as set by MOPFI is restricting travel and negatively their medicines budget through a relatively new affecting service delivery, including on MoHS’ capacity Procurement, Supply and Distribution (PSD) Division to respond promptly and appropriately to the COVID-19 and continue on with procurement capacity building pandemic, as health workers were forced to rely on through development partners. However with COVID their own funds or donations. As the response to the pandemic emergency requiring fast track procurement COVID pandemic evolved, health workers have largely of essential medical equipment and supplies under a relied on external assistance to finance their outreach very competitive and constrained global supply chain activities, but this is not sustainable. More flexible context, MoHS had utilized direct contracting and budget norms, including criteria other than just duration use of UN agencies at the central level National-level and distance of travel, are needed to facilitate travel by procurement reforms led by MOPFI and supported frontline health workers, especially where they support by World Bank will also provide a stronger regulatory remote or difficult to access communities. MOPFI is and capacity-building framework through which MoHS aware of this constraint and will review the norms. can improve the efficiency and value for money of its medicines and equipment budgets. Centralizing Recommended Action. MOPFI could carry out a procurement will allow Myanmar to make use of review of budget norms for travel, in consultation framework contracts with pharmaceutical and medical with MoHS and other service delivery ministries, to equipment suppliers, which will also improve Myanmar’s consider introducing more flexibility or other criteria for readiness and responsiveness to health emergencies entitlement to travel allowance to ensure the norms do such as COVID-19 (see detail recommendations not unduly restrict service delivery in remote locations. in annex). Recommended Action 1. In the short to medium Budget Execution – Management of term, MoHS could continue with its current strategy of centralizing procurement of medicines and medical Physical Inputs equipment and at the same time work with development partners (for example, World Bank, UNOPS) to build the procurement capacity of the PSD Division. Procurement (H18) 27. Bottleneck 11 (BN11): Nationally and in MoHS, Recommended Action 2. It is strongly recommended professional procurement capacity is limited, that provision is made in the draft Procurement Law, or at procurement activity is inefficient, fragmented the minimum in the Regulations, to serve as a mandate and decentralized across MoHS departments for decision makers to act. It is also recommended and hospitals (H18). Until recently there has been that the procurement manual under preparation takes no centralized pool of procurement skills in MoHS. this into account and includes standard operating Procurement of medicines and some medical procedures for MOHS procuring entities to follow. It is equipment in MoHS has been the responsibility of also important that MoHS participates in the MOPFI- medical staff in individual hospitals or departments, led procurement reform plan to take early advantage reducing the value for money and efficiency of MoHS’ of opportunities for capacity building, framework medicines and equipment budget. Small-value contracts, e-procurement, and so on. procurements are made from local intermediary firms who in turn import in higher volumes from international Public Investment Management (H19) suppliers, but at a higher overall price for MoHS. Also, 28. Bottleneck 12 (BN12): A single year approach to there are no procedures or other guidance in place planning, budgeting, and execution of construction to deal with emergency situations like the COVID-19 projects and lack of project readiness lead to pandemic. The lesson learned is that important quick allocative and operational inefficiencies, under IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 19 execution and delays in critical health infrastructure. the facility level if these assets are not available or not Current approaches to budgeting for and implementing working and increases fiduciary risks around valuable construction projects by MoHS are constrained by mobile assets. Lack of clear rules for asset disposal national practices and rules which unrealistically clutter up health facilities. require a single year time frame in which to carry out all stages of construction for health facilities. PFM reforms Recommended action. MoHS could explore at the national level, such as the Medium-Term Budget affordable options for creation of a simple Union- Framework (MTBF) would give MoHS greater certainty level MoHS digital assets register for physical and about medium-term funding of construction but are still high-value assets, that is accessible by subnational some years away. Significant rates of underspend of budget units or DL holders. The assets register should construction budgets delay provision of much needed incorporate key information about assets, including health infrastructure for service delivery and thus call geospatial information, financial information, physical for short term actions within MOHS. verification, working condition, climate risk exposure, and maintenance requirements and costs. Simple Recommended Action 1. MoHS itself can still budget rules for asset disposal could be issued in coordination for and implement construction projects that are with MOPFI. sequenced over the medium term around a prioritized MoHS medium term Public Investment Plan (PIP). Human Resources and Staffing (H16) 30. Bottleneck 14 (BN14): Survey results confirm high Recommended Action 2. MoHS could improve vacancy rates (over 60 percent) for clerical and project prioritization and readiness in cooperation with accounting staff in subnational budget units (which MOPFI and ensure as many preliminary activities as exacerbate the effects of low financial management possible are completed before projects from the MoHS skills and causes poor budget management) (H16, PIP are included in its annual budget submission to H21, H22). The reasons for the high vacancy levels MOPFI. As existing MoHS projects at state/region/ are complex but include budget constraints and the township level progress or are completed, MoHS sub- high demands on and stress levels associated with national departments can then commence preliminary these positions. Additional demands are also placed planning, specifications, drawings, and procurement on these staff for other administrative or even clinical packages for those projects which are next in priority functions, which distract from their responsibilities on the internal MoHS PIP, with assistance from MoHS for accounting and reporting. Moreover, this small at the Union level. cohort of staff face further demands on their time to meet the needs of accounting and reporting for donor Assets Management (H20) funded programs in the absence of an accounting and 29. Bottleneck 13 (BN13): weak assets management reporting system such as GAS. Some DPH and DMS and maintenance, including lack of an up to directors/managers have managed the shortage of date, accurate and comprehensive assets staff for clerical and accounting positions better than register, and associated maintenance plans and others, for example, by using temporary hires to take budgets are accelerating depreciation and loss on some of the workload that is normally borne by the of functionality (H20). Donor funded audits confirm branch clerical and accounting staff, and by using that only some MoHS departments and programs the job descriptions for these positions to protect the maintain assets registers, and there are no national clerical staff from unreasonable demands on their time. guidelines or software to support assets management and maintenance. Even where assets registers are Recommended Action. Drawing on better practice maintained by individual MoHS departments, they across DPHs/DMSs/hospitals, the Union MoHS could are paper based, not consolidated, and they do not provide guidelines for state/region Health Directors, include details of physical assets verification, working TMOs and other department heads with options for condition of the assets, maintenance plans, or budgets. managing shortage of critical finance staff, including the This contributes to under estimation and budgeting for option of temporary hire of contract staff with relevant maintenance costs and accelerates the deterioration of accounting, bookkeeping qualifications or experience. these assets with adverse impact on service delivery at IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 20 Accounting and Reporting (H21, H22) Remedy and CERP Action Plan’, directing all reporting 31. Bottleneck 15 (BN15): Accounting, recording, and units to maintain a separate register for COVID-19 reconciliation processes are largely manual, paper prevention, control, and remedy related to the CERP based and not documented into simple standard Action Plan. MoHS could coordinate with MOPFI for operating procedures (SOPs) (H22). This delays further clarification or training related to this instruction. financial management reporting to Union MoHS departments and consumes scarce clerical resources External Audit (H23) and Internal Audit at the local level. The financial management reports (H15) themselves are paper based, manually prepared, and 32. Bottleneck 16 (BN16): External audit has historically of limited use because of national chart of accounts been compliance based, and not focused on risk limitations. The delays in preparation and consolidation or performance. However enhanced and modernized of these financial management reports contribute to external audit practices are being rolled out by OAGM. the delays in approval of requests for budget transfers. OAGM has adopted a strategy for auditing Covid-19 These bottlenecks also affect MoHS ability to account related expenditures and is undergoing a process of for COVID-19 funding. In common with the education modernization to roll out a risk-based methodology and sector, MoHS is piloting its own Excel based recording adopt computer assisted auditing techniques. An Audit and reporting system that allows for rapid consolidation, of Strong and Resilient National Public Health Systems addresses chart of accounts limitations by including (linked to SDG 3D) is also being planned. program/location fields, and allows dynamic reporting using Excel filters, charts, pivots etc. Recommended Action. MoHS could prepare for these audits by ensuring compliance with MOPFI Instruction Recommended Action 1. There is a need for a national 4/1/15 (2346/2020), ‘Matter to send expenditures for set of standard and simple SOPs and forms for PFM that COVID-19 Prevention, Control and Remedy and CERP address the planning, budgeting, execution, recording, Action Plan’ and coordinating with OAGM to understand and reporting functions and which are consistent with audit documentation and other requirements. MoHS the FRRs. Such a set of standard operating procedures could create further efficiencies in the audit process are being prepared by Ministry of Education and could by adopting the Government Accounting System, be adapted to MoHS to support service delivery. They which would allow for application of computer assisted must be simple and easy to understand for clerical staff auditing techniques. supposed to implement them. 33. Bottleneck 17 (BN17): There is no internal audit Recommended Action 2. For short term recording, function in Myanmar, and the internal reviewer analysis and internal management reporting purposes, process within MoHS is not a risk-based approach. MoHS can continue to roll out its Excel recording and While outsourcing the Internal Audit function would not reporting tool or a web-based platform. be a cost-effective solution, external resources could nonetheless be leveraged to complete a business Recommended Action 3. The pilot testing and rollout process review of existing procedures and controls. of the Government Accounting System (GAS) and the adoption of the unified chart of accounts led by MOPFI. Recommended action. MoHS could carry out a review of its business processes, procedures and controls. Recommended Action 4. In view of the demands Such a review will highlight processing deficiencies for additional transparency over the use of resources and control weaknesses but also inform the IPSAS related to the COVID-19 crisis, MoHS compliance reform launched by MOPFI and OAG. MoHS could with MOPFI instructions on accounting and reporting also consider leveraging the existing cadre of internal over such funds is critical. On July 3, 2020, the MOPFI reviewers to pilot an internal audit manual being issued instruction 4/1/15 (2346/2020), ‘Matter to send developed with IMF support. expenditures for COVID-19 Prevention, Control and IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 21 Other Cross Cutting Risks – Climate Recommended actions for MoHS and MOPFI on budget formulation challenges are addressed in the Change and Natural Disasters PFM in Health functions H4 to H7; for procurement in 34. Bottleneck 18 (BN18): MoHS is vulnerable to climate H18; for health infrastructure in H19; for accounting change and natural disasters, but its investment and reporting in H21 and H22. From an institutional plans and systems are not disaster ready nor perspective, the split in 2015 of the Department of Health are the national PFM and procurement systems. into two separate departments (DMS and DPH) has Independent research14 confirms that Myanmar is increased fragmentation and coordination challenges, one of the world’s most disaster-prone countries, especially in terms of budget management. The survey exposed to multiple hazards, including floods, indicated important organizational challenges, mainly cyclones, earthquakes, landslides, and droughts. in accounting and reporting, including the lack of A lack of disaster readiness of MoHS and national human resources for the MoHS’ core PFM functions, governance, PFM, and procurement systems means particularly at the local level. This is exacerbated by that the negative impacts of these disasters are higher the increase in the required number of administrative/ than they should be. MoHS’ responsiveness to natural clerical positions arising from the split of the DPH/ disasters could be improved with greater preparedness DMS departments, and is evidenced by the very high in national systems and in MoHS systems. This is also vacancy rates (60%) for finance/clerical staff (BN14), relevant for pandemic response such as COVID. low skills in accounting and finance (BN8), manual systems (BN15), and no SOPs (BN15). Actions have Recommended Action 1. Given Myanmar’s high-risk already been recommended above for the relevant profile, MoHS will need to mainstream climate change bottlenecks and PFM in health functions. and natural disaster assessments and preparedness into its public investment and infrastructure planning, 36. A recent World Bank PFM Capacity Building costing, and prioritization processes and can leverage Assessment Report17 identified many of the same global public goods and tools to do so.15 human resource bottlenecks for core PFM functions, such as planning, budgeting, treasury and project Recommended Action 2. At the Union level, MOPFI management at MOPFI, including at the provincial could review16 and prepare its PFM and procurement level, which are similar to the challenges discussed systems for the response challenges that arise from above for MoHS. It made recommendations for the emergencies such as COVID-19 or Cyclone Nargis. following short-term interventions for MOPFI, which are also relevant for MoHS, to ease the most pressing Other Institutional and Human Resource institutional and human resource constraints. Bottlenecks There are many other whole of government, sectoral Recommended Actions. (i) MoHS could conduct a and behavioral factors, outside the scope of this staffing and pay scale review for critical PFM support study, that can have an impact on the accessibility, functions to inform the adoption of a more strategic affordability and quality of healthcare in Myanmar. approach to staffing levels, workforce composition, However, the study did examine the institutional and and allocation in remote and conflict areas; (ii) proceed human resource management arrangements directly with batch recruitments of financial management staff impacting public financial management in the sector outside of Yangon and carry out initial training of young and thereby service delivery. accounting graduates to fill the vacancies; (iii) recruit contractuals and explore remote support options to 35. Bottleneck 19 (BN 19): Public health service address acute staffing constraints; and (iv) develop and delivery and PFM in the sector are constrained pilot incentives mechanism to foster staff performance by multiple and mutually reinforcing institutional, and learning/training. organizational and human resources challenges, some of which can be eased by MoHS and MOPFI. 14. Index for Risk Management. INFORM is a global, open-source risk assessment for humanitarian crises and disasters. 15. https://www.who.int/ihr/publications/WHO_HSE_GCR_2018_2/en/; https://wbclimatescreeningtools.worldbank.org/ 16. Guidance is available to better prepare PFM and procurement systems for disaster recovery, for example, “Preparing PFM Systems for Emergency Response Challenges,” IMF 2020; “Disaster Response - A PFM Review Toolkit,” World Bank 2019. 17. Public Financial Management Capacity Building Assessment Report, MOPFI, World Bank, September 2020 IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 22 Cross-Cutting PFM Bottlenecks Affecting • Incompatible sector planning and budgeting procedures and tools leading to a disconnect Service Delivery between plans and budgets and inadequate 37. Many bottlenecks identified are also affecting costing, prioritization, and financing. other service delivery sectors and thus requiring • Lack of a medium-term budgeting perspective collective action. A Financial Debottlenecking (including costing sector strategies, such as the Analysis conducted for the Ministry of Education (MoE) NHP, and the need for internal sectoral budget in 2019 revealed many similar bottlenecks. They were ceilings based on sector strategies and fiscal categorized in a convenient quadrant based on two space as forecast through a medium-term fiscal criteria: (a) bottlenecks that primarily affect the MoE or framework (MTFF). bottlenecks that affect all sectors and (b) bottlenecks • Limited use of data for allocating capital that the MoE could directly address or bottlenecks or construction budget (which reflects the that require other stakeholders’ support, primarily from weaknesses in sector project pipelines, lack of MOPFI. The same categorization has been done for project prioritization and readiness, and weak the Health assessment to ensure comparability and project monitoring and evaluation). MOPFI’s public presented in Figure 1 below. This helps inform MOPFI investment reforms and project monitoring system how it can leverage its ongoing PFM reforms to address can help sectors address these issues, in line with some of these bottlenecks and help improve service the sector priorities, the COVID CERP, and the delivery and efficiency of spending. new project bank. • Tension between bottom-up planning and top-down 38. The following key bottlenecks are identified in the budgeting (which corresponds to the lack of reliable health and education assessments as well as in the budget ceilings for subnational health departments 2020 PEFA assessment. They should be considered and lack of early involvement of TMOs in decisions as a matter of priority as they are affecting service on budget allocations). delivery and public finance outcomes across sectors and can be supported by the new forthcoming PFM II project: > > > F I G U R E 1 - Comparison of Four Categories of Financial Bottlenecks in MoE (2019) and MoHS (2020) Financial bottlenecks that the MoE can directly address BN3: Limited use of data for allocating BN1: Incompatible planning & budgeting Financial bottlenecks primarily affecting the MoE capital budget procedures Financial bottlenecks affecting all sectors BN4: Tension between bottom up and BN2: Lack of multi-annual budgeting top down perspective BN7: SISP financial formula BN6: Lengthy procurement procedures BN8: No budget envelope for subnational BN10: Manual expenditure reporting offices systems BN9: Untimely fund releases BN11: Unpublished external audit findings BN5: Fixed unit cost rates for construction and limited internal audit function BN12: Re-appropriation and carry-over rules BN14: Lack of SOPs for education financial inhibit flexibility of the budget management BN13: Misalignment between GoM systems BN15: Limited financial management skills and donor spending plans Financial bottlenecks requiring other stakeholders to fix IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 23 Bottlenecks that MoHS can action BN4: Program and location fields needed to BN1: MoHS plans & budgets not linked with trace all health funds ceilings BN8: Limited financial management skills BN7: Decentralized payroll, fragmented HR BN9: Inflexible budget rules cause management contributes to underspend of underspends payroll budget BN13: Weak assets management and BN11: Weak procurement capacity and maintainance practices in MoHS Bottlenecks primarily affecting MoHS Bottlenecks affecting all sectors BN14: High vacancy rates for clerical staff BN12: Single year approach to infrastructure weekens budget mgt PIM BN18.1: Lack of mainstreaming of disaster readiness into MoHS PIP BN6: Health Financing Strategy needs a BN2: Lack of National MTBF to reflect strong partnership with MOPFI, with GoM Government policy or spending priorities endorsement BN3: Manual paper based budget BN16: External audit not focused on risk preparation tools performance BN5: Contingency, Supplementary Budget BN17: No risk based internal audit function tools not used strategically BN10: Budget norms restrict service delivery travel in remote locations BN11: Weak national procurement regulatory framework BN18.2: Lack of disaster readiness in national PFM & Procurement systems Bottlenecks that require other stakeholders support, i.e. MOPFI • Lengthy procurement procedures for construction Cause and Effect Analysis of MoHS PFM projects, with too many decision points, which are not Bottlenecks compatible with a single-year procurement, tender, and 39. The FinHealth Toolkit approach recommends the construction process. use of cause and effect (or ‘fish-bone’) diagrams to • Need for e-budget submission templates (part of BN8 better understand the underlying causes of the PFM for the MoE and BN3 for MoHS). bottlenecks identified in the assessment. Numerous • Use of manual paper-based systems for expenditure cause and effect diagrams have been used throughout recording and reporting; lack of a consolidation tool this assessment. These have been consolidated into for subnational reporting to Union level; need for other a single cause and effect diagram in Figure 2. This dimensions or codes in expenditure reporting such as is aimed to inform the discussion of the joint MOPFI- function, program, and location. Health task force to find solutions to the bottlenecks • Lack of standard operating procedures for financial identified in this study, as well as their sequencing. management processes, including at subnational level. • Limited financial management skills across the sector, but especially at subnational level IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 24 > > > F I G U R E 2 - Consolidated Cause and Effect Analysis of Underlying Causes of Pfm Bottlenecks Payroll budget underspend by many entities & hospitals Operating budget underspend by many entities and hospitals (mainly 02 and 03) Up to date HR data about each entity’s and hospitals staffing is dispersed across numerous MoHS depts at Union level Short timeframe to calculate sub national allocations after MoFT Union level MHMS Depts have short time at beginning of FY notifies approved budget results in misaligned budgets for of FY estimate each entity or hospitals payroll needs MoHS entities High number of vacancies at all levels Lack of a MTBF and early ceilings to give MHMS departments earlier certainty around funding levels Depts are too optimistic on # of positions that will be filled and when they will be filled Lack of in-year flexibility to shift budget between budget lines Strict FRR virement rules around budget line 01 Delayed consolidated monthly reporting on spending against budget by budget lines Paper based reporting means up to date into on YTD spending is delayed Paper based recording & reporting It takes several weeks for entity or hospital heads to get PFM constraints on health service delivery Transfer of 01 budget between Entities delayed because of lack of up to date data on actual spending approval from Union level for transfer of budgets To ensure enough budget to pay employees, MoHS needs to No delegation to entity or hospital heads to shift budgets at estimate on the high side 4 digit level Payroll is managed by each entity or hospital, but the HR data Lack of clear guidelines for entity heads on how, when and to is located in MoHS at Union level whom to apply Paper based Budget submissions There is no MOPFI multi year budget Consolidation of reports from states, framework to support budgeting for regions, townships, etc is time consuming Budget templates not linked to NHP multi year projects Clerical & medical staff responsible for No sub national ceilings to guide MoHS doe not have its own MT recording and reporting budget submission infrastructure priority plan; Chart of accounts limitations with no No early ceilings from MOPFI Without a national MTBF, a risk that geographic or program fields Cabinet may annually override any No MTBF MoHS infrastructure plan No standard operating procedures other than FRRs Inflexible budget Rules of transfers No national procurement law Chart of accounts does not support Lack of SBDs or contracts increases Delayed & poor quality budget location, programs etc. time of each tender process execution reports limits MoHS effectiveness for in-year resource MoHS budget allocations at No use of retention monies, allocation and annual budget guarantees, etc. sub national level not linked to preparation strategic NHP priorities No use of pre qual’n of bidders State/Reg. committees Re established each year 3 different evaluation and approval committees Construction projects included in budget even though not properly costed, designed etc. MOPFI rules do not allow separate tendering of different stages Budget year is not well aligned with monsoon season Construction budget is underspent each year IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 25 >>> 1. Introduction 1.1 Rationale and Purpose of the chain of financial management within MoHS and at the point of service delivery. Review 42. The main objective of this report on PFM in the health sector is to improve service delivery and the 40. Myanmar exhibits poor health outcomes and lags efficiency of health financing at all levels of health regional peers. Myanmar’s Human Capital Index care in Myanmar. This will be achieved by identifying (HCI)18 score is 0.47, compared to a regional average and analyzing relevant PFM bottlenecks and providing of 0.60. Every year, 2,000 pregnant women and 50,000 recommendations to address them. Secondary children die from preventable causes, and 29 percent objectives are to deepen the understanding of PFM of children under age 5 are stunted. While there are arrangements in Myanmar’s health sector, including many reasons for these poor outcomes, the effective the PFM reforms required under the health financing coverage (access, utilization, and quality) of service reforms for UHC, and strengthen the communication delivery in the health sector plays a fundamental role. and coordination between MoHS and MOPFI to ensure Budget execution remains prominent among PFM sustainability of reforms going forward. challenges in the health sector, demonstrated by several roadblocks to spending on time and on target. There is an urgent need to better understand the PFM bottlenecks that affect frontline service delivery. 1.2 Management and Quality Assurance of the Review 41. Budgeted expenditure for the Ministry of Health and Sports (MoHS) has been increasing, but actual spending has been declining. Budgeted expenditure 43. The assessment is led jointly by the Government increased for the MoHS from 0.86 percent of gross of Myanmar (GoM) and the World Bank. A Joint Task domestic product (GDP) in 2014/15 to 1.15 percent Force (JTF) was established in mid-2019 to oversee of GDP in 2017/18. However, actual expenditure by the work and to provide technical and administrative MoHS has declined from 1.0 percent to 0.8 percent guidance. The JTF membership comprises of GDP in the same period. The increase in resources representatives from MoHS, MOPFI, and the World available through the budget allocation process had Bank. The JTF has met regularly and has effectively helped expand access and availability of health provided high-level oversight of the process, as well as services to some extent, but it has not been able to guidance on the approach to the survey, sample size, address significantly the major health challenges and and selection. The JTF provided the authority for health achieve better outcomes at population level. This is facilities and other entities to participate in the survey partly due to weaknesses at several points along the and broader assessment. The JTF have provided 18. HCI includes measures of health, nutrition, and education such as the rate of survival of children under five, adult survival rate, stunting prevalence, years of school completion, and learning outcomes IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 26 feedback on this draft assessment report, and will later 47. The approach set out in the toolkit and used for approve the draft report and submit it to the Union this assessment focuses on three core areas in the Government for its approval. health sector. 44. On August 7, 2019, the Union Minister of Health and a. PFM systems as implemented in the health sector Sports, H.E. Dr. Myint Htwe, formally approved the b. Health financing arrangements in the health sector assessment, the formation of the JTF, and the carrying c. Health sector service delivery. out of the survey. 48. The approach looks closely at the interaction of the health PFM systems with health financing 1.3 Methodology for the Review arrangements and with service delivery systems. As discussed later in this report and as foreshadowed in the current National Health Plan (NHP, 2017–2021), health financing arrangements in the Myanmar health 45. The methodology for the review closely follows the sector are in the early stages of what is likely to be a FinHealth: PFM in Health Toolkit (v4.0, December major reform. Section 3.3.3 therefore also discusses 2019). The approach builds on earlier analytical and the changes to health PFM systems that will be needed research work by taking a problem-driven approach to support restructured health financing arrangements. with a service delivery focus, starting from the lowest level of citizen engagement with the health care system 49. There are three main stages to the analytical phase of (that is, health centers and hospitals) and moving up the assessment, which have been used to inform the the chain to link with policy-level issues at MOPFI and writing of this assessment report. MoHS. This FinHealth approach provides a broader view of the current situation and allows for the provision a. A review of recent studies on the Myanmar health of robust recommendations to improve service delivery sector, on PFM and governance issues, including and health financing in the health sector. The FinHealth the recently completed PEFA assessment. This approach also recognizes that some PFM bottlenecks includes discussions with key officials in MoHS to service delivery in the health sector are common and MOPFI to better understand some of the across other sectors, such as education, and may issues raised in these studies and to help inform require national actions or reforms led by MOPFI. The the survey stage. review will therefore inform future interventions in the b. A survey of a sample of health service providers health and governance sectors of Myanmar. The timing to identify PFM-related challenges or bottlenecks of the review coincides with MOPFI’s and the World from the service provider perspective. This stage Bank’s development of the next phase of the Public includes the development of the survey instrument, Finance Management Project (MY PFM 2). collection and recording of data, and analysis of the data. 46. The FinHealth methodology is based on a tested c. A series of follow-up interviews with key officials conceptual framework and provides a standardized and institutions to triangulate the information and and adaptable approach to the diagnosis of discuss the constraints and possible causes and, PFM bottlenecks to effective service delivery in in some cases, on possible solutions or actions. health. Bottlenecks in this context are constraints to service delivery, and PFM bottlenecks in health may 50. The survey questionnaire was administered to be defined as any systematic financial management 95 different health service entities, all except 1 of weakness which has an adverse impact on service which were at subnational level. The sample included delivery in health. The FinHealth tool for diagnosing 20 Departments of Public Health (DPHs) at district, PFM bottlenecks builds upon the recognized PEFA township, state, and region level and 15 Departments approach to diagnosing broader whole-of-government of Medical Services (DMSs) at township, state, and PFM systems, using a similar set of pillars and regional level (that is, 35 administrative entities in indicators to those used in the PEFA. The toolkit uses total). These were selected from a total population of 24 PFM-related functions relevant to the health sector 15 states/regions and over 320 townships. The sample (see Annex 3). IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 27 also included 15 sub rural health centers (SCs), 15 issues or bottlenecks (based on analysis to date) rural health centers (RHCs), and 30 hospitals (that is, were raised and discussed. JTF members were able 60 facilities in total). Of the 30 hospitals, 14 were at to provide useful background information or updates station level, 8 at township level, 2 at district level, 2 at on current initiatives MoHS is already undertaking state level, 3 at region level, and 1 at Union level. These to address some of these issues. Finally, during the were selected from a total population of approximately analysis of the data from the survey findings, various 1,144 hospitals and 10,658 health centers in Myanmar. members of the survey team or data entry team The structure and accountability arrangements for held telephonic discussions with respondents to the the deconcentrated19 health system in Myanmar are survey questionnaire to clarify responses or to obtain discussed further in section 2.2. A summary of the additional information. sample selection process and the survey process is attached as Annex 4. 52. There are other factors which can have an impact on accessibility, affordability, and quality of health 51. Follow-up interviews with key stakeholders were care Myanmar, but these are beyond the scope of necessary after completion of the survey. Following this review. Annex 3 lists the 24 PFM-related functions completion of the survey and of data entry, a preliminary in health analyzed in this review, but it also illustrates analysis of the data suggested several areas where that there are other factors that have an impact on follow-up discussions would be necessary. These took health service delivery but which are beyond the scope several forms. The Technical Working Group (TWG) of this study. These include economic growth, macro held meetings with senior officials from DPH and DMS fiscal policies, external shocks, fiscal decentralization, at the Union level to clarify some of the implications public sector pay levels, transport systems, education, of the early data tables. Another meeting was then and so on. The study touches on some of these areas also held with the full JTF, where a series of possible where they intersect with health PFM functions. 19. For clarity, in this report the term ‘deconcentrated’ is used to refer to MoHS administrative units or departments located at subnational level. This is in contrast to the situation in some other jurisdictions where the health function or primary health function may be a ‘decentralized’ responsibility of provincial governments. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 28 >>> 2. Country Background Information 2.1 Economic, Social, and Political share of those classified as vulnerable has also grown by 18 percent. Country Situation 56. Myanmar is the second largest country in Southeast Asia with a population of around 53 million. It has a 2.1.1 Country Context, Geography, and total land area of 676,578 km2 bordered by China, Lao Population20 People’s Democratic Republic, Thailand, Bangladesh, 53. In Myanmar, the challenge and importance of and India. Myanmar’s 2,800-kilometer coastline service delivery is better appreciated in the light of provides access to sea routes and deep-sea ports, and the scale of its geography and ethnic diversity, as the country is rich in natural resources including arable well as its recent political and economic history. land, forests, minerals, natural gas, and freshwater and marine resources. 54. Myanmar is a lower-middle-income economy with a GNI per capita of US$1,310 in 2018. Strong 57. The numerous conflict-affected areas provide economic growth has translated into reduced levels of further challenges to the provision of public poverty.21 The proportion of the population living under services. The conflict-affected areas are difficult to the national poverty line halved from 48.2 percent in access, and this can affect delivery of government 2005 to 24.8 percent in 2017. The reduction in poverty services. Since 2011, Myanmar has endeavored is visible in both rural and urban areas but has been to achieve lasting and sustainable peace. The faster in urban areas. Poverty depth and severity have sustainability of the current democratic and more also decreased substantially since 2005 but these peaceful governing regime depends on its ability to gains are threatened by the COVID crisis and ensuing deliver positive development outcomes (NUPI 2018). economic slowdown. The need for effective provision of basic and quality public services cannot be overemphasized. 55. Despite strong performance on poverty reduction, vulnerability to poverty remains an issue. A third 58. COVID-19. While Myanmar has passed relatively of the population is highly vulnerable to falling into unscathed from first wave of COVID-19, it has poverty in the future despite not being poor in 2017. been hit hard by a second wave since 16 August.22 As the poverty rate declined since 2005, the share of The Government is currently implementing a the population that is non-poor has increased, but the containment strategy in an effort to save lives and 20. This section of the report has largely been drawn from the 2020 PEFA Assessment for Myanmar, March 2020. 21. Poverty Report - Myanmar Living Conditions Survey 2017, World Bank, June 2019. 22. As of 23 November 2020, 1,259 new cases and 26 death cases were reported bringing the total number of cases more than 80,505 (the positive rate - 7.76%) and 1,765 (the case fatality rate - 2.19%) deaths. Myanmar has tested more than 1,037,450 specimens since the beginning of the pandemic. In the ASEAN Region, Myanmar ranks the third country with the highest number of COVID-19 cases after Indonesia and the Philippines. In terms of deaths, Myanmar ranks the second country in ASEAN with 2.19% CFR. On the testing, Myanmar ranks the 6th country with the highest number of tested people in ASEAN - around 19,017 people per million. More than 90% of cases are local transmission and congregated in the large urban townships in Yangon (76%), Bago (5.5%), Mandalay (5.3%), Rakhine (4.4%) and Ayeyarwady (3%). Of them, only Rakhine has some areas with conflict. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 29 reduce strain on the health system. A full-blown the capital budget. The latter is occurring despite pandemic will test the low levels of health system changing the fiscal year from April 1–March 31 to preparedness. As assessed by the Joint External October 1–September 30 in an attempt to better align Evaluation (JEE) and Global Health Security Index,23 the fiscal year with the annual monsoon and its impact Myanmar performs poorly in terms of preparedness and on construction. Revenue collection performance has readiness to prevent, detect and respond to disease increased only slightly from 16.4 percent of GDP in outbreak and pandemics. Although the government 2017/18 to 16.8 percent of GDP in 2018/19. has a costed National Action Plan for Health Security since 2018, implementation is far from adequate due 2.1.3 Health Status and Disease Prevalence to limited financing24 and inadequate attention due Health outcomes in Myanmar have improved substantially to competing priorities. With local transmission of and steadily over the last few decades. Life expectancy at COVID-19 taking root in the country, the country’s birth has risen steadily from just 42.04 years in 1960 to 67.17 health system is being overwhelmed, given the limited years in 2020 (United Nations-World Population Prospects). capacity of health care facilities to treat and manage Since 1990, the under-five mortality rate (U5MR) has fallen respiratory problems on a large scale. The challenges from 106 per 1,000 live births to 50; infant mortality rate will be greater in conflict-affected areas. (IMR) has declined from 76 per 1,000 live births to 40; and the maternal mortality ratio (MMR) fell from 520 per 100,000 2.1.2 The Myanmar Economy25 live births to 227 (DHS 2015–16). However, Myanmar did 59. COVID-19 will have a major negative impact on not achieve Millennium Development Goal (MDG) 4 and 5 global and regional economic growth, and the targets of 36 per 1,000 live births for under-five mortality and impact on the Myanmar economy is expected to 130 per 100,000 live births for maternal mortality. The country be severe. Myanmar’s GDP growth for FY2019/20 is met the targets of MDG 6 of reduction and management of estimated to decline to a range of 2 to 3 percent from communicable diseases such as malaria, HIV/AIDS, and 6.3 percent last year. The reflects impacts across all tuberculosis (TB), in large part through effective disease control sectors, driven by a slowdown in domestic demand and programs, which received the largest share of the external significant trade, tourism and supply chain exposure to aid and have seen the strongest collaboration between the China and the rest of the East Asia region. Myanmar’s public sector, international and national nongovernmental forecast growth in 2019/20 is supported by the timing organizations (NGOs). Childhood and maternal undernutrition of its financial year (October to September), as the first continue to constitute a serious public health and development 5 months of the year are the most important in general, concern. In 2015, 29.2 percent of children under five years of and particularly strong this year, lifted by domestic age in Myanmar were stunted (DHS 2015–16). With respect consumption and exports. While growth is expected to to Myanmar’s progress towards achieving the Sustainable recover next year, there is a high risk that the slowdown Development Goal 3 of ensuring healthy lives and promoting could persist. well-being for all at all ages, UHC services coverage index has increased from 49 in 2010 to 54 in 2017. However, Myanmar 60. On the fiscal side, the 2018/19 actual budget deficit needs more rapid progress compared to other LMICs in was lower than forecast as a result of budget many of the key indicators in maternal and child health, under-execution (see section 3 of this report). The communicable and non-communicable diseases. On financial programmed budget deficit for 2018/19 was revised protection front, 0.6% of people are being pushed into poverty upward from 5.4 percent in September 2018 to 6.4 (at $1.90 level) because of out-of-pocket health spending and percent in June 2019. The actual deficit is projected 14.4% of people spent more than 10%. at 3.3 percent due to continued under-execution of 23. According to the JEE, Myanmar had an average score of 2.2 out of 5, compared to the global average of 2.8. On the Global Health Security Index, Myanmar ranked 72 of 195 countries with an overall score of 43.4 out of 100. .(ghsindex.org). 24. National Action Plan for Health Security (2018-2022) was costed at USD 158M and financing gap was estimated roughly around 40% of total cost (NAPHS Finalization Workshop, September 2018) 25. This section of the report has largely been drawn from the Myanmar Economic Monitor, June 2019; World Bank, June 2019; and the IMF Article IV Visit to Myanmar Press Release, Staff Report, March 2020, as well as an internal World Bank note (April 7, 2020) on the corona virus impacts on Myanmar. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 30 > > > F I G U R E 3 - Myanmar Health Indicator Trends 70 200 65 Mortality rate (per 1000) 60 150 Life expectancy 55 50 100 45 40 50 35 30 0 1960 1970 1980 1990 2000 2010 Life expectancy at birth, total (years) Mortality rate, infant (per 1,000 live births) Mortality rate, under -5 (per 1,000) Source: World Development Indicators 2017. > > > T A B L E 1 - Selected Health Outcome Indicators: Myanmar Versus Comparator Countries 2015 Indicator Myanmar Cambodia Lao PDR Thailand Vietnam Life expectancy 66 68 66 75 76 IMR (per 1,000 live births) 40 25 51 11 17 U5MR (per 1000 live births) 50 29 67 12 22 MMR (modelled estimate per 178 161 197 20 54 100,000 live births) (227 from DHS) Source: World Development Indicators database, Myanmar DHS. 61. Myanmar is also undergoing a rapid epidemiological very high with about 42% and 63% among the adult transition. The share of communicable diseases male smokers and smokeless tobacco consumers, in the overall burden of disease in Myanmar has respectively [STEPS, 2014]. Not surprisingly, Myanmar declined from 57 percent in 1990 to 26 percent in 2016. has one of the highest oral cancer rates in the world. Noncommunicable diseases (NCDs) now account Percentage of adults with raised blood glucose levels for the largest share of the burden of disease—65 and raised blood pressure are about 10.5% and 26.4%, percent—an increase from 36 percent in 1990 respectively [STEPS, 2014]. (Institute for Health Metrics and Evaluation [IHME] 2017). In 2017, NCDs ranked as one of the top five 62. There are wide variations in health outcomes and causes of deaths and they are responsible for 6 out access to health services across the country based of top 10 causes of years of life lost and 9 out of top on geography, gender, and income. For example, 10 causes of years lived with disability. In terms of risk the IMR across states and regions ranges from 37 per factors, adult tobacco (smoking and smokeless) is 1,000 live births in Mon State to 80 in Bago Region— IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 31 more than a twofold difference. The same degree of 2.2 The Health Sector variation is observed for neonatal mortality rates and U5MRs. Stunting rates also vary from 40.3 percent in Chin State versus 16.4 percent in Mon State. Populations in urban areas also consistently fare much 2.2.1 Overview better than rural residents. 65. The 1993 National Health Policy sets out a vision of achieving UHC by 2030. The National Health Plan (NHP, 2017-2021) supports implementation of this 2.1.4 Other Risks - Climate Change and policy through a phased and prioritised approach. Natural Disasters The NHP is supported by a Monitoring and Evaluation 63. Myanmar is one of the world’s most disaster-prone Framework, with a NHP Implementation Monitoring Unit countries, exposed to multiple hazards, including (NIMU) established in the Minister’s office to monitor floods, cyclones, earthquakes, landslides, and NHP implementation. Costing of the NHP, including droughts. Myanmar is one of the countries most costing of the basic package of health services, was affected by climate change in the last 20 years, ranking also carried out to inform on the financing gaps, along 3 out of 184 countries in the 2019 Global Climate Risk with annual operational plans (see H2 below on sector Index and 12 out of 191 countries on the Index for planning and costing). Risk Management (INFORM).26 It is also one of the 15 countries where 80 percent of the world’s population 66. DMS and DPH combined play a major role in exposed to severe flooding are located. The monsoon providing comprehensive clinical and public health brings heavy rains to mountainous and river delta care throughout the country. DPH is responsible for areas from May to October, displacing many people primary health care and basic health services including every year. In cities, the situation is exacerbated by immunization, nutrition, environmental sanitation, inadequate and in the countryside, river and dam maternal and child health, school health, and health erosion are the main problems. The worst natural literacy promotion. DMS is responsible for clinical or catastrophe to have struck Myanmar was Cyclone hospital-based services, including the national health Nargis in 2008. In addition to widespread material laboratory and national blood bank. DMS and DPH damage, it left over 380,000 people dead and even were created from the split of Department of Health more injured, traumatized, homeless, and without in 2015, and section 3 below explores the impact this access to food. Poor governance was a key reason for had on vacancies for administrative/clerical positions the impact of Cyclone Nargis (NUPI 2018). (H16), and in particular on accounting and financial reporting (H21 and H22). Health care delivery is 64. Possible MoHS and MOPFI Actions. Given further fragmented as a result of parallel programs and Myanmar’s high-risk profile, MoHS will need to financing by external donors, increasing the demands mainstream epidemic risks,27 climate change and on weak financial management capacity at sub national natural disaster assessments, and preparedness into its level (see External Funding H3). public investment and infrastructure planning, costing, and prioritization processes. Governance systems 67. As discussed in H5, Sub National governments also need to be upgraded to ensure better disaster currently play almost no role in the administration preparedness. At the Union level, MOPFI could review28 and financing of health service delivery. Public and prepare its PFM and procurement systems for funding for health service delivery is financed almost the response challenges that arise from emergencies entirely through MoHS which allocates down to the such as COVID-19 or Cyclone Nargis. MoHS will state/region/township health departments and facilities, need to prioritize these disaster prepared actions. which are all deconcentrated units of MoHS itself. 26. Index for Risk Management. INFORM is a global, open-source risk assessment for humanitarian crises and disasters. 27. Tools available for assessing and managing epidemic risks include the World Health Organization (WHO) JEE tool. See https://www.who.int/ihr/publications/WHO_HSE_ GCR_2018_2/en/. 28. There is guidance available to better prepare PFM and procurement systems for disaster recovery, for example, “Preparing PFM Systems for Emergency Response Challenges,” IMF 2020, and “Disaster Response - A PFM Review Toolkit,” World Bank 2019. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 32 68. In conflict affected and non-government controlled financing models based upon community cost sharing areas, MoHS presence can be extremely limited. (user fees), hospital trust funds, and drug revolving In some of these areas, Ethnic Health Organizations funds to raise additional revenues for the health sector. (EHOs) and Ethnic and Community Based Health Since 2010, there has been a significant effort by the Organizations (ECBHOs) have played an important government to increase public spending on health. role in service delivery for local communities. These Between 2011/12 and 2017/18, the government are funded largely through external (donor) resources, increased its spending on health from 0.19 percent and sometimes contributions from Ethnic Armed to 1.1 percent of GDP, while total health spending is Organizations or the local community. about 3 percent of GDP. One of the major reasons behind the sharp increase in the health budget has 69. A more detailed summary of the health sector in been a shift in the government’s prioritization toward Myanmar, its legal framework and institutional social service sectors. The health sector has been the arrangements is provided in Annex 8. largest ‘beneficiary’ of this recent shift in government spending priorities. Figure 4. shows the growth in 2.2.2 Health Financing and Pooling spending, relative to each ministry’s level of spending in FY2009/10. The rate of increase of the MoHS’ Arrangements budget has outpaced that of all other ministries by a 70. The health system challenges that Myanmar faces wide margin, albeit starting from an extraordinarily today have been, in large part, caused by low levels low base (Health Financing System Assessment of public spending in health over recent decades. [HFSA] 2018). The National Health Policy (1993) introduced health > > > F I G U R E 4 - Increase in Health and Other Sector Spending Government spending growth index 1,400 Health 1,200 1,000 (2009/10=100) 800 Education 600 Agriculture Defense 400 Total 200 Energy 0 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Year Health Education Agriculture Defense Energy Total Source: World Bank Public Expenditure 2017. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 33 71. However, because of the historically low levels to health. Health spending also has a significant of spending, in 2015, Myanmar’s total health impoverishing effect on households: approximately 3.4 expenditure per capita continued to be low at MMK percent of the population, or 1.7 million people, were 70,100, or US$54 per year (HFSA 2018). Current levels pushed into poverty due to health spending per year. of public expenditure will be insufficient for Myanmar to address a ‘double burden’ of an unfinished MDG 74. External financing for health in Myanmar has agenda for maternal and child health and a growing increased significantly in recent years. This is quite burden of NCDs such as diabetes and hypertension. unusual compared to other high-growth countries in the lower-middle-income category; many have seen a 72. Out-of-pocket (OOP) spending accounts for more marked decline in external financing for health. Tracking than 75 percent of total health expenditure in external financing is quite challenging, as most of the Myanmar, and as a share of household spending, it funds flow outside the government system. Estimates is greatest for the poorest, with adverse implications of external financing as a share of total health spending for financial protection. In the absence of reliable OOP also vary widely, from 7.7 percent (Myanmar, MoHS data prior to 2013-2014, it is hard to say what the impact 2020) to about 10 to 14 percent of health spending in of the significant public spending increase (2011-2015) global databases. External financing focuses mostly was on OOP, but overall estimates of OOP (as a share on public health, such as control of communicable of total) from the two credible data sources tend to diseases (HIV/AIDS, TB, malaria) and strengthening suggest that the share has remained fairly constant. delivery of maternal, newborn, and child health services OOP spending has increased slightly over the last (including immunization). In certain programs, such as five years, while public spending has plateaued over immunization, and interventions against HIV/AIDS, TB, this period. and malaria, external financing comprises the majority of program financing. Most of the external financing is 73. Approximately 16 percent of Myanmar households off-budget and is managed and implemented by United face catastrophic health spending—that is, they Nations (UN) agencies and NGOs devote over 10 percent of their total expenditure > > > F I G U R E 5 - Various Estimates of External Financing Million constant 2015 US dollars 300 250 200 150 100 50 0 1990 1995 2000 2005 2010 2015 Year IHME data WHO-GHED data OECD-CRS data Source: WHO Global Health Expenditures Database; Institute for Health Metrics and Evaluation; OECD Creditor Reporting System IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 34 75. Prepaid and pooled funds for health remain COVID-19 take hold in remote locations or in poorer relatively small and fragmented in Myanmar. The de populations. This has implications for the nature of the facto pool for most of the population is the government MoHS’ COVID-19 response, that is, for information, health budget. The size of that pool remains small, at education, and communication strategies, and for about US$7.84 per capita per year (in 2018, Myanmar, community outreach program modalities. MoHS 2020), which would be insufficient to fully cover the cost of the basic health needs of its population. This 78. Domestic and international resources have pooling mechanism does not include all citizens, as in been rapidly mobilized to improve the COVID-19 some conflict areas MoHS facilities are not accessible. response. The GoM has mobilized funds for nationwide There is no comprehensive health insurance system COVID-19 response both domestically, from the public in Myanmar. The only social health insurance (SHI) and private sectors, and internationally from bilateral in Myanmar, established in 1956, has low coverage and multilateral development agencies. The recently and covers predominantly private sector employees approved World Bank-financed US$50 million Myanmar in the formal workforce. The social security scheme COVID-19 Emergency Response Project (M-CERP) to date covers only around 2 percent of Myanmar’s includes funding for upscaling critical care facilities at population and SHI spending by the SSB amounted designated hospitals, capacity building, community to just 0.58 percent of total health spending in 2018 engagement, and communications. Complementary (Myanmar, MoHS 2020). With more than 80 percent support of US$5 million from the existing EHSAP is also of the labor force engaged in informal employment supporting MoHS with operational costs of surveillance, in Myanmar, the contribution scheme is not suited to testing, risks communications, coordination, and so on. labor market structure. There are also voluntary private Medium to longer-term support to improve essential health insurance schemes following the opening of the services and strengthen pandemic preparedness will insurance markets, but their coverage is very small. also become available through the AF of the EHSAP of US$110 million. 76. The MoHS “Strategic Directions for Financing UHC in Myanmar” discussion paper and possible reforms in 2.2.3 Trends in Government Health Sector strategic purchasing are discussed in section 3.3.3 for Resource Provision and Expenditure the PFM in Health indicator H12 - Strategic Purchasing. 79. The budget of the MoHS increased at a rate higher than the average annual economic growth rate 77. A risk for Myanmar’s COVID-19 response and between 2011/12 and 2015/16. As a share of GDP, resilience is that a substantial portion of the Myanmar’s government health budget had hovered at population in remote areas do not seek health about 0.2 to 0.3 percent before 2011. This shot up to care when they need it because of affordability, 1.1 percent in 2014/15 before falling to 0.8 percent as availability, and concerns about the quality of at the end of 2018/19, as per Figure 6. However, it is service. Even with the MoHS currently providing free important to note that Myanmar’s level of government testing for everyone suspected of COVID-19 and their health spending is low despite a substantial increase contacts, and free clinical care for confirmed COVID-19 in government budgetary health expenditure patients, the high rates of OOP spending, including since 2011/12. opportunity costs, will likely affect the willingness of the population to seek testing or treatment should IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 35 > > > F I G U R E 6 - Health Budget as a Share of Budget and of GDP, 2014–2020 Public expenditure on health as % of Budget and of GDP 5.00% 1.10% 1.10% 1.10% 1.20% 4.50% 1.00% 0.90% 0.90% 1.00% 4.00% 0.80% 3.50% 0.80% 3.00% 2.50% 0.60% 4.50% 4.00% 4.10% 4.10% 4.40% 3.60% 3.90% 2.00% 1.50% 0.40% 1.00% 0.20% 0.50% 0.00% 0.00% 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 PA PA PA PA PA TA RE Public expenditure on health as a % of total budget Public expenditure on health as a % of GDP Source: World Bank data (PA = Published Actuals; TA = Temporary Actual; RE = Revised Budgeted Estimates). 80. There has been a measurable shift in the the health in the union budget to 3.9 percent. Going government’s prioritization toward social service forward in FY 2020/21, more budgetary allocation sectors. Since 2013/14, the MoHS budget as a share for MoHS is planned as part of the GoM’s COVID19 of Union government expenditure has fluctuated and Economic Relief Plan (CERP). This increased political has decreased from 4.5 percent of the Union budget commitment and public spending on health catalyzed in 2013/14 to 3.6 percent in 2018/19. For 2019/20, by the COVID-19 pandemic will need to be sustained to the budgeted estimate before COVID19 is for MoHS bring the pandemic fully under control in the immediate to have a 3.8 percent share of budgeted Union and short term, provide access to COVID vaccines government expenditure. for everyone in the country in the medium term, and improve and assure the health system preparedness 81. However, given the unprecedented scale of the for outbreaks and pandemics of the future. The COVID19 pandemic and its negative impact on the COVID-19 pandemic has clearly highlighted the lives and livelihoods of the population, under the whole- critical linkage between investing in a stronger health of-government and whole-of-society approach to the system and protecting the country’s economic growth pandemic response, Government made strong efforts and development. to quickly mobilize in-kind and monetary resources for health response from its own domestic sources as well as external assistance (loans and grants). A 2.2.4 Health Sector Reforms, Ongoing Supplementary Budget increase of MMK 92.7 billion and Planned (7% increase on the original budget estimate (BE)) 82. Supporting the progress toward UHC, MoHS was allotted to MoHS in the Revised Estimates (RE) introduced policies to improve service delivery, of FY 2019/20 by using reallocation from other sectors expand utilization, and reduce OOP spending and external assistance. This brings the share of IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 36 in health. Those policies include provision of free the decisions and EHOs are poised to play a critical essential medicines at primary health care facilities and role in helping shape the future of Myanmar’s health township hospitals and free health services at the point system, and at the same time, to continue improving of care for children under five years, pregnant mothers, access to essential health services and financial risk and patients needing emergency surgery (all services protection among communities long affected by conflict including medicines on the first day of emergency and fragility. hospital admission and free essential medicines throughout the hospitalization). 2.2.5 The Evolving Impact of COVID-19 on the Health Sector 83. Moreover, realizing the current critical challenges facing 86. Decades of underinvestment in health sector before the health sector in achieving the aspirational goal of 2011 resulted in weakened health infrastructure and UHC, the government, led by MoHS, is implementing technology. COVID 19 has highlighted these gaps, several reforms such as identifying Essential Package where an effective and timely response would require of Health Services (EPHS); strengthening the supply that hospitals and laboratories be fully equipped and chain system with a focus on providing universal set up with sufficient supplies to handle infectious access to essential medicines; improving efficiency of respiratory outbreaks on a national scale. Shortage public spending through a strengthened PFM system; of human resources for health remain a persistent modernizing and harmonizing the health management challenge with many public health facilities and information system (HMIS) at all levels and across departments having only between a third to half of their programs; and developing a human resource sanctioned positions filled to deliver on their increasing management master plan to address HR challenges responsibilities. COVID has made this shortage more in the health sector, including an accreditation body to acute as more health workforce is required to run and improve quality standards. deliver health care at the designated COVID hospitals and treatment centers and to also be responsible 84. As a first step to developing an approved for quarantine facilities, when the health workers government health financing strategy (HFS), in themselves are also succumbing to COVID infection. 2019, MoHS led the preparation of a Strategic Further details on the impact of COVID 19 are provided Directions for Financing Universal Health Coverage in Annex 8. in Myanmar discussion paper. In it, a set of ‘quick win’ strategic directions were identified and recommended for consideration and action by the government. These included recommendations for raising revenues 2.3 The National PFM system for health in a sustainable, efficient, and equitable manner and utilizing innovative pooling and purchasing mechanisms. It also calls for the formulation of financial 87. The current PFM legal and regulatory framework protection policies, funded entirely by the state through in Myanmar is incomplete and fragmented and is increased budgetary allocations for the health sector being reformed. The MoPFI is currently preparing a or through SHI mechanisms to ensure that nobody new PFM law and regulation, with the support from faces financial barriers when seeking care. These are the World Bank and building on the findings of the discussed further below for the PFM in Health indicator 2020 PEFA assessment. This represents a unique H12 (section 3.3.3). opportunity to modernize the country’s public financial management, consolidate recent reforms and address 85. In the long run, Myanmar’s aspiration of a federal some of the bottlenecks identified by this study. system of government will influence and determine the governance of the country’s health system. Its 88. A thorough assessment of the national PFM system arrangements and functions, such as management, was completed in March 2020 through the most financing, planning and service delivery, under the recent PEFA assessment and report. A summary of federal system are yet to be clear at this time. PFM the national PFM system is attached in Annex 9 and systems would need to change and adapt to reflect this draws heavily on the 2020 PEFA assessment to IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 37 provide a detailed analysis of the PFM system which to support Myanmar’s socioeconomic development MoHS operates within. objectives and to improve service delivery. In the discussion of the various PFM in health functions in 89. There is a well-established PFM reform program in section 3 below, many of the proposed national PFM Myanmar led by MOPFI, supported by development reforms will be of direct benefit to MoHS. This includes partners, mainly through the Modernizing PFM the proposed new PFM law (incorporating a medium- project and its subsequent PFM II operation. term budget framework and policy based ceilings), The GoM has also published a new Public Financial a new Procurement law and regulatory framework, Management Reform Program Strategy (2019 to 2022). a new chart of accounts and financial management The PFM reform strategy aims to modernize the PFM information system, and a PFM capacity/skills legal and regulatory framework, systems, and practices building program. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 38 >>> 3. Review of PFM Functions Affecting Health Service Delivery 90. The review of PFM functions below is focused 92. The NHP is supported by a monitoring and on the 24 PFM-related functions most relevant to evaluation framework. The NHP documents the the health sector. For each of these PFM in Health necessary oversight and accountability arrangements functions (H1 to H24), the review makes use of to support implementation of the plan and anticipated information from recently completed studies, survey the formation of the NIMU in the minister’s office to data gathered from providers, and follow-up interviews facilitate smooth implementation of the NHP. with key stakeholders within the institutional coverage of this assessment. For some of these PFM in Health 93. The entity and facility survey results indicate that functions, the analysis may include cause-and-effect the NHP strategies are being used to at least inform or ‘fish-bone’ diagrams which illustrate the links budget preparation. The survey results show a high between supply-side challenges and root causes in level of awareness of the NHP, and those responsible PFM systems. for budgeting do use the NHP to broadly inform preparation of their budget submissions. Eight out of the ten respondents from DPHs and seven out of eight 3.1 Strategic Planning respondents from DMS indicated that they refer to the NHP when preparing their budget submission, even though they do not have access to any NHP annual or medium-term costings (see H2 - section 3.1.2). 3.1.1 Sector Planning and Coordination (H1) 94. Survey results reveal that while around half of 91. The NHP (2017–2021) identifies relevant goals, DPH and a quarter of DMS entities prepare some programs, and activities that support achievement kind of workplans, these are not linked to the of UHC. The NHP documents a structured, medium amounts in their budget request. Almost all DPHs to long-term pathway toward UHC through expanding and DMS indicated that these workplans are not used access to a basic EPHS by 2021, progressing to for budget execution, that is, after they are advised of access to an intermediate EPHS by 2026 and to a their actual budget, because the budget is far lower comprehensive EPHS by 2031. This strategy would than they requested29 and because they do not have at the same time reduce the level of catastrophic the resources (financial and human) to fully implement and impoverishing OOP spending on health across the workplans. Most hospitals indicated that they the population. The strategy for improved financial do not prepare workplans as they see them as not management includes recruitment of professional being relevant to the type of services they provide. financial management personnel to state or region Lower-level facilities such as SCs and RHCs prepare health departments and township offices, as well as workplans for specific activities such as immunization, this PFM bottlenecks assessment and the resulting antenatal care, outreach visits, and so on, but these action plan. are plans for specific activities or field trips and are not IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 39 costed or linked to any budget (which in any case is prepared at the township level). 96. The limitations of national financial reporting systems and of the chart of accounts do not support 95. At the facility level, 17 percent of hospitals, analysis of the budget or historic spending by 73 percent of RHCs, and 53 percent of SCs outcomes, goals, programs, state/region, township indicated that they do use workplans during the or type of facility, and so on. These constrain year to support their work. For those facilities that MoHS’ capacity to use NHP or NHP costings to inform did not use workplans at all, various reasons were budgeting at the subnational level by MoHS entities. provided including limited access to computers or no standardized format available from MoHS or because 97. These sector planning constraints are summarized they are informed of the budget available to them well in Figure 7, along with related budget preparation after the financial year has commenced. issues (see discussion on H4 in section 3.2.1). > > > F I G U R E 7 - Budgets Not Well Linked to NHP Planning Priorities Budget preparation templates not linked to NHP Manual budget, financial reporting and MIS systems outcomes, programs, etc. limit MoHS entities ability to analyze financial data level not linked to strategic NHP priorities MoHS budget allocations at sub national alongside HMIS data to better inform budget allocations Not standardised Excel based templates Most entities still prepare paper based budget submissions, Annual workplans do not guide budget preparation with some also using Excel at sub national department level MOPFI unable to provide early Time consuming for departments to shift National chart of accounts does Aggregate ceilings to MoHS budget to ‘needed’ budget line during not support location, outcomes, the year No MoHS MT budget framework based programs, activities on the NHP to guide prioritisation Inflexible budget rules constrain by program location budget execution No sub national ceilings for departments to guide preparation of their budget submission 29. Even though DPH and DMS units normally receive less budget than requested, many still have difficulty spending the budgets they do receive. The reasons for these underspends vary according to budget line and are discussed further in section 3.3.1 on Predictability of in-year resource allocations. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 40 98. Possible MoHS action - MoHS could prepare its budget 101. A key part of the NHP costing involved both earlier within its own indicative ceilings based on medium and long-term forecasts of the impact of historic levels and donor funding commitments. Ideally, the OOP share on health financing. As discussed MoHS at the Union level could provide departments in section 2.2.1, as of 2015, OOP comprises around and hospitals with medium-term allocations to support 74 percent of financing for total health expenditures. NHP implementation, based on a Cabinet-approved It is understood that this proportion had not changed MTBF which reflects agreed national policy priorities. significantly up to 2017 when the possibility of a new However, there is currently no whole-of-government health financing framework was first incorporated into MTBF and these reforms are unlikely in the short to the NHP 2017–2021. One of the goals of the new medium term. In the meantime, MoHS could still work financing arrangements is of course to reduce the from its own indicative medium-term aggregate ceilings burden of OOP. (based on current and immediate past few years from MOPFI) and sub-allocate this to MoHS entities with 102. Actual levels of MoHS spending to implement the budgets based on NHP priorities and needs, well before strategies in the NHP around new/rehabilitated MOPFI issues its budget circular. This will allow MoHS facilities, service expansion, and so on have not departments and hospitals to prepare their budget kept pace with the estimated costs reflected in the proposals early within realistic ceilings and commence NHP costings. Largely because of the bottlenecks preparation of workplans. If MOPFI ultimately provides identified in this assessment, actual health expenditure a higher level of annual ceiling in the first budget has not matched the available MoHS budgets and has circular, then marginal adjustments can be made late actually started to decline in real terms. Specific areas in the budget preparation cycle for only some MoHS of underspending are discussed further below. Another department budgets based on NHP priorities. reason is that annual budget planning by various MoHS departments has not always been directly linked to the 3.1.2 Sector Plan Costing and Financing priorities reflected in the NHP 2017–2021. (H2) 99. The costing of the NHP 2017–2021 identifies the 3.1.3 External Funding of the Sector (H3) additional budget required to finance planned 103. Information on the composition of health spending progress toward UHC, including new/rehabilitated in Myanmar is fragmented and not up to date. In facilities, service expansions, and so on, but it does 2020 NIMU finalized a new set of National Health not fully cost all existing programs or activities. Accounts (NHA). In the most recent year, 2018, only The NHP costing therefore cannot be reconciled with 16.7 percent of health expenditure was financed MoHS share of total health expenditure, even after through GoM (including internal government grants recognizing that it covers different financial years. and foreign transfers through GoM), 76.5 percent from After preparation of the NHP in 2017, the approach to private sources (almost entirely OOP), and around 6.2 costing focused on the identification of the basic EPHS, percent through not-for-profits. whereby NIMU (supported by World Bank) costed both the recurrent budget needed to deliver the package to 104. Following the transition to civilian government and all and the budget needed to prepare the supply side as Myanmar has opened up and engaged more with for delivery. other partners, the level of external financing of the health sector has increased rapidly. Reliable data on 100. The NHP 2017–2021 policy on strategic purchasing the composition of health spending and the role played was not yet sufficiently developed or endorsed to by external finance is scarce, and Figure 5 provides allow for credible costing of the necessary MoHS or a range of estimates. Even with this range of external new purchasing authority budgetary implications. financing, since the constitutional reforms in 2008 and The NHP costing did make a long-term estimate of elections in 2010, the amount of external financing has what funds would need to flow through MoHS and increased rapidly, albeit from a low base. what through a purchasing agency or non-MoHS providers, but this was outside of the time frame of the 105. Most of these external resources are directed current NHP. toward public health programs and are channeled IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 41 outside of the government’s budget systems. 108. Possible MoHS actions. As part of a strategy to Most of the external funds remain off-budget and encourage development partners to make greater are managed and/or implemented by NGOs and UN use of MoHS PFM systems, in the short term, MoHS agencies. Broadly, the programs focus on control of could undertake a resource tracking31 exercise to communicable diseases and strengthening delivery of better understand and analyze MoHS’ own allocations maternal and child health services. In some programs, by program and geographic location. In the medium external funding continues to comprise the majority to longer term, MoHS could include program and share. For immunization, for example, domestically geographic location codes in its own budget preparation sourced government funding covers just 7 percent of and reporting tools and work closely with MOPFI total immunization expenditures, and there remains to ensure unified chart of accounts reforms include a high reliance on external funding for vaccines and introduction of fields to capture programs and locations injection supplies. for sector allocations. 106. Subnational health departments commit significant resources to accounting and reporting for donor- 3.2 Budget Preparation funded programs and use the same paper-based cashbooks and reporting formats as they do for budget-funded activities. The survey results show that all 20 DPH entities and 14 of the DMS entities 3.2.1 Annual Budget Preparation Process maintained accounting records for donor-funded (H4) programs in which they were participating. Most were 109. MOPFI is implementing needed reforms in budget supporting at least 2 vertical programs, and many were preparation at the national level, and it will be supporting 3 or 4 donor-funded programs in total. Each some time before these reforms have any impact DPH spent an average of 3.3 person-days per month at the subnational level of MoHS. From the 2019/20 maintaining accounting records for donor-funded budget preparation cycle, line ministry recurrent activities and each DMS spent an average of 5.6 and capital budget proposals are now required to be person-days per month on accounting for donor funds. submitted in both electronic and paper-based formats For the World Bank loan program, both DPH and DMS (PEFA Indicator (PI) PI-17). MOPFI budget and use the same paper based Htasa forms that they use planning departments are supporting line ministries, for government accounting. including MoHS to use Excel-based templates to submit their aggregate budget proposals. However, at 107. Development partners are reluctant to use national the subnational level, there are a range of issues that and MoHS PFM systems until PFM bottlenecks are hinder effective budget proposal preparation. addressed satisfactorily through a credible PFM reform program. The Global Partnership for Effective • The national chart of accounts does not currently Development Cooperation found that the share of provide for key dimensions of budget allocation development cooperation recorded in the government’s such as location (that is, state/region/township), budget declined from 44 percent in 2016 to 21 percent cost centers, NHP outcomes, programs, activities, in 2018.30 There is therefore a strong appetite from and so on (see H5 - section 3.3.5). development partners to support MOPFI and MoHS • While steps are being taken to replace paper- in PFM reform and capacity-building programs. based budget proposals with electronic formats, Addressing the PFM system and capacity weaknesses consolidation of budget proposals is still time- in the health sector requires a long-term cooperative consuming, and Union-level departments have little partnership between MoHS and MOPFI, with the active time to consult with their subnational counterparts. support of partners such as World Bank, GAVI, and Union-level departments have to make important Global Fund. allocative decisions that sometimes result in subnational departments receiving budget 30. Global Partnership for Effective Development Cooperation, 2018. Myanmar Summary. Available at: https://effectivecooperation.org/wp-content/uploads/2019/07/myanmar. pdf?s. 31. The Global Financing Facility has a resource tracking tool that can be adapted for this exercise. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 42 allocations that are not aligned with local needs these should be standardized. The weaknesses of (that is, the available budget is held against the the paper-based approaches are well understood, and wrong account code). several electronic solutions are at various stages of • For subnational MoHS units, there is not yet development, for either or both of budget preparation a standardized electronic budget preparation and financial reporting. template that meets the need for rapid consolidation and adjustment as the budget is brought together • A NIMU Excel-based tool, the Integrated at the Union level. Township Health Plan with links to the NHP and to • There are practical challenges to shifting budget annual workplans has been under development for to the correct or needed budget lines during the the past 2 years. budget execution stage (see H14). • An Excel-based budget submission template, • Although the NHP provides strategic priorities for introduced by MOPFI in 2018, is also being used MoHS, the subnational units with budget do not by MoHS Union departments to submit aggregate have an MTBF to help prioritize budget allocations budget proposals to MOPFI. This would benefit and guide preparation of their annual budget from being upgraded to a more user-friendly Web- proposals to the Union-level MoHS. based platform. • In 2019, MoHS introduced an Excel-based 110. Without medium-term ceilings from MOPFI and monthly budget execution reporting template with uncertainty around final budget allocations at all levels of the ministry with support from the from MoHS at the Union level, subnational World Bank. This tool is based on the good practice departments prepare unrealistic and unprioritized and lessons from the MoE’s experience. It is able budget submissions. Until a MOPFI-led MTBF reform to consolidate data from all 382 DPH MD accounts is implemented, MoHS can provide more certainty to and all 369 DMS MD accounts, thereby allowing subnational departments by providing internal ceilings some degree of analysis by location or program. much earlier in the budget cycle and well before MOPFI • The development of a web-based budget issues its budget circular. This would also allow the submission platform, building on the Excel Union-level MoHS to base these ceilings on national forms and a Microsoft Access database would NHP priorities or needs. increase sustainability. The World Bank has developed such a platform which can be handed 111. All subnational departments are still preparing over to MOHS and MOPFI. This can also be used paper-based budget submissions. The survey for monitoring of budget execution at the Union results show that two-thirds of both DPH and DMS only and States and Region level but does not replace prepared paper-based budget proposals, with around a transactional treasury and accounting system one-third preparing both Excel and paper-based (IFMIS). Although it uses the current limited chart proposals. These are time-consuming to prepare but of accounts, user login details can be used in the do not significantly influence the allocations that are meantime to analyze budget data by location. decided by the Union-level MoHS departments and • The financial reporting and consolidation submitted to MOPFI. At the Union level, DPH and system called FIRST is being developed by MOPFI DMS have to meet tight MOPFI deadlines for budget but it is not transactional nor linked to the upstream submissions. They base their submissions on historic budget preparation. FIRST uses the current chart actual spending levels for the (part) current year and of accounts dimensions. Importantly, it permits the two immediate prior years rather than on delivery either direct web-based data entry or importation units’ priority needs and potential savings. Until MOPFI of data on preformatted Excel spreadsheets, which is in a position to provide MoHS with medium term can then be consolidated. ceilings, MOHS should prioritize its expenditures based • MOPFI is also leading the development of a new on the current year allocation and then adjust based on Government Accounting System (GAS) which the available annual ceiling. will be adapted to double entry accounting and will be progressively rolled out to different levels of 112. A set of electronic budget proposal templates can government, using the current chart of accounts, help improve links to strategic NHP priorities, but which is being updated. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 43 113. After MoHS is notified of its approved budget plans and budgets. It is understood that a functional by MOPFI in the first month of the financial year or program segment may be introduced during a later (October), the Union-level DPH and DMS have phase of the MOPFI unified chart of accounts reform. a compressed time frame in which to calculate subnational allocations. In October each year, 117. MoHS has a deconcentrated structure down to DPH and DMS face time pressures and logistical township level for financial management purposes. challenges to gather the necessary information This structure means that not all MoHS cost centers for the complex process of calculating subnational or budget centers are currently captured or preserved allocations down to the 4-digit account code, given during consolidation from townships’, states’, and the large number of MoHS subnational departments. regions’ health departments. Under current paper- This is particularly challenging for payroll 01 (see H13 based budget preparation and monthly financial -section 3.3.4), medicines 0313, and also for capital reporting arrangements, as budgets or reports are construction budgets. consolidated, valuable information regarding the township, state, or region is lost. The parallel Excel- 114. The budget preparation bottlenecks are also based or Web-based budget preparation and reporting summarized in the cause-and-effect diagram presented tools discussed in section 3.2.1 may be able to capture in Figure 7 for the related planning bottlenecks. and preserve this information during consolidation. 115. Possible MoHS Action. MoHS faces a bigger challenge 3.2.3 Forecasting of Earmarked Revenue than other line ministries with budget preparation and (H6) financial reporting because of the large number of 118. Until 2017, health facilities were permitted to collect subnational departments involved, whose submissions and retain user fees and charges, by depositing or reports need to be consolidated. MoHS could these into an ‘Other Account’ (OA) bank account, switch to an electronic budget preparation process and to use these fees to make local purchases. and evaluate which of the tools available or under MOPFI has instructed that these OAs should no development best meets its immediate needs for rapid longer be used for this purpose, and the relevant bank consolidation of subnational budget proposals while account should be closed. Fees and charges collected at the same time allowing multiple filters to be applied by health facilities must now be deposited directly into (that is, more than provided for by the current chart the relevant facility’s normal MD account. This does of accounts) to generate different budget scenarios. not automatically increase the DL funds available to MoHS could ensure that state, region, district, and the facility through, unless negotiated between MOHS township inputs to the evaluation are considered. The and MOPFI as part of the budget process. In response budget preparation and consolidation tool could also to survey questions about the use of these OAs, all support stronger links between subnational budget entities and facilities indicated they are no longer using proposals and priorities or need as per the NHP or them or have closed them altogether. These amounts other policy documents. are therefore no longer available for or treated as earmarked revenues. For budget submission, MoHS 3.2.2 Budget Classification (H5) includes the revenues from these fees and charges in 116. Myanmar’s budget classification structure facilitates its aggregate revenue forecasts. While this reform is reporting at administrative (down to tertiary unit good practice from to ensure the unity of the budget level) and economic classifications down to 4-digit and optimize cash management, it may unincentivize level. While MOPFI is able to use these classifications health facility staff to collect such fees or optimize for external reporting, it is generally not available to their assets. support internal reporting for line ministries, including MoHS state/region and township level reporting units. 119. However, some hospitals are allowed to continue to Nevertheless, MOPFI is working with World Bank and use revolving fund accounts for purchase of medicines, IMF support to further improve the chart of accounts, provided they have the approval of the hospital including through adding additional levels (up to 5) supervision committee. The receipts into and payments to the administrative segment. These reforms will not out of these funds are managed through a separate immediately address the gaps in the chart of accounts bank account under the control of committee members. discussed for H4 (section 3.2.1), that is, to better links These revolving funds are managed off budget, where IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 44 neither the receipts nor the payments appear in the general-purpose grant, and a constituency MoHS budget submission. development fund grant. The 2020 PEFA scores the relevant indicator (PI-7) as an ‘A’ because these 3.2.4 Medium-Term Perspective in transfers are based on objective rules, a transparent transfer formula, and the amount of actual tax Expenditure Budgeting (H7) collections for four specified tax types and they provide 120. The 2020 PEFA indicates that while MOPFI a set amount per township. prepares medium-term estimates by administrative classification they are for internal use only and are 124. Public funding for health service delivery is not presented to the Parliament. The PEFA notes financed almost entirely from MoHS which allocates that while line ministries, including MoHS, prepare down to state/region/township health departments 5-year strategic plans, and some are costed, actual and facilities, with no direct financing from the budget allocations are not based on the figures in governments of the states and regions in which the plans (which reflects a lack of high-level political MoHS functions.32 Health and education services in ownership of the plan strategies and their financing). Myanmar are both administered and financed from the This is consistent with the findings from the survey Union level, with service delivery resourced through where none of the DPHs and only one DMS had ever the deconcentrated administrative units of the relevant attempted a medium-term budget plan. Union line ministries located in the states and regions. For both the recurrent and capital budgets of the health 121. The lack of a medium-term perspective in sector, the Union-level MoHS departments such as expenditure budgeting contributes to funding DPH and DMS, in consultation with their subnational uncertainty at the subnational level, weakens DPH/DMS units, negotiate the priorities for recurrent links between the NHP and MoHS budgets, and funding and infrastructure by program or by location. encourages unrealistic budget submissions from There are no transfer formulas to guide budget subnational entities. Without an MTBF endorsed by allocations from Union-level MoHS to state/region level MOPFI and the Cabinet that reflects the government’s MoHS deconcentrated units. true political and policy priorities, there will continue to be a lack of predictability in MoHS funding levels. 125. The role of the states and regions will need to be This funding uncertainty will filter down from MoHS reviewed as part of the development of any new at the Union level to departments at the subnational HFS. The “Strategic Directions for Financing UHC level. It will also create uncertainty around the goals in Myanmar” discussion paper prepared by NIMU in and strategies of the NHP. Ideally, the costing of the 2019 includes a recommendation that the role of the next NHP and its financing strategy should reflect an regions and states will need to be clarified as part of agreed medium-term funding arrangement between the discussion around pooling arrangements and what MoHS, MOPFI, and the Cabinet (H12). should be the institutional arrangements for demand- side financing of health providers or facilities. 122. The lack of a medium-term approach to budgeting contributes to underspending of the annual capital construction budget. The underspending of the MoHS capital construction budget has several reasons 3.3 Flow of Funds (see H19), but most are connected to the requirement to tender and complete construction within a single budget year. 126. Adequate and timely flow of funds to subnational health departments and facilities is essential for service 3.2.5 Transfers to Subnational delivery. Even if overall budgets for MoHS are adequate Governments (H8) to fund the NHP and have been efficiently allocated, 123. Reforms to intergovernmental fiscal transfers from subnational providers may still face difficulties in 2015/16 have replaced various types of transfers implementing their workplans, activities, and so on to state/region governments with three major if funds are delayed or are not available directly at instruments: revenue sharing, an unconditional frontline facility level. 32. World Bank. 2019. Subnational Public Expenditure Review - Fostering Decentralization in Myanmar. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 45 3.3.1 Predictability of In-Year Resource budgets within the constraints of a single budget year (see H13, H4, H14, and H19). Allocation (H9) 127. At the aggregate level, Myanmar scored high on 130. There can be delays in the availability of funds for the PEFA scores for aggregate revenue outturn subnational MoHS departments at the beginning of (PI-3 is B), aggregate expenditure outturn (PI-1 is each financial year (that is, from October 1). While a A), and predictability of in-year resource allocation few of the DPH and DMS entities were advised of their (PI-21 is B). Also, for dimension PI-22.1, stock of budget in late October, the survey results show that expenditure arrears, Myanmar scored A because the 14 DPH and 11 DMS entities were not notified of their stock of expenditure arrears is less than 1 percent of approved budget allocation until mid-November. This total expenditure in two of the three years assessed. is because Union MoHS DPH and DMS departments Myanmar therefore scores highly on the credibility of face challenges (see H13) in calculating payroll its budget estimates, that is, they are realistic when (budget line 01) and medicine budgets (budget line comparing actual outturn to budget estimates at the 0313) for so many subnational departments after the aggregate level. aggregate MoHS budget is notified to them by MOPFI early in October. Union-level DPH and DMS therefore 128. In-year resource allocation also appears to be will not advise subnational departments of any budget both predictable and reliable, including for MoHS. line allocation and will not request DL releases for any Because of the unique relationship MOPFI has with entity or facility until all calculations for 01 and 0313 the MEB, the quarterly DLs that are released to are completed. MoHS departments both at the Union and subnational levels are also copied to the MEB, and the MEB strictly enforces the upper limit imposed by DLs on 3.3.2 Collection of Earmarked Revenue for payments made through MD accounts nationally and Health (H10) and Accounting for Health subnationally. The quarterly DL are calculated based on Sector Revenue (H11) the MOHS payment forecast. Adjustments are possible 131. As already discussed for H6, ‘Other Accounts’ that within the quarter and as part of budgetary increases were previously used to deposit fees and charges through the supplementary budget. MoHS has a wide collected from patients and property rentals from network of subnational departments, each with its own private pharmacies can no longer be used. It should MD bank account at the MEB. There are some 382 MD be noted, however, that for lower-level facilities such bank accounts at the MEB for DPH and 369 MD bank as SCs and RHCs, the health workers themselves accounts for DMS. The adoption by MEB of a core often use their own OOP funds to pay for travel for banking system with online banking functionality under outreach visits. the PFM I project will expedite cash management by departments. Modernized virement rules should also 132. Some hospitals are allowed to use drug revolving improve budget flexibility. funds with the approval of the relevant hospital supervision committee. These revolving funds allow 129. MoHS significantly underspends its recurrent the relevant hospitals to charge some patients for and capital budget in aggregate terms. In 2017/ certain medicines that are not provided by MoHS, and 2018 MoHS only managed to spend 76.5% of the the revenues from those sales of medicines can then be total recurrent and capital budget available in the retained in a drug revolving fund and used to purchase Revised Estimate.33 However, the underspends additional needed medicines. It is understood that a are not attributable to any unpredictability in separate revolving fund bank account is maintained resource allocations or to cash shortages. Rather, at the MEB branches to facilitate accounting for the the underspending arises because of capacity revenues and purchases from these funds. and institutional limitations in payroll forecasting, medicines’ budget forecasting at the entity level, the 133. Accounting for revolving fund revenues is covered limited flexibility in reallocation of funds during budget by the 2017 FRRs. Revolving funds are defined in execution, and challenges in executing the construction the FRRs as including any enterprising activity carried 33. MOPFI revised budget estimates. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 46 out by a ministry, but which is not included in any 136. The next NHP will need to incorporate an agreed appropriation required by the annual Union Budget Law. health financing and strategic purchasing The MEB is required to maintain a separate Ledger 6 framework, including monitoring and evaluation to facilitate recording and reconciliation of deposits arrangements to support its implementation. In and withdrawals. May 2019, NIMU published its “Strategic Directions for Financing UHC in Myanmar” discussion paper. 3.3.3 Strategic Purchasing Arrangements This paper provided a significant step forward from the principles outlined in the current NHP and documented (H12) key decisions needed to allow a (politically) agreed 134. Although the current NHP (2017–2021) sets health financing framework to be reflected in the next out a long-term strategy to develop a strategic NHP, along with the necessary monitoring and evaluation purchasing function, it also acknowledges that arrangements to support smooth implementation of the in-country experience with strategic purchasing framework. The Strategic Directions paper discusses is limited. The 2018 HFSA supported the NHP a wide range of issues and decisions to be addressed strategy but also cautioned that a significant change in to improve MoHS and government preparedness for budgeting, reporting, and accountability arrangements implementation of a strategic purchasing framework. for subnational providers would mark a major shift from Improved financial management capacity of health current financing arrangements. The HFSA correctly service providers at the subnational level will be observed that MoHS would need to renegotiate important for accountability. its current funding model with MOPFI to shift to a mechanism where service delivery funding would 137. The current levels of financial management skills gradually be redirected toward a semiautonomous in DPH or DMS are not adequate to provide the purchasing entity. This would be new ground for necessary financial management and training MOPFI, and it would be important to ensure fiduciary support that will be required by health providers. risks are identified and managed. The new financing As MoHS prepares to implement strategic purchasing model would mean payments from the purchasing reforms, the clerical and accounting staff from DPH/ entity to subnational and other providers (for example, DMS units in states, regions, and townships will be hospitals, health centers) would be based on their at the forefront of delivery of financial management needs and outputs and not on their current inputs training to health providers who will be accountable for (salary, allowances, medicines, and so on). grants or other funds they receive from any autonomous purchasing authority. However, the DPH/DMS clerical 135. The shift toward a system of purchasing will therefore and accounting staff are not sufficiently skilled or require a different financing structure for both the trained to take on this role (see Internal Controls of Non- purchaser and the providers. The purchaser will need Salary Expenditure (H14) and Staff Recruitment (H16). sustainable sources of revenue, information, and autonomy to determine the rates to be paid to the 138. It is important that the HFS currently being providers for services they deliver and the flexibility to developed is built on a strong partnership allocate funds across a range of services and providers between MoHS, MOPFI, Cabinet, and development based on need. Providers such as hospitals, health partners. Experience from other countries points to centers, and so on will similarly need a level of budget a strong partnership between MoHS and MOPFI as autonomy to provide services in response to local a critical success factor for ensuring integration of an demand and be able to quickly respond to changing HFS into government systems. The HFS will identify needs from their clients. This level of budget autonomy new sources of financing (for example, earmarked or flexibility is not currently available to MoHS providers taxes, donor service delivery grants, performance at any level but would improve their level of readiness linked grants), as well as options for more flexible and resilience for public health emergencies such as funding channels directly to health providers such COVID-19 or other natural disasters which Myanmar is as hospitals or public health facilities managed by highly susceptible to. townships. MOPFI will need to be a strong partner with MoHS to ensure successful implementation through government systems. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 47 139. Recommended MoHS action. MoHS could finalize and the Health Minister, although MoHS currently plans to seek GoM endorsement of the proposed HFS in close rely on resources from other departments without any partnership with MOPFI, other relevant government dedicated resources for the HR unit itself. It is unlikely agencies (for example, SSB), and development that this arrangement will improve coordination of HR partners. It is important that MOPFI in particular is fully management or consolidation of HR data. MoHS committed to any change in health budget and treasury could consider providing dedicated resources for the arrangements for suppliers and providers and financial proposed HR unit. reporting/accountability responsibilities of health service providers. 142. MoHS payroll records are paper based and highly decentralized down to state, region, and township 3.3.4 Payroll Controls (H13) departments and to hospitals above township level. 140. While payroll management is decentralized to Regular reconciliation is therefore difficult, and subnational MoHS departments and hospitals with instead, comparisons are regularly made of each an MD bank account, HR management is centralized month’s payroll with the previous month’s payroll, and but spread across several Union-level MoHS variations confirmed with whichever MoHS Union-level departments and several units/divisions within department is responsible for HR management and the same department. For internal control reasons personnel records for those employees. it is important that the payroll management and HR/ personnel management functions be kept functionally 143. Survey results suggest that health workers’ payroll separate. Unfortunately, in MoHS, the HR data about payments are on time and that the payment of health workers—their location, pay levels, entitlements, increments is largely up to date. There appear to be vacancies and when they will be filled and so on—is no cash shortages at the subnational level in the MEB held across several MoHS departments at the Union MD bank accounts of health entities, from which health level and often across several units/divisions within the workers are paid. In their survey responses, all health department. This means that subnational departments entities and health facilities indicated that their workers do not have the integrated and timely HR information are paid their salaries on time, with no delays in payroll needed for them to accurately forecast their 01 payroll over the past 12 months. All health workers are aware budget. Even at the Union level, DPH and DMS need of their increment entitlements. to gather all this information from various other MoHS departments and institutions, including on prioritization 144. Subnational-level entities and facilities with DLs for recruitment and filling of vacant positions. are allowed to hire temporary workers using their goods and service budget line 03. There is limited 141. MoHS plans to establish a centralized HR information on how subnational entities and facilities unit to coordinate workforce planning and HR make use of temporary workers. Some DPHs/DMS management. For a large ministry such as MoHS, use temporary workers to assist branch clerks with and with a workforce spread nationwide in all states, accounting, financial reporting, and other financial regions, and townships, the HR management management obligations because of the shortage challenge is enormous. If payroll forecasts can be of financial management staff in front line spending made more accurate and underspending reduced, units.34 Figure 8 shows the total amounts budgeted for this will free up the ceiling for the total MoHS budget DMS and DPH on hiring of temporary workers (budget from MOPFI which could then be used to increase line 0301), and then the amounts spent on temporary operating expenditure or capital expenditure. MoHS labor as a percentage of DMS and DPH payroll budgets recognizes that HR management should be centralized (budget line 01). and is planning to establish an HR unit in the office of 34. “Spending More on Human Capital” Myanmar Economic Monitor, World Bank, December 2018. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 48 > > > F I G U R E 8 - Amounts Budgeted for Temporary Labor Hire (0301); and Temporary Labor as a Percentage of Payroll DMS & DPH Temporary Labour Budgets (line 0301)(MMK millions) 120,000.00 100,000.00 80,000.00 60,000.00 40,000.00 20,000.00 - 2015/16 2016/17 2017/18 DMS DPH DMS & DPH Temp. Labour Budgets (RE) as (%) of Total Payroll Budget (i.e. 0301 as % of 01) 14.0% 12.6% 12.0% 10.6% 10.0% 7.9% 8.0% 6.8% 5.2% 6.0% 4.3% 4.0% 2.0% 0.0% 2015/16 2016/17 2017/18 DMS DPH Source: MOPFI data. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 49 145. The disconnect between decentralized payroll accurate information from every subnational unit on management and centralized (but fragmented) their current rates of salary spending and whether there HR management may be a contributing factor to will be sufficient funds until the end of the financial year. the overestimation and underspending of payroll. With paper-based payroll records and reporting, up- In common with many countries, the FRRs35 do not to-date and reliable reporting is a challenge and may permit budget transfers into or out of the budget line for contribute to underspending of payroll. salaries, that is, 01. This means that line ministries such as MoHS are conservative in their budget estimate for 148. The survey results confirm that underspending 01, that is, they need to slightly overestimate to avoid the of the payroll budget line 01 is the most frequent risk of having insufficient budget or DL to pay salaries. source of recurrent underspending for DPH entities and for hospitals. Figure 9. shows the percentage of 146. Overly optimistic forecasts on filling of vacant each type of entity or hospital surveyed which indicated positions is also contributing to overestimating they had underspends for various budget lines for and underspending of payroll. There are a number which they held DLs (but does not quantify the amount of vacant positions across MoHS at all levels (see H16 of the underspends). - section 3.4.1). In preparing the payroll budget, MoHS departments make overly optimistic assumptions about 149. The amount of underspend for payroll for MoHS as a how many of these vacant positions will be filled and whole is summarized in Figure 10. and demonstrates also in which months of the financial year the vacancies that if budget for payroll were better forecasted and will be filled. managed, these foregone budgets could in theory have been better used in supporting other operating 147. Although transfer of budget between departments costs. However, Figure 11. shows that the amount of within MoHS is permitted for salary line 01, in underspend is even higher for the goods and services practice, transfers are challenging. Making use budget line 03. (See H14 on causes of underspend for of budget transfer authority requires up-to-date and non-payroll, section 3.2.1) > > > F I G U R E 9 - Budget Lines Most Often Underspent in 2018/19 - Percentage of Surveyed Entities or Hospitals Percentage of Entities or Hospitals with Underspend by Budget Line 05 Construction 04 Maintenance 03 Goods & Serv Hospitals DMS DPH 02 Allowances 01 Payroll 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% Source: Survey data. 35. FRR number 45 also does not permit transfers or virements between capital heads of expenditures or from capital to current. Even where transfers or virements are permitted, they must be reported to the Pyidauggsu Hluttaw as part of a ministry’s revised estimates. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 50 > > > F I G U R E 1 0 - Amount of Underspend for Payroll Only for MoHS as a Whole 01. Payroll - Amount of Underspend (i.e. Revised Estimate RE less Actual A, in MMK millions) 14,000.0 12,171.6 12,000.0 10,000.0 7,948.4 8,000.0 6,733.6 6,000.0 4,000.0 2,000.0 0.0 2015/16 RE-A 2016/17 RE-A 2017/18 RE-PA Source: Survey data. > > > F I G U R E 1 1 - Amount of Underspend by Budget Line for Mohs as a Whole Amount of Underspend by Budget Line for MoHS as a Whole (i.e. Revised Estimate RE less Actual A, in MMK millions) 80,241.7 90,000.0 80,000.0 70,000.0 60,000.0 38,044.1 50,000.0 25,598.4 40,000.0 20,000.0 12,171.6 7,948.4 6,733.6 10,000.0 0.0 2015/16 RE-A 2016/17 RE-A 2017/18 RE-PA 01. Payroll 02. Travel Allow. 03. Goods & Services 04. Maintenance 06. Entertainment Source: Survey data. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 51 150. The cause-and-effect diagram below summarizes the factors which might contribute to overestimation or underspending of the payroll budget for subnational entities and hospitals. > > > F I G U R E 1 2 - Payroll Underspend - Contributing Factors Payroll budget underspend by many entities & hospitals Strict FRR virement rules around budget line 01 Payroll is managed by each entity or hospital, but the HR data is located in MoHS at Union level To ensure enough budget to pay employees, MoHS needs to estimate on the high side Transfer of 01 budget to the needed department or Paper based payroll recording and reporting means up to date hospital can be delayed because of lack of up to date data information on year to date spending is delayed on actual spending Departments are overly optimistic on number of positions that Union level MHMS Depts challenged at in short time frame at will be filled and when they will be filled beginning of FY to accurately estimate each entity or hospitals payroll needs High number of vacancies at all levels Up to date HR data about each entity’s and hospitals staffing is dispersed across numerous MoHS depts at Union level 151. Possible MoHS action. Until a longer-term whole-of- 3.3.5 Internal Controls of Non-Salary government payroll solution is feasible, MoHS could Expenditure (H14) continue to implement and accelerate two existing strategies: (a) creating a centralized HR unit in the minister’s office with its own dedicated resources, 3.3.5.1 Segregation of Duties and Financial and (b) implementing the Excel-based recording Management Skills and reporting system. When used together, these 152. Although the FRRs describe a clear segregation of two strategies could (a) allow more accurate payroll roles, in practice there is a limited understanding forecasts in the MoHS budget submission, in aggregate of and compliance with the principle at the MoHS terms and for each budget unit; (b) ensure more subnational level. For the GoM as a whole, PEFA realism in budgeting, that is, the number and timing of indicator PI-25 scores Myanmar at B+ for internal vacancies to be filled; and (c) provide the new MoHS control on non-salary expenditure, which includes a B centralized HR unit36 and each DPH/DMS with up-to- for PI-25.1 on Segregation of Duties, a B for PI-25.2 date, consolidated information on which subnational Effectiveness of Commitment Controls, and an A for budget units are underspending and which are PI-25.3 Compliance with Payment Rules. Regarding overspending. This would in turn allow quicker action the segregation of duties, although the FRRs do not to be taken by MoHS at the central level to transfer explain the principles of segregation of duties, they do excess payroll budgets to where they are most needed. define responsibilities for a controlling officer, a drawing officer, and a cashier/collector. However, in practice, in 36. This MoHS proposed HR unit will also help address the broader HR for Health issues discussed in H9 (section 3.3.1) and in H16 (section 3.4.1) and H17 (section 3.4.2). IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 52 some ministries, including in MoHS, there is limited need. The content would need to be significantly understanding of these roles and why they need to be complemented with optional modules to provide kept separate. Audits by some development partners the hands-on practical training needed by of vertical programs have shown that at subnational township and hospital-level clerical staff. The PFM level, the principle of segregation of duties is often not Academy would also need to deliver trainings at complied with. the subnational level and at a duration and interval that take into account the time constraints of the 153. The FRRs do not provide the detailed procedures, frontline staff. MOPFI have indicated they are steps, forms, and so on that are required by branch willing to work in partnership with MoHS to adapt clerks, upper division clerks, lower division clerks, the PFM Academy materials and modality to suit and others at the township and hospital finance sub national requirements. unit level. One of the foundations of internal controls is b. MoHS Union-level finance unit staff do not have the having trained staff who have access to and can be held time or sufficient training skills to provide regular accountable against clear financial procedures. The trainings at township and hospital level. FRRs do not provide the detailed procedures, forms, c. Township- and hospital-level clerical staff do not instructions, and so on that are needed by department have time to travel outside of their duty stations to or facility heads and accounting staff. other locations for long periods of training, as there are not sufficient human resources to backstop 154. Survey results discussed for H16 show that clerical during their absence. and accounting staff at the subnational department d. Training is more effectively delivered at the and hospital level do not have sufficient skills or workplace or possibly online when IT infrastructure training in the basics of government bookkeeping, and equipment are made available to the staff. accounting, and reporting. These skills will become e. The training should leave behind practical standard even more critical should the proposed HFS provide operating procedures, forms, and templates for a greater level of financial autonomy at provider level future reference, which can be used to train others and will also improve MoHS’ responsiveness for public or induct new staff or temporary workers. health emergencies such as COVID-19. Various f. Consider or pilot innovative approaches to support approaches to training of subnational government clerical staff. Funding from the proposed World finance staff have been tried before and some valuable Bank Additional Financing of the Health Sector lessons learned. Project could be used to pilot such innovations. These might include the following: 155. Possible MoHS and MOPFI actions. There is clearly a need for further basic bookkeeping, accounting (i) Consider or pilot supporting the continuing and financial reporting training at state, region, learning with an online repository of guidelines, township, and hospital finance unit level, supported forms, and so on. with written procedures. In the medium to long term, (ii) Provide a hotline telephone number for clerical the government/MOPFI could institutionalize the PFM staff to phone for assistance. capacity building for all government departments, (iii) Consider or pilot using online or smart phone- instead of leaving it up to individual line ministries to based learning tools. manage this responsibility on their own. In the short (iv) Expand the use of social networking groups on term, MoHS will still need to take continuing actions Viber, WhatsApp, or Facebook to allow clerical to strengthen the financial management capacity of staff to share information or documents and to its staff with support from development partners. The ask questions of more experienced peers in following lessons and principles should be considered other townships or hospitals or at Union level. in designing any training program for clerks and accounting staff at the subnational level: g. The training should include an overview of the GoM PFM systems and how the department/ a. The PFM Academy being established by MOPFI facility level accounting and reporting feeds into is an important initiative, but the course content the bigger picture of budget allocation, monitoring, is high level and generic and will not provide the and evaluation. It should also cover likely reforms support township and hospital level clerical staff under MPFMP phase 2. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 53 3.3.5.2 Effectiveness of Commitment Control is that their allocated budgets are ‘not aligned’ (that is, not enough in the budget line where it is needed, but 156. There is no formal commitment control mechanism with available budget in other budget lines) and that it in Myanmar, but the DLs for Account Units with was time-consuming to apply to the Union level to have MD bank accounts at the MEB effectively control the budget ‘transferred’. The nonalignment of budgets or prevent commitments beyond available budget. with needs and the delays in transfer can result in The amount of cash released each quarter by MOPFI underspends and negative impacts on service delivery, Treasury to each entity’s MD bank account at the MEB especially at the facility level where funding may not be matches the DL advised to each entity quarterly. It is available for local maintenance, equipment, and so on. true that this will only prevent payments beyond the DL and the aggregate budget for each entity and would not 160. Survey results - frequency and duration of budget prevent entities from entering into contracts or issuing transfer requests. Of the 20 DPH entities surveyed, purchase orders or verbal informal orders where they 10 indicated they had applied for transfers, but that it have insufficient cash or DL cover at the MEB. But it took between 1 week and 2 months to get approval. appears that in practice the level of expenditure arrears Of the 10 DPH entities which did not apply, 7 indicated is also minimal. they did not need to do a transfer, but 2 indicated they did not apply because it takes too long, and 1 157. The related issue of multiyear commitments for public indicated that it is often not approved so they did not investments or programs that span across several apply. Similarly, 5 of the 15 DMS entities indicated they years is discussed for Medium-Term Perspective in had applied for transfers, and it took between 4 weeks Expenditure Budgeting (H7) and for Public Investment and 3 months to get approval. Of the 10 DMS entities Management (H19). which did not apply, 8 indicated it was because they did not need a transfer, and 2 indicated they did not apply 3.3.5.3 In-Year Budget Adjustments because it takes too long. 158. In-year budget adjustments between budget lines 161. Survey results show that underspends are are difficult in practice for subnational entities or also common for goods and services (03) and hospitals to process, which can sometimes affect maintenance (04) (see Figure 9.). Figure 11 shows service delivery. FRRs 45 to 47 deal with in-year that the highest amounts of underspend are for goods budget adjustments37 and mainly restrict transfers and services. Any underspend in one subnational entity between capital and recurrent and into or out of payroll is a potential opportunity for those funds to be spent 01 (as well as entertainment 06). This allows each by another entity with better overall outputs in service ministry including MoHS a significant level of flexibility delivery. Similarly, any underspend in one budget line to manage its operating budgets internally, including is a potential missed opportunity for those funds to the authority to transfer funds between departments. be spent in another budget line, whether at 2-digit or In practice, MoHS at the Union level requires each 4-digit level. Figure 13 shows the average underspend entity or hospital at the subnational level to first seek by entity type (excluding hospitals) for all entities approval from the Director General for any ‘transfer’38 in the sample. The averages may also disguise the between 4-digit budget lines. scale of some of the underspends. For example, for maintenance (04), one regional health department had 159. Survey results suggest that ‘transferring’ budget an underspend of MMK 14.7 million. More up-to-date across budget lines is logistically challenging for financial reporting to the Union level departments may subnational entities and hospitals. In the survey, allow earlier action to be taken to transfer the funds many entities and hospitals indicated that a significant from these potential underspends to another entity or constraint on managing their budget for service delivery another budget line. 37. The PEFA indicator PI-21.4 scored this as an A, as small adjustments between budget lines are permitted, with large changes made only once per year using a supple- mentary budget. 38. The term ‘transfer’ is used here, but in practice there is no form for a transfer as such. There is a form to seek approval to return budget from one 4-digit budget line where the allocation is not needed and another form to request additional allocation for a 4-digit budget line where it is needed. For simplicity, the combined process is referred to as a ‘transfer’. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 54 > > > F I G U R E 1 3 - Average Underspend by Facility Type by Budget Line - Recurrent Only Average Underspend 2018/19 by Entity Type by Budget Line for Total Survey Population (MMK) 8,000.0 7,000.0 6,000.0 5,000.0 4,000.0 3,000.0 2,000.0 1,000.0 0.0 State/Region State/Region Township/District Township/District DPH (5) DMS (5) DPH (15) DMS (10) 01. Payroll 02. Travel Allow. 03. Goods & Services 04. Maintenance Source: Survey data. 162. Rigidities around in-year budget adjustments to the COVID-19 requirements at the hospital and contribute to the high rates of underspending and community level. to less health services being delivered and will also limit MoHS capacity to respond to public health 163. Possible MoHS action. In the short term, MoHS could emergencies like COVID-19 at the community level. accelerate the rollout of the Excel-based budget and Budget transfers should be simple and quick for health expenditure recording39 and reporting system and facilities to request and process. The lack of sufficient provide clearer guidelines to subnational entities on operating budget to finance travel of health staff and when, how, and to whom to submit transfer requests. transport of specimens or basic equipment, medicines, The Excel-based recording and reporting tool will and supplies for frontline health workers is difficult provide entities with more up-to-date information about to understand or justify, especially in the context of their spending against their budget. Moreover, it will also health emergencies, when high rates of underspend give Union-level departments consolidated information are common. Although the COVID-19 pandemic did earlier (that they can filter and analyze) which they not appear in Myanmar until after the survey was can use to decide which transfer requests should completed, there is anecdotal evidence from frontline be given priority. MoHS could provide subnational health workers that limited operating budget is entities with clear guidelines to accelerate approval of already hindering their capacity to effectively respond transfer requests. 39. It should be noted that MOPFI is preparing an IT Strategy at the Union level which, among other initiatives, is expected to introduce a Government Accounting System (GAS) to facilitate transaction recording using double entry bookkeeping. MoHS could upgrade to the GAS when it becomes available through the MOPFI rollout. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 55 > > > F I G U R E 1 4 - Operating Budget Underspend - Possible Causes Compressed timeframe to calculate sub national allocations after MOPFI notifies the approved budget entities and hospitals (mainly 02 and 03) Operating budget underspend by many in October can result in mis aligned budgets at entity or hospital elve Lack of clear guidelines for entity or hospital heads Lack of a MTBF and early ceilings to give MHMS departments on how, when and to whom to apply earlier certainty around funding levels Delayed consolidated monthly reporting on spending against It takes weeks or months for entity or hospital heads to get budget by budget line approval from Union level for transfer of budgets No delegation to entity or hospital heads to shift budgets Paper based recording & reporting at 4 digit level Lack of in-year flexibility to shift Budget between budget lines 164. Other MoHS action. Another option for MoHS is to funding to support a COVID-19 response could control recurrent (non-payroll) budgets at the 2-digit come from a Supplementary Budget process or level only, giving subnational entities freedom to move through the Contingency Fund. The problem with the funds around at the 4-digit level provided they seek Supplementary Budget is that it has lost its purpose approval for transfers between the 2-digit level. MOPFI of strategic and selective budget reallocations to policy has confirmed that FRRs give the director general of priorities and has become a systematic second annual each ministry the discretion to decide how to manage budget process with the same rigidities and challenges transfers, provided they do not break the restrictions of the initial budget process. It not only adds additional in the FRRs. This may significantly reduce the number transaction costs for MOPFI and finance departments of transfer requests that need to be referred to the of line ministries but further undermines the quality Union level for approval. The Excel reporting templates of the initial budget preparation and discipline. In can track and control spending against budget at the 2019/20 the COVID crisis provided an example of how 2-digit level but leave flexibility for spending to exceed the supplementary budget process could be used to budget at the 4-digit level. This will be consistent with address an unforeseen disaster, where MOPFI, as part the direction of health financing strategic reforms (see of its COVID Emergency Response Plan, used the H12 - section 3.3.3) to give providers more autonomy supplementary budget process to re-allocate funds from over use of their budgets. other sectors and to increase the MoHS budget by 10%. 3.3.5.4 Contingency Fund, Supplementary Grant 166. Although MOPFI has a Contingency Fund as part of the Processes Not Used Strategically annual approved budget, it is only for MMK 100 billion40 and is often underspent for a number of reasons. The 165. The current COVID-19 pandemic has highlighted Contingency Fund in practice is not treated as an that some existing budget tools that could emergency or disaster fund but is routinely preallocated have been used strategically to finance COVID across MOPFI, the states, regions, and line ministries response priorities have not been used. Additional to supplement their normal budgets. 40. It is understood that this MMK 100 billion is now divided so that MMK 50 billion is controlled by MOPFI, MMK 14 billion by the 14 states/regions, and the remaining MMK 36 billion divided among line ministries. This suggests it is being treated more as another form of annual budget allocation rather than as an emergency reserve or contin- gency in case of disasters. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 56 167. Recommended MOPFI reform action. In the face of allowance did restrict their ability to travel, especially the current COVID-19 crisis and in the short term, the for RHC staff. In the supporting narrative information, MOPFI budget department could engage with other of those that indicated the norms restrict their travel, ministries and budget-funded agencies to identify all 32 indicated the ‘>5 miles’ travel distance norm was savings that can be reappropriated to MoHS, which a constraint, and 53 percent indicated that the ‘> 12 in turn can reallocate these additional funds to high- hours’ travel time norm was a constraint. Many RHCs priority activities or townships/districts. In the medium and SCs indicated they use their own OOP funds to term, MOPFI could consider preparing new PFM laws finance trips where they do not qualify for payment. This to modernize and simplify the budgeting process and is detrimental to staff and service delivery, particularly discontinue the annual practice of supplementary affecting the poor in rural areas. Revising these norms budgets and at the same time increase the managerial is MOPFI’s responsibility and would have an impact on flexibility through a larger budget contingency reserve other sectors with service delivery responsibilities, for and simpler virement rules. Also, MOPFI could work example, MoE. with the government to ensure that the Contingency Fund is properly treated as an emergency or disaster 169. Inadequate operating budget and inflexible budget fund, and not preallocated across MOPFI, the state, norms will have an impact on Myanmar’s capacity regions, and line ministries as is current practice. to respond to COVID-19. After the survey results were compiled and early in the COVID-19 response phase, 3.3.5.5 Facility Outreach Activities Not Fully there has been anecdotal evidence of frontline health Financed - Budget Norms for Travel workers paying travel expenses out of their own pockets and also seeking community donations for sending 168. The survey results suggest lower-level facility staff specimens for testing in Yangon. This increases the incur significant levels of OOP expenses when urgency of addressing some of the inflexible rules doing outreach activities because of restrictive around budget management and reforming budget MOPFI rules or budget norms. Of the 60 facilities norms for travel. surveyed, 32 said that the budget norms for travel > > > F I G U R E 1 5 - Budget Norms Restricting Outreach Travel - Number by Type of Facility Surveyed 35 30 6 25 9 20 13 2 15 10 17 13 5 0 No Yes Hospital RHC Sub-Center Source: Survey data. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 57 170. Possible MOPFI action. MOPFI could carry out a The most obvious obstacle would be skills and cost. review of budget norms for travel, in consultation with Of all ministries, MoHS would have the most extensive MoHS and other service delivery ministries, to consider network of state-, regional-, and township-level entities, introducing more flexibility for entitlement to travel as well as hospitals. The development of a risk-based allowances to ensure the norms do not unduly restrict approach to internal audit that meets international service delivery in remote locations. The review might standards would require a large number of internal audit also consider the option of a reduced level of allowance staff. These staff would need to be suitably qualified and where durations or distances currently exceed the trained. In other countries with limited financial space MOPFI-mandated minimums. It is understood that and a limited number of skilled accountants or auditors, MOPFI are already aware of the need for greater the relevant Ministry of Finance has often taken the flexibility in budget norms for travel and intend to lead to establish a centralized whole-of-government review them. internal audit function, which then assesses risks across government as part of its process of developing 3.3.6 Internal Audit (H15) medium-term and annual internal audit plans. 171. The discussion around the equivalent internal audit PEFA indicator (PI-26, scored as D) at the 174. Whilst there is no internal audit function in national level makes it clear that there is effectively Myanmar, steps could be taken to improve no internal audit function in most ministries business processes and controls. While outsourcing including MoHS. As in many other ministries, MoHS the Internal Audit function would not be a cost effective has established an ‘internal audit team’. However, this solution, external resources could nonetheless be comprises MoHS officials who are still fully occupied in leveraged to complete a business process review of their substantive positions but who can be called upon existing procedures and controls. Such a review will to carry out internal compliance self-reviews. However, not only highlight processing deficiencies and control these internal audit teams have no permanent function weaknesses but is a necessary first step to engineer and no permanent staff or resources. They are not the new processes necessary to pave the way for independent of management (often led by a Director of an IPSAS/IFMIS reform. MOHS could also consider Administration or other department head). Also, these leveraging the existing cadre of internal reviewers to internal audit teams do not operate in compliance with pilot an internal audit manual being developed with international internal audit standards. IMF support. 172. The survey results confirm that very few MoHS subnational entities or facilities had ever been the 3.4 Management of Physical Inputs subject of an internal audit. Only 2 DPH entities, no DMS entities, and 4 township hospitals indicated they had ever been audited by MoHS internal auditors. On the other hand, all subnational DPH and DMS entities, 3.4.1 Staff Recruitment (H16) 175. The lack of a human resources for health (HRH) all hospitals, and many RHC and SCs indicated they database limits the level of analysis around staff are regularly audited by the Office of the Auditor recruitment, retention, and turnover. Each MoHS General (see H23). department currently has its own database on staffing levels (covering staff at all levels but not volunteer health 173. It would be difficult for MoHS to establish and workers), with no central41 HRH database in place. The resource its own internal audit function without a current policy of the MoHS is to establish a central HRH broader national strategy and financing for internal unit in the office of the minister, whose mandate will audit. There are significant obstacles to MoHS be to lead and coordinate comprehensively on HRH establishing a true internal audit function that would across all MoHS departments. cover all of its subnational departments and facilities. 41. The MoHS HRH Strategy 2018-2021 indicates that a centralized database (CHiPS) is under development. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 58 176. A recent study42 of HRH in Myanmar identified the total numbers of doctors, nurses, and public health staff shortages in almost all states and regions, supervisors. The training of medical professionals has including major cities, as well as wide disparities expanded, producing larger numbers of graduates. in urban and rural areas. Since the release of the A new medical university and nursing and midwifery World Health Report in 2006, Myanmar has been schools were established during that period to increase listed as one of 57 crisis countries facing critical the production of doctors, nurses, and midwives to health workforce shortages. The study suggests that meet demand. Although the production of health while health workforce numbers in all cadres are professional numbers has increased significantly and steadily increasing, this is not sufficient to keep up with sustainably, this is not enough to match the needed population growth. In 2016, 13 out of 15 states and increase in the recruitment of graduates to work in the regions were below the WHO recommended number public health sector due to limited government budget of one doctor per 1,000 population. Although the size allocation for new recruitment and lack of coordinated of the overall health workforce is increasing, including approach to workforce planning across government. the number of doctors (public and private sectors), the number of public sector doctors per 1,000 population 180. There are various disincentives to working in the has been gradually decreasing since 2006. public health sector. Fewer medical doctors apply for work in the public sector because of low rates of 177. In Myanmar there are significant challenges to remuneration, poor working environments and highly ensuring that the supply of health professionals demanding workloads. Doctors in the public sector can keep up with demand. These include the unequal have to be on call 24 hours for 5 to 15 consecutive distribution of health professionals, the increasing days. Those who work for station-level hospitals have demand for health professionals because of population to work 24 hours on call for emergencies every day. For growth and increasing life expectancy. There are nurses, a morning, afternoon, and nightshift system significant disadvantages to working in the public health is usually applied in public hospitals in Myanmar. sector including long working hours, heavy workloads, However, due to nurse shortages, they may also work difficult working environment, and low rates of pay and night duty for 6 to 12 consecutive days. living conditions. 181. In rural areas there are additional challenges and 178. There are wide disparities in the ratios of health disincentives for basic health professionals and workers to population catchments between urban volunteers that lead to high rates of turnover. and rural areas. The same study (Yu Mon Saw et In rural areas, the basic health care professionals al. 2019) compared the changing ratios from 2006 to are responsible for a wide range of health services 2015. Overall, the ratio increased for both urban and including public health interventions and disease rural areas. In FY2006/2007, the ratio was one medical control programs for their catchment areas. Also, they doctor per 2,581,000 population and that increased have to work in the context of geographic isolation, to one medical doctor per 1,477,000 population in transport challenges, and heavy workloads as they FY2015/2016—a positive development. On the other are the only health workforce available for multiple hand, there were significant differences between the programs. There are additional salary incentives for urban and rural ratios. In urban areas, there was one working in these remote locations, but there may be medical doctor per 633,000 population, while in rural inadequate staff housing. areas there was one medical doctor per 3,447,000 population in FY2015/2016. 182. These disincentives reflect in the high rates of vacant positions. Survey results show that a much 179. The same study showed that while there have higher percentage of sanctioned positions remain been positive developments for the overall health vacant for administrative entities than for health workforce (public and private), this has not facilities. Figure 16 shows that for the entities and translated into sufficient levels of public health facilities covered in the survey, over 60 percent of workforce recruitment. The overall health workforce positions are vacant for administrative entities and has increased over the decade 2006 to 2016, including almost 37 percent of positions are vacant at health 42. Mon Saw, Yu, Thet Mon Than, Yamin Thaung, Sandar Aung, Laura Wen-Shuan Shiao, Ei Mon Win, Moe Khaing, Nyein Aye Tun, Shigemi Iriyama, Hla Win, Kayako Sakisaka, Masamine Jimba, Nobuyuki Hamajima, Thu Nandar Saw. 2019. Myanmar’s Human Resources for Health: Current Situation and its Challenges. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 59 facility level. These high vacancy rates put additional rates of vacancy are for township and district hospitals pressure on the clinical, managerial, and clerical/ at 47.1 percent and 49.2 percent, respectively. The accounting staff who remain. second part of Figure 17 shows vacancy rates for DPH and DMS departments only by level or location, and 183. Figure 17 shows vacancy rates for different facility shows that the highest vacancy rates are for township/ types, including hospitals, and shows that the highest district DMSs, at almost 83 percent. > > > F I G U R E 1 6 - Sanctioned, Filled, and Vacant Positions in Entities and Facilities Surveyed (%) 120.0% 100.0% 100.0% 100.0% 80.0% 60.8% 63.3% 60.0% 39.2% 36.7% 40.0% 20.0% 0.0% Admin Entities % Facilities % Total number sanctioned staff level Total number appointed (filled) Total number vacant Source: Assessment survey results. > > > F I G U R E 1 7 - Vacancy Rates for Sanctioned Positions by Facility Type; DPH/DMS Vacancy Rates by Level 120.0% 100.0% 80.0% 60.0% 47.1% 49.2% 37.5% 41.9% 35.2% 40.0% 28.4% 13.4% 13.3% 20.0% 0.0% RHC % Sub RHC % Station Township District Region State Union Hosp % Hosp % Hosp % Hosp % Hosp % Hosp % Total Filled Vacant IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 60 120.0% 100.0% 82.9% 80.0% 68.0% 56.6% 60.2% 60.0% 40.0% 20.0% 0.0% State/Region State/Region Township/District Township/District DPHs % DMSs % DPHs % DMSs % Total Filled Vacant Source: Assessment survey results. 184. Poor remuneration and other incentives for working Staff Responsible for Financial Management in the health sector may also affect Myanmar’s COVID-19 response capacity. The demands on 185. There are also significant challenges to those health facility capacity and on the limited staff in those of the health workforce responsible for financial facilities have significantly increased with the rapid rise management. Here the vacancy rates are also high, in the number of COVID-19 confirmed cases, primary especially for the DPH and DMS entities at subnational contacts and suspected cases through a second wave. level since the split of the Department of Health into Where staff are already poorly remunerated, with poor these two departments. The key positions where DLs working conditions, these increased workloads and the are attached (that is, TMOs and Directors) are all filled, increased risk of infection of health workers themselves but vacancies exist at the lower-level branch clerk and may cause some health workers to leave the workforce similar positions, responsible for accounting, reporting, and increase vacancy levels. and reconciliation. Comparing the vacancy rates in Figure 18 with those in Figure 16, it can be seen that the vacancy rates are even higher for finance- related positions than the overall vacancy rates, at 68.5 percent for finance positions in DPH/DMS administrative departments/offices and 53.5 percent for finance positions in hospitals. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 61 > > > F I G U R E 1 8 - Vacancy Rates for Finance-Related Positions (Branch Clerks and so On) 120.0% 100.0% 80.0% 68.5% 60.0% 53.5% 40.0% 20.0% 0.0% DPH/DMSs % Facilities/Hospitals % Total Filled Vacant Source: Assessment survey results. 186. There have been ongoing difficulties in filling these 3.4.2 Staff Performance Management (H17) vacant positions. Even for the positions that are filled, 188. While there are formal job descriptions in place for the occupants do not have any specialized training in the MoHS paid workforce, a control weakness is financial management, although some have attended that these often do not match the range of functions short courses. The managers of the department (that that staff may be responsible for in practice. This of is, TMOs and Directors) all have medical qualifications course makes staff performance management difficult and often have a postgraduate degree in public health. and also weakens accountability as staff can no longer The branch clerks and similar staff may have degrees be held accountable for their performance if their actual in arts or science but no finance qualifications and roles do not match those on their job descriptions. The very little training unless they have participated in MoHS HRH Strategy 2018–2021 includes as one of its training delivered by a development partner as part of strategies the need to review workforce classifications project training. and job descriptions, especially for basic health professionals. The HRH Strategy rightly identifies a broader agenda of properly defining and delineating 187. For these lower-level clerical positions responsible the role of those lower-level facilities and determining for accounting and reporting, where vacancy rates the optimal staff mix at the facilities to expand access are high, the clerical staff have little relevant training. to a basic EPHS. On financing, the HRH Strategy also Around 30 percent of DPH clerks and 46 percent of notes the need to develop a package of remuneration DMS clerks have received some kind of in-service and allowances to improve staff retention rates in rural training from the Central Institute for Civil Service. facilities. However, these HR strategies do not seem to Around 80 percent of DPH clerks and 73 percent of be linked with any medium-term HFS. DMS clerks have received training from a development partner (World Bank, United Nations Office for Project 189. Weak supervision and no formal support Services [UNOPS], GAVI, and so on). For hospital mechanisms have been identified in the HRH clerks responsible for financial management, around Strategy as contributing factors to low rates of 40 percent have received in-service training from the retention for basic health professionals. Although Central Institute for Civil Service, and 67 percent have there are pockets of good practice in supervision of received training from a development partner. basic health professionals, supervision remains weak IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 62 at all levels of health care, including at volunteer health standard bidding documents, contracts, and so on. A worker level. There are supervisory checklists in place draft Procurement Law is currently before Parliament, to assist those responsible for support and supervision and draft procurement rules are also in place to support of other health workers, but these are not well linked the Law when it is ratified by Parliament. Implementation with program objectives. plans are also well advanced and these will cover the development of manuals, capacity building, 190. There is little information available on levels professionalization of a procurement cadre across of discipline and absenteeism in the Myanmar government, e-procurement tools, and importantly the health sector. Anecdotal evidence suggests that the use of framework contracts for common use items such Myanmar bureaucracy is relatively disciplined and as medicines. functional. Levels of compliance with or observance of regulations and procedures seem to be high, even 193. However, experience in other jurisdictions is that even though the systems and procedures are slow, paper with a strong regulatory framework in place it can take based, and inefficient.43 Administrative issues such as many years for effective institutional arrangements absenteeism that are common in service delivery areas to be put in place and for procurement and contracts of health and education in many developing countries management capacity to be developed. Various are not significant in Myanmar. The poor rates of external assessments of Myanmar’s procurement remuneration, working conditions, and accommodation systems have identified a range of weaknesses that referred to above seem to result in staff voting with their are rated as high risk. feet, that is, giving low preference to working in basic health services compared to other jobs in the private 194. Procurement is highly decentralized within MoHS. sector, NGOs, and so on or not staying long in a basic MoHS staff at state or region health departments or health role or position. hospital level who are engaged in procurement have limited qualifications or expertise in procurement. 3.4.3 Procurement Management (H18) Those involved in procurement of pharmaceuticals, 191. Myanmar has no central agency responsible for medical equipment, and consumables are normally procurement policy, standards, monitoring, and medical officers who perform multiple roles within their evaluation. The 2020 PEFA scored procurement departments or hospitals. Despite recommendations in systems overall at D+, and procurement monitoring earlier assessments44 of supply chain management in at D. There is no central database for recording, MoHS for establishment of a central procurement unit at monitoring, and reporting of government procurement the Union level and the establishment of a professional to help achieve value for money and to promote financial procurement function, procurement remains largely integrity. Procurement is highly decentralized across decentralized and in the hands of medical specialists government, including in MoHS. Data compiled by rather than procurement specialists. Centralizing MOPFI in June 2019 through the Modernization of PFM procurement would also provide opportunities for Project show that 90 percent of MoHS contracts being framework or panel contracts with pharmaceutical or implemented were advertised through a competitive medical equipment suppliers—arrangements which tendering process. Similarly, MoHS published details of would have improved Myanmar’s readiness and contracts awarded in 85 percent of cases for contracts responsiveness to the current COVID-19 emergency. over MMK 100 million. 195. For MoHS’ procurement of pharmaceuticals, 192. MoHS public procurement functions within a value for money and budget cost efficiency would limited national regulatory framework, which is improve if procurement was centralized. Under currently in the process of reform. There is currently current arrangements for DMS, hospitals with 200 or no Procurement Law in Myanmar, apart from a 2017 more beds have their own pharmaceutical budget and Directive issued by the President’s Office. As of early are in charge of their own procurement. For smaller 2020, the World Bank is supporting MOPFI to draft a hospitals, pharmaceutical procurements are carried new regulatory framework for procurement, including out at the state/region level by state/region health 43. World Bank. 2019. Subnational Public Expenditure Review - Fostering Decentralisation in Myanmar. 44. Myanmar Health Supply Chain - Procurement Options Analysis Report, PEPFAR, PFSCM, May 2014. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 63 department. For DPH, procurement of pharmaceuticals trained in procurement. It is important that this initiative for public health facilities (for example, Sub-RHC, of MoHS and the PSD Division is properly supported RHC, maternal and child health clinics, urban health and later scaled up. Centralized procurement brings its centers) are done both at the Union department level own challenges in warehousing, distribution, inventory and state/region level. These arrangements mean that control, and so on, for which there are various software the volumes and total values are small. Small-value and private sector solutions available. MoHS could procurements are made from local intermediary firms consult with its international partners to secure medium- who in turn import in higher volumes from international term technical assistance to help build this capacity in suppliers. This results in higher prices than if MoHS were the PSD Division and MoHS. to procure centrally and also leaves open the possibility of rent-seeking behavior from these local drug supply 197. Survey results show that stockouts are more companies in their dealings with individual hospitals. frequent than would be expected with decentralized small-value procurement. For administrative 196. For FY 2019-20, MoHS has initially reserved 40 departments in the sample surveyed, only 1 district percent of the total medicines budget to pilot health department and 9 township health departments centralized procurement. However with COVID experienced stockouts in the past six months. For pandemic emergency requiring fast track procurement facilities, 40 out of the 60 facilities surveyed experienced of essential medical equipment and supplies under a stockouts in the past 6 months. Table 2 provides a very competitive and constrained global supply chain breakdown of the percentage and type of facilities that context, MoHS had largely utilized direct contracting experienced stockouts. and use of UN agencies at the central level for COVID response under FY 2019-20. MoHS DMS has 198. Table 3 provides a more detailed breakdown the established a Procurement, Supply, and Distribution percentage and type of hospitals that experienced (PSD) Division which is responsible for managing stockouts. In most cases the facility asked the patients the centralized medicine budget. This is a welcome to buy the medicines themselves while the facility waited initiative. However, it is understood that the PSD for a fresh supply, which could take from 1 to 6 months. Division has been largely staffed with officials from The survey showed that expired medicines were a rare medical backgrounds with little direct qualifications or occurrence. Only 2 region health departments reported expertise in procurement, and they will now need to be cases of expired drugs, as did 2 RHCs and SCs. > > > T A B L E 2 - Stockouts - Percentage of Facilities Experiencing Stockouts in Previous 6 Months Number Reporting Percentage Experienced Number of Respondents Stockouts Stockouts SCs 15 9 60 RHCs 15 7 46.7 Hospitals 30 24 80.0 Total 60 40 67 IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 64 > > > T A B L E 3 - Stockouts - Percentage of Hospitals by Type Experiencing Stockouts in Previous 6 Months Number Reporting Percentage Experienced Number of Respondents Stockouts Stockouts Union Hospital 1 1 100 State/Region Hospital 5 4 80 District/Township Hospital 10 8 80 Station Hospital 14 11 78.6 Total 30 24 80 199. The MoHS response to the COVID-19 pandemic the procurement capacity of the new PSD Division. It will be made more difficult because of this is also important that MoHS participates in the MOPFI- fragmentation in procurement and weaknesses led procurement reform plan to take early advantage in procurement capacity in MoHS. In common with of opportunities for capacity building, framework other partners, the World Bank has moved quickly contracts, e-procurement, and so on. to streamline and fast-track World Bank-financed procurements for COVID related health goods and 3.4.4 Public Investment Management (H19) equipment, for example, allowing more frequent use 201. A recognized constraint across the GoM is the level of of direct contracting, providing streamlined competitive underspending of the capital budget for construction, procedures, providing hands-on support for borrowers, that is, for public investment projects. Although and enabling or expediting procurement through the PEFA assessment for indicator PI-2.1 looks at UN agencies. For other World Bank funded project expenditure outturn compared to budget, it provides procurement not directly related to COVID activities, a data for the capital budget as a whole but not specifically detailed guidance (Annex 11) has been shared with the for construction. Table 4 uses the PEFA data (PEFA implementing agencies to enable business continuity. Annex 5) for all agencies to show original capital However, for government-financed procurements, the budget, adjusted or revised budgets, and then actual weaknesses already discussed will limit MoHS’ capacity expenditures. It also shows actual as a percentage of to respond quickly, even though exemption has been original and revised. The common pattern is that the temporarily granted from the Directive No. 1/2017 for original estimates are too optimistic and at midyear procurement to help with the COVID response. these are revised downward based on more up-to-date information. However, these revised estimates are also 200. Possible MoHS action. In the short to medium term, too optimistic. There is more than a 10 percent rate MoHS could continue with its current strategy of of underspend when compared to the original budget centralizing procurement of medicines and medical and more than a 6 percent rate of underspend when equipment and at the same time work with development compared with the revised budget. partners such as the World Bank and UNOPS to build IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 65 > > > T A B L E 4 - Actual Capital Expenditure as Percentage of Original and Adjusted Budgets Original Budget Adjusted Budget Actual Spending Actual as % of Actual as % of Year (MMK, millions) (MMK, millions) (MMK, millions) Original Adjusted 2015/16 5,059,397 4,825,581 4,653,007 92.0 96.4 2016/17 4,453,656 4,162,990 3,947,300 88.6 94.8 2017/18 4,487,776 4,399,467 3,978,324 88.6 90.4 Average % 89.7 93.9 202. Underspending of the capital budget is also a problem spending fell 27 percent (or MMK 68 billion) short of for MoHS specifically. The 2018 World Bank Myanmar the budgeted amount. While the World Bank report Economic Monitor discussed the challenge of budget suggested that better quality data and further analysis execution rates for the health and education sectors. For were required to understand the reasons for these MoHS, spending as a percentage of budget (recurrent underspends, it also noted that “limited capacity and and capital) declined over 2015/16 to 2017/18, with a time to do proper multiyear planning; and lack of particularly poor outturn (69%) in 2017/18, as shown integrated information system for capital planning for in Figure 19. In 2017/18, for construction alone, actual public health facilities” may be contributing factors. > > > F I G U R E 1 9 - MoHS - Rate of Budget Execution (Recurrent + Capital) Ministry of Health and Sports Spending as % of Budgeted Amount 120% 100% 80% 60% 40% 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Capital Current Grand Total Source: Myanmar Economic Monitor, World Bank, 2018. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 66 203. Survey results on reasons for construction budget than anticipated if key documents or approvals and underspends confirm that health departments are so on are missing. Also, these committees include constrained by institutional arrangements that members from State and Region government who require a single-year approach to budgeting for have their own infrastructure priorities, as do Members multiyear projects. One DPH entity underspent its of Parliament at Union level. construction budget in 2018/19 by MMK 2,141 million because of extended procurement processes. A 206. The MoHS annual capital budget for health second DPH entity (underspend by MMK 235 million) infrastructure includes projects that are not ready pointed to a land dispute which in turn delayed the for implementation. There is an assumption in tender process. Similarly, one DMS entity underspent the timelines above that for any capital project with its construction budget by MMK 1,140 million because an approved budget, all preliminary work has been of long procurement processes. For facilities, one completed, that is, feasibility, specifications, designs, township hospital underspent its construction budget bills of quantities, landscaping, soil testing, land disputes by MMK 100 million because the relevant DL was resolved, and so on. There is also an assumption that received too late in the financial year to complete the the monsoon season will not interfere too much with procurement in time. Another hospital underspent its actual construction and that there is a sufficient number construction budget by MMK 6,100 million because soil of bidders. As in many other countries with single year tests and structural designs could not be completed in budget cycles, the relevant line ministries are not time to complete the procurement and construct the willing to carry out all of the necessary preliminary building by the end of the financial year. work on design, specification, and so on until they are guaranteed budget finance. In a single year budget 204. It is clear that departments and facilities are cycle (that is, with no MTBF), that guarantee can only unrealistically trying to squeeze budgets for come after Parliament has approved the budget and construction projects into a single financial year. MOPFI has notified the line ministry of its allocation for Realistic project planning, costing, and cash flow construction for that year. Line ministries request the schedules for the underspent projects mentioned entire budget for a construction project for a single year above should clearly show that the budget should be because there are no guarantees that Cabinet and split over 2, 3, or more years. In addition, government Parliament will not change their priorities in future years. regulations (including the 2017 Procurement Directive) and other institutional arrangements and controls that 207. To improve rates of budget execution for the surround tender processes will often result in even capital construction budget, MOPFI will need to small construction projects taking more than one lead medium-term budgeting and other reforms at year to complete, even before taking into account the the national level, but MoHS can also take actions impact of the monsoon season. Follow-up discussion within its control. It is understood that as part of with MoHS planning officials and with MOPFI planning development of the next phase of the MPFMP with officials revealed a complex and time-consuming World Bank support, MOPFI is considering a reform that series of steps and arrangements that work against would involve implementation of a Cabinet endorsed completing most projects within 12 months. The table Fiscal Budget and Policy Statement (FBPS), an MTBF, in Annex 10 summarizes the steps that are required for and annual ceilings based on the MTBF. This would the simple construction of basic health facilities for a bring much greater political and financing certainty to building of 3 to 4 floors. medium-term funding levels for construction projects and encourage line ministries to budget for construction 205. Construction projects could be planned for projects over the medium term and not try to squeeze execution over a multiyear budget cycle. These all steps and costs into a single year. MOPFI PAPRD timelines may be feasible in an ideal world but in the could also take steps to streamline some of these tender real world they are too optimistic for a single budget committee processes which involve intergovernmental year. In practice, and as suggested by the survey arrangements with state/region-level cabinets and results and other discussions, there will almost always ministers. be reasons why any one of the steps shown in Annex 10 could be delayed or extended. Any one of these 208. Possible MoHS action 1. MoHS itself can still budget committee processes could be delayed or take longer for and implement construction projects that are IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 67 sequenced over the medium term around a prioritized monitoring in cooperation with MOPFI PAPRD and the MoHS medium-term infrastructure plan. MoHS has geo-referenced project monitoring system. experimented with a medium-term infrastructure plan in the past but did not prioritize its budget allocations 209. Possible MoHS action 2. As existing MoHS projects to ensure implementation. A well-designed health at state/region/township level are progressed or sector medium term public investment plan (PIP) completed, MoHS departments can then commence would function within the less than desirable single preliminary planning, specifications, and so on for year MOPFI budget cycle and ceiling by maintaining a those projects which are next in priority on the internal pipeline of projects which have already been prioritized MoHS PIP, with assistance from MoHS at the Union and approved by all relevant state/region and township level. MoHS at the Union level could improve project health departments. Once they are on board and prioritization and readiness in cooperation with MOPFI committed to the medium-term health PIP, the state/ and ensure that as many preliminary activities as region and township/district health departments would possible are completed before projects from the not waste their time preparing construction budget MoHS PIP are included in the MoHS annual budget proposals each year that are not prioritized in the submission to MOPFI. medium-term PIP. MoHS also could strengthen project > > > F I G U R E 2 0 - Capital Construction Budget Underspend - Possible Causes State/Region level committees are re-established each year, but not until November MoHS Depts wait until Oct to decide which level should manage construction, i.e. State/Region or Union There is no MOPFI multi year budget framework to Construction budget is underspent each year S/R Chief Minister assigns Social Minister to set up new support budgeting for multi year projects committee each year, even though not dependent on budget Without a Cabinet endorsed MTBF including capital, Three different committees involved: there is a risk that Cabinet may annually override such 1. To set budget for the tender MoHS infrastructure plan 2. To receive and evaluate bids 3. To monitor quality of work and deliveries, acceptance MoHS does not have its own MT infrastructure priority plan Budget year is not well aligned with No use of pre-qualified to identify MOPFI rules do not currently allow monsoon season under-capitalised or non compliant separate tendering of specification, construction companies feasibility, design, costing & construction states No standard bidding documents or standard contract documents Construction projects are included increases timeframe for stage of each tender and contract in MoHS budget proposal to MOPFI even though not properly costed or designed, and bidding documents No requirement for use of retention monies, bank guarantees, not prepared etc security deposits No national procurement law or regulations IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 68 3.4.5 Physical Assets Management (H20) 213. MoHS is currently carrying out a Health Facilities 210. Line ministries generally do not maintain complete Readiness Assessment but a report is not yet or quality asset registers. The PEFA assessment finalized. It is expected that this report will provide for indicator PI-22.2 (non-financial assets monitoring) much more comprehensive information about the was scored as D and reported that line ministries have volume and value of equipment and their current asset registers of varying quality but which usually only working condition. contain lists of office furniture, vehicles, and machinery. Some of these registers include other information 214. Medical and other equipment that is approved about asset location, age, and usage. There are no for ‘write-off’ is generally retained at the relevant standard approaches applied to cost information or facility and not formally disposed of. The relevant asset valuation. PEFA assessment indicator PI-22.3 (transparency of asset disposal) was scored as D. No information is 211. Donor-funded audits confirm that only some MoHS published or made available to Parliament on assets entities and facilities maintain assets registers disposals or value of assets disposals. The responses properly. Recent audits by some health development to survey questions on assets disposal show that 1 partners45 found that while some programs keep district public health department (PHD), 1 regional registers of valuable assets such as vehicles, medical PHD, 3 township PHDs, 1 district DMS, 2 regional equipment, and ICT equipment, other programs did not. DMSs, and 1 township DMS did seek approval to write This meant that the donors were unable to verify many off various pieces of medical equipment. Similarly, 22 of the assets purchased using their funds. Even where facilities sought approval to write off various pieces of assets registers were maintained, critical information medical equipment. They received responses within a such as serial numbers, warranty information, vehicle few weeks, but there was no guidance on what to do license numbers and working condition of the assets with the obsolete or unusable equipment other than to was not recorded. These registers are paper based, retain it at the department or facility. maintained separately by each MoHS department or hospital, and are not consolidated. A similar situation 215. Possible MoHS action. In the absence of a national exists with regard to annual stocktaking, that is, only level assets register integrated within a MOPFI some programs carried out an annual verification of Financial Management Information Systems (FMIS) assets in the register. There are no internal MoHS and to comply with the FRR requirements, MoHS could guidelines or instructions on assets management. It is implement its own digital assets registry for defined a requirement of Chapter XIX of the FRRs 2017 that all assets and values. Establishing and maintaining departmental heads could maintain an assets registers, parallel assets registers without the benefit of an based on guidelines issued by MOPFI. However, integrated FMIS assets module, supporting chart of it is not known whether MOPFI has ever issued accounts codes for assets and MOPFI guidelines will such guidelines. be technically challenging for MoHS departments and programs. However, it should be possible for MoHS at 212. Weak assets management also creates a risk the Union level to implement a relatively simple digital that valuable infrastructure assets or medical assets register, with web-enabled access, that focuses equipment is not properly maintained. The audits on infrastructure and other high-value assets. MoHS- also found that even where assets registers were specific guidelines would define the type and value maintained, they did not record details of physical of assets that need to be recorded, linked to specific assets verification, working condition of the assets, account codes in the chart of accounts. The database maintenance plans, or budgets. Without regular could easily incorporate geospatial information, climate inspection of assets and without regular maintenance, risk exposure, custodianship information, stocktaking these assets will deteriorate faster or cease to function, verification details, and maintenance status. with adverse impacts on service delivery at facility level. It also increases fiduciary risks around valuable mobile assets such as vehicles and computers. 45. See for example the Additional Financing EHSAP Project Paper, World Bank, January 2020. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 69 3.5 Accounting and Reporting month on recording, DMSs spend an average of 7.7 person-days, and hospitals an average of 8.2 person- days. This does not include the time taken to prepare financial reports (see H22 - section 3.5.2). For hospitals, 3.5.1 Accounting, Recording, and this is 8.2 days from a senior medical officer’s or senior Reconciliation (H21) nurse’s time which is not being devoted to clinical work. 216. Although largely manual and paper based, It should be kept in mind that modern FMISs almost fully the accounting, recording, and reconciliation automate the recording and reconciliation functions. functions are prioritized by MoHS departments and facilities with MD bank accounts. It is clear 219. Recording or accounting for donors further from the survey results that the combination of limited increases these workloads by an average of financial management skills or training, vacant clerical 4.7 to 7.7 person-days per month. Donor-funded positions and paper-based systems sometimes means expenditures are recorded separately, albeit on the that recording of payments and reconciliation of bank same paper-based and/or Excel-based formats. The accounts can be delayed when the clerical staff have survey results show the same type of staff are also too many other administrative demands placed on used to maintain records for donor-funded spending, them. This can also delay financial reporting (see H22 - including nurses and doctors in hospitals. DPH entities section 3.5.2). It is clear that heads of departments and spend an average of 4.7 person-days accounting for facilities try to give priority to keeping their accounting donor funds, DMSs spend an average of 7.7 person- and reporting up to date, and this often requires that days, and hospitals an average of 5.2 person-days. clerical staff work long hours to achieve this. 220. Impact of the administrative creation of the two 217. All departments and facilities with DLs continue departments, that is, DPH and DMS. The survey to maintain paper-based government-mandated questionnaire asked department heads at the recording systems, although a growing number subnational level to estimate how many additional are also using Excel. All 20 of the DPH entities person-days were required to maintain two sets of surveyed, all 15 of the DMS entities, and all hospitals accounting records rather than one set. Both DPH use government-mandated paper-based recording and DMS entity heads estimated that this adds systems. Six of these DPH entities (30 percent), 5 DMS between 2 and 2.8 person-days per month. These entities (33 percent), and 5 hospitals (15 percent) also amounts might be perceived as not being as high as use Excel. However, some of those who use Excel46 expected. However, the narrative responses of DPH complained that it is time-consuming to maintain two and DMS entities in the survey showed they had other sets of accounting records. For both DPH and DMS, concerns regarding the impact of the division into the recording is done by clerical staff with various job two departments. titles, such as branch clerks, upper division clerks, lower division clerks, deputy staff officers, administrative • It affects the unity of staff in the two departments officers, and even temporary hire staff. This reflects and takes away flexibility of staff duties, making it the high vacancy rates in many departments and that difficult for department heads to assign tasks; it also staff need to be adaptable in terms of the demands makes it difficult to ask staff mapped to different made on them. For hospitals, 15 of the 30 hospitals department to help out in emergency situations. used clerical staff, but the other 15 used medical staff • It creates a need for more office space and to maintain accounting records, that is, either senior resources. medical officers or senior nurses. • There are not enough skilled people to fill both sets of clerical positions, so it creates more vacancies. 218. Time spent on recording for government. DPH • It reduces the level of communication between entities spend an average of 7.5 person-days per clinical and public health staff. 46. In some countries that have not transitioned to a full FMIS with built-in controls and audit trails, Excel is not acceptable for audit purposes because it is too easily manip- ulated and does not leave an audit trail as paper-based systems do. The attraction of using Excel is that from a management reporting perspective (as distinct from a fiduciary or an audited financial statement perspective), it provides more flexibility as users can include additional fields not in the chart of accounts, it produces financial management reports more quickly, and the databases or reports can be consolidated much faster than paper-based records can. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 70 221. The JTF believes that the level of vacancies in significant weakness in internal control. However, these clerical or administrative positions can be managed factors also contribute to delayed and poor-quality if department and hospital heads manage their budget execution reporting which does not give MoHS human resources better. This issue was discussed planners and decision-makers at the Union level the further with the JTF in February 2020. JTF members information they need to take timely corrective actions from Union-level MoHS believe the issue is not so to prevent underspends or to reallocate budgets to high much the split of the two departments but the limited priorities. It also does not give them the information financial management skills of the branch clerks, they need to prepare budget plans for future years. upper/lower division clerks, nurses, and so on and that they have too many other administrative and clinical 224. Possible MoHS action. There is a need for a responsibilities. Some TMOs and other department national set of SOPs and forms for PFM that address heads manage this challenge better than others, for the planning, budgeting, execution, recording, and example, make targeted use of daily paid contract staff reporting functions and which are consistent with the to take some pressure off the branch clerks and so on. FRRs. Such a set of standard operating procedures TMOs can also use existing job descriptions, which are being prepared by MoE and could be adapted to are relatively flexible, to focus on the accounting and MoHS to support service delivery. reporting roles and protect these staff from demands on their time which are not related to accounting 225. Survey results confirm audit findings that or reporting. consolidated financial reporting in MoHS is slow and not reliable. Despite the best efforts of overworked 222. Possible MoHS action. To better manage the impact clerical staff and department or facility heads at the of the level of vacancies for clerical and administrative subnational level to prepare monthly paper-based staff, combined with the impact of low financial financial reports, the information arrives at MoHS management capacity, a possible action here is for Union level too late to be useful. Current paper-based MoHS departments at the Union level to provide a set systems do not show spending or funds remaining as a of guidelines or options for TMOs and other department percentage of budget by budget line. heads on how to deal with the level of vacancies and low skill levels, providing a set of options drawn from 226. MoHS is currently piloting Excel-based budget better practice across DPHs, DMSs, or hospitals. These and expenditure recording and reporting tools options should include the option of hiring temporary across all subnational departments and hospitals contract staff with relevant skills in math, accounting, to address these weaknesses. The World Bank and so on who are better qualified to address the skill has been supporting both the education and health gaps. These guidelines could also set out steps being ministries to develop Excel-based tools for use at taken to increase financial management skills and the subnational level, which greatly reduces the time training (see H14 - section 3.3.5 and H22 - section 3.5.2). required to prepare monthly financial reports, and then to consolidate those reports. In so doing, the 3.5.2 Financial Reporting and Budget Excel-based reporting preserves information about the location of each department or hospital, thereby Execution Reports (H22) significantly increasing the range of financial reports 223. Paper-based recording/reporting systems, available to MoHS at all levels and permitting further non-standardized or documented operating analysis using fields which are not part of the current procedures, and low-skilled clerical staff combine chart of accounts.47 Importantly, the Excel-based to leave MoHS with delayed and poor quality cashbooks and reports maintain the same logic and financial reports to monitor budget execution. The appearance as the paper-based formats already in lack of standard operating procedures for financial use, which facilitates learning as the training on these management and department/facility heads and templates is rolled out nationwide. clerical staff with low financial management skills and little training have already been discussed in H14 as 47. A new unified chart of accounts is being developed by MOPFI with World Bank support, but it is not clear when it will be implemented for budget preparation, recording, and reporting purposes. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 71 227. Possible MoHS action. For recording, analysis and ministry and subnationally over the medium term, the internal management reporting purposes, MoHS could GAS will hopeful provided a more integrated approach continue with the development and rollout of its Excel to the recording and reporting needs of subnational based recording and reporting tool. departments and hospitals. 228. MOPFI is preparing an IT Strategy at the Union level 229. Joint MoHS and MOPFI action. The assessment which, among other initiatives, is expected to introduce recommends the pilot testing and rollout of the GAS a Government Accounting System (GAS) to facilitate and the adoption of a new chart of accounts led transaction recording using double entry bookkeeping. by MOPFI. As and when the GAS modules are implemented by the > > > F I G U R E 2 1 - Contributors to Delayed and Limited Value Budget Execution Reports Delayed & poor quality budget execution reports limits MoHS effectiveness Consolidation of reports from states, regions, for in-year resource allocation and annual budget preparation townships etc is time consuming Vacant clerical positions Time spent on donor accounting and reporting Paper based reporting Chart of accounts limitations with no geographic or program fields Paper based recording No township or facility level training available No standard operating procedures other than FRRs Vacant clerical positions Current training options are not suitable for desk based on-the- job training needs of overworked clerical staff Generic civil service training of limited value at sub national department level Clerical & medical staff responsible for recording and reporting 3.6 Oversight and Transparency 3.6.1 External Audit (H23) with a high percentage of transactions checked and 230. The PEFA assessment for this indicator (PI-30) verified. OAGM is developing but does not yet have the was scored as D+, with the low score attributable capacity to carry out performance-based audits. OAGM to delays in submission of audit reports to scored highly on follow-up of audit findings in that it is Parliament. The time taken to submit reports ranged a requirement of all line ministries to respond to OAGM from five to nine months for the three financial years findings within 30 days of receiving the report, and assessed. The current approach to auditing of line OAGM provided evidence this was complied with. ministries is not risk based but focuses on compliance IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 72 231. Donor-funded programs in the health sector are 234. However, MoHS publishes very little information also audited by OAGM. Some development partners, on its budget or spending either nationally or for including World Bank, entrust the audit of their programs departments or facilities at the subnational level. to OAGM. There have been delays to the completion The MoHS website includes a copy of the NHA for of audits for some donor-funded programs, but these 2016-2018 but no other information on recent budget delays were attributable to delays in MoHS notifying allocations or spending. The International Budget OAGM of the program requirements for audits. Partnership48 (IBP) score on its Open Budget Index for Myanmar in 2017 is 7 out of a possible 100, which is 232. Survey results confirm that all surveyed slightly higher than its 2015 score. However, Myanmar departments and hospitals are audited by OAGM has not made progress in the following areas: regularly. All 20 DPH entities indicated that they had been audited by OAGM within the previous six months, • The executive’s budget proposal is not available to and 8 DPH entities indicated that they had also been the public in a timely manner audited in respect of a donor-funded program in the past • Not making the in-year reports available to the six months. Similarly, all 15 DMS entities were audited public in a timely manner by OAGM in the past six months, and 5 of these were • Not making the pre-budget statement, the mid-year also audited in respect of a donor-funded program. In review, and the audit report available to the public. total, 19 out of the 60 facilities surveyed were audited by the OAGM, and of that 19, 13 were hospitals at 235. On the indicator ‘public participation in the budget various levels. These are compliance audits and do not process’, IBP did not score Myanmar because it audit performance or value for money in procurement. provides the public with no opportunities to engage in budget processes. 3.6.2 Public Access to Health Finance 236. Health financing reforms may provide scope for Information (H24) greater community participation in local budgeting 233. MoHS publishes extensive information about its and for community audits of services and budgets. policies, strategic plans, and clinical guidelines. For The strategic purchasing and health financing reform example, the MoHS website currently makes the directions discussed under H12 (section 3.3.3) may following information available: provide facilities with greater levels of discretion over local budget allocations to best address local health • The NHP 2017–2021 needs. This would also encourage a greater level of • The NHP monitoring and evaluation framework community participation in the local budget preparation (but not the NHP financing plan) and in monitoring budget execution. Community-based • Annual Operational Plan 2018–2019 (but not yet audits or evaluations of service delivery would also for the current year 2019–2020) be feasible should the health financing forms result in • A ‘Three Years Achievement Report’ dated May 2019 greater autonomy for township level and other facilities. • Copies of 25 different laws related to health • Job descriptions for basic health professionals 237. Possible MoHS action. When MoHS progresses • Various national health policies, including up-to- further with implementation and rollout of an electronic date information on COVID-19 budget preparation tool and with its Excel-based budget • Public Health Statistics 2014–2016, and various execution reporting tool, each MoHS subnational other health statistics reports department or hospital could publish a summary of its • Myanmar Demographic and Health Survey 2015-16 annual spending levels as well as its annual budget. • Many clinical guidelines and standard operating procedures. 48. The International Budget Partnership (IBP) is an independent nonprofit corporation that was formed in 1997 to promote transparent and inclusive government budget processes as a means to improve governance and service delivery in the developing world. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 73 >>> 4. Summary of Key Bottlenecks and Recommendations 238. Section 3 above discussed bottlenecks for all 24 PFM 239. Summary tables on these most significant bottlenecks in health functions. For some PFM in health functions and their impact on service delivery are provided there are multiple constraints or bottlenecks, some in Annex 1 below. The summary description of each of which are mutually reinforcing. Consistent with bottleneck’s impact on service delivery is preceded by the FinHealth approach, recommended actions have a table with the bottleneck heading, which FinHealth been developed for only the most significant of the PFM Functions are affected, whether it affects bottlenecks, with a focus on actions which MoHS has COVID-19 or disaster readiness, and whether it affects the capacity to implement in the immediate to medium only MoHS or other sectors as well. For each of these term, and on actions where MoHS can leverage most significant bottlenecks there are recommended national level reforms led by MOPFI. actions. Each recommended action is preceded by a table summarizing: the recommendation heading; the timeframe49 for the action; whether it is a new or existing action; which other bottlenecks (if any) this action is dependent50 on; and which ministry is responsible for leading implementation. 49. Timeframes used in this table are: Immediate - within 6 months; Short term - less than 1 year; Medium term - less than 3 years; Long term - 3 years or more. 50. Where the action is not dependent on any earlier actions and can be immediately implemented by MoHS, the action is also labelled as a ‘quick win’. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 74 >>> ANNEXES >>> Annex 1: Summary of PFM in Health Bottlenecks and Recommendations BN1 - Annual budget preparation by subnational units of MoHS is not well linked to NHP and is not guided by early advice of ceilings with a medium-term budget framework. FinHealth PFM Function H1 - Sector planning and coordination H4 - Annual budget preparation process H7 - Medium-term perspective in expenditure budgeting COVID-19 or Disaster Impacts Indirectly only Sector Impact MoHS and other sectors At the national level, budgeting in Myanmar is not guided by a politically (Cabinet) approved MTBF. Without predictability in funding for existing programs or new strategies over the medium term, health sector strategic planning and costing is not well linked to annual budget preparation nor to annual subnational allocations. Subnational departments and facilities therefore waste time and resources on annual budget proposals that may not be consistent with the NHP, are not realistic and are only adjusted back to realistic levels after the budget year has already commenced. This results in resource alloca- tions to subnational departments and budget lines that are less than optimal and can result in less efficient or lower levels of service delivery. BN1 - Recommended Action: MoHS to advise subnational units of annual ceilings early in budget preparation cycle, allow- ing each unit to prepare realistic budget proposals within these ceilings. Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs BN3 Who will implement the action MoHS MoHS could prepare their budgets earlier within their own indicative ceilings based on historic levels and donor-funding com- mitments. Until a national MTBF is implemented (led by MOPFI), MoHS could provide subnational units with reliable ceilings early in the budget preparation stage, consistent with the NHP priorities for recurrent and capital. MoHS subnational units would prepare the budget proposals early, within these envelopes. If MOPFI provides a higher level of annual ceiling, MoHS can make marginal adjustments to their budget proposal based on NHP priority activities or infrastructure. MOPFI could pro- vide more integrated budget ceilings (current and capital) at least 6 weeks prior to budget submission. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 76 BN2 - Need for a MOPFI-led reform to institutionalize a Cabinet-endorsed FBPS and MTBF approach to medium term and annual budgeting. FinHealth PFM Function H1 - Sector planning and coordination H2 - Sector plan costing and financing H7 - Medium-term perspective in expenditure budgeting H12 - Strategic purchasing arrangements H19 - Public investment management COVID-19 or Disaster Impacts Would improve COVID-19 and disaster readiness Sector Impact MoHS and other sectors The lack of a government (Cabinet) approved FBPS and MTBF is a contributing factor to many of the bottlenecks identified in this assessment. Key service delivery ministries such as health and education require greater certainty or predictability in the medium-term funding of their priority programs and construction projects. This level of certainty or predictability can only come from the early participation of Cabinet in the setting of national policy priorities over the medium term, including health priorities, and making a political commitment to finance those agreed national strategic priorities. Predictability in medium- term funding will allow MoHS to better link its budget allocations to the NHP priorities and reduce the level of underspend. BN2 - Recommended Action: Cabinet’s policy priorities and medium-term funding commitments should be reflected in an MTBF, to be implemented as part of a MOPFI-led set of budget reforms. Time frame for action Medium term New reform action or existing action New action Sequence or dependency on other BNs As per MPFMP & PFM Strategy Who will implement the action MOPFI Cabinet’s policy priorities and medium-term funding commitments should be reflected in a medium-term budget framework (that is, the MTBF), used to inform annual ceilings to budget entities including MoHS. Rather than signing off on an (single year) annual budget led and coordinated by MOPFI, Cabinet would dictate the policy agenda over the medium term by publishing its own FBPS and require that a MTBF reflect Cabinet’s medium-term policy and funding priorities. BN3 - Manual paper-based, cumbersome budget preparation practices reduce time available for realistic subnational participation in budget preparation, and limit links to NHP objectives. FinHealth PFM Function H4 - Annual budget preparation process H10 - Predictability of in-year resource allocation COVID-19 or Disaster Impacts Yes, when combined with weaknesses in Budget Execution Reports H22 Sector Impact MoHS and other sectors MoHS subnational departments manually prepare paper-based budget proposals which do not significantly influence the allocations that are decided by Union-level MoHS departments to meet tight MOPFI time frames. Union-level DPH/DMS base IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 77 their submissions to MOPFI on historic actual spending levels for the (part) current year and two immediate prior years, that is, without sufficient time to consult with subnational budget units, which can result in ‘misaligned’ budgets at the subnational level, that is, funds not optimally allocated for service delivery. In the absence of an MOPFI-led FMIS solution for budget preparation (at least 5 years away), MoHS could select a web-based or Excel-based solution that would allow its proposals to be linked to NHP strategies and would preserve information about townships, states, and regions during consolidation. BN3 - Recommended Action: BN3 - Recommended Action: MoHS could implement an electronic budget preparation tool which permits rapid consolidation of subnational proposals, with links to the NHP and location. Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs BN3 Who will implement the action MoHS MoHS could switch to an electronic budget preparation process and evaluate which of the tools available (whether Excel or web based) best meets MoHS’ immediate needs for rapid consolidation of subnational budget proposals, and then supports Union level budget submissions consistent with the requirements of MOPFI. The budget preparation tool should facilitate links to the NHP and provide for rapid consolidation that does not lose valuable information about prioritization of budget allocations by township, state, and region. BN4 - Development partners need assurance that both government and external finance spending on health can be al- located and tracked by program and location. FinHealth PFM Function H3 - External funding of the sector H5 - Budget classification COVID-19 or Disaster Impacts Would improve COVID-19 and disaster readiness Sector Impact MoHS The current chart of accounts includes fields for administrative units of ministries and budget lines down to 4-digit level. For the health sector, it is important to be able to allocate and track domestic and external resources by program/activity (for example, malaria, HIV, TB, immunization, nutrition, and so on), as well as by geographic location (for example, state/region, district, township). This will provide a greater level of assurance to MOPFI and to development partners that resources are being allocated and spent effectively and efficiently based on the priorities of the NHP, health needs, and any HFS. BN4 - Recommended Action 1: MoHS could undertake a resource tracking exercise Time frame for action Short term New reform action or existing action Current action Sequence or dependency on other BNs None – quick win Who will implement the action MoHS IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 78 As part of a strategy to encourage development partners to make greater use of MoHS PFM systems, in the short term MoHS could undertake a resource tracking51 exercise to better understand and analyze external assistance for health and its own allocations by program and geographic location. BN4 - Recommended Action 2: In the medium to longer term, MoHS could include program and geographic location codes in its own budget preparation and reporting tools Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs BN3 Who will implement the action MoHS (in cooperation with MOPFI) In the medium to longer term, MoHS could include program and geographic location codes in its own budget preparation and reporting tools and work closely with MOPFI to ensure unified chart of accounts reforms include introduction of fields to capture programs and locations for sector allocations and spending. BN5 - MOPFI Contingency Fund, Supplementary Grant, and Re-appropriation processes not used strategically. FinHealth PFM Function H9 - Predictability of in-year resource allocation H14 - Internal control of non-salary expenditure COVID-19 or Disaster Impacts Directly affects government’s and MoHS’ COVID-19 and disaster readiness Sector Impact MoHS and other sectors The current COVID-19 pandemic has highlighted that some existing budget tools are not being used strategically. The lack of flexibility for MoHS to reprioritize existing budget allocations has been covered in the discussion of in-year budget adjustments (H14). This lack of flexibility could be compensated by additional budget allocations either through the annual Supplementary Budget process or through the Contingency Fund. The problem with the annual Supplementary Budget is that it has lost its purpose of strategic and selective budget reallocations to policy priorities and has become a routine second budget process with the same rigidities and challenges of the initial budget process. It not only represents important transaction costs for MOPFI and finance departments of line ministries but further undermines the quality of the initial budget preparation. Although MOPFI has a Contingency Fund as part of the annual approved budget, it is only for MMK 100 billion52 and is often underspent for a number of reasons. The Contingency Fund has not been properly treated as an emergency or disaster fund but has been preallocated across MOPFI, the states, regions, and line ministries to supplement normal budgets. BN5 - Recommended Action 1: MOPFI budget department could continue to engage with other ministries to identify savings that can be reappropriated to MoHS for priority COVID-19 activities. 51. The Global Financing Facility has a resource tracking tool that can be adapted for this exercise. 52. It is understood that this MMK 100 billion is now divided so that MMK 50 billion is controlled by MOPFI, MMK 14 billion by the 14 states/regions, and the remaining MMK 36 billion divided among line ministries. This suggests that it is being treated more as another form of annual budget allocation rather than as an emergency reserve or contingency in case of disasters. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 79 Time frame for action Immediate New reform action or existing action Current action Sequence or dependency on other BNs None – quick win Who will implement the action MOPFI In the face of the current COVID-19 crisis and in the short term, the MOPFI budget department could engage with other ministries and budget-funded agencies to identify savings that can be reappropriated to MoHS, which in turn can reallocate these funds to high-priority activities or townships/districts, in line with the CERP. BN5 - Recommended Action 2: MOPFI could work with the Government to ensure the Contingency Fund is enhanced and treated as an emergency fund, and not routinely pre-allocated. Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs As per MPFMP and PFM Strategy Who will implement the action MOPFI MOPFI may the opportunity of amending PFM laws to modernize and simplify the budgeting process and discontinue the routine annual practice of Supplementary Budgets and at the same time increase the managerial flexibility through a larger budget reserve and simpler virement rules. Also, MOPFI could work with the government to ensure that the Contingency Fund is properly treated as an emergency or disaster fund and not pre-allocated across MOPFI, the state, regions, and line ministries. Likewise, the Supplementary Budget approach should be revised so that it is used less routinely and on a more selective basis. BN6 - It is important that the HFS currently being developed is built on a strong partnership between MoHS, MOPFI, Cabinet, and development partners. FinHealth PFM Function H12 - Strategic purchasing arrangements COVID-19 or Disaster Impacts Would improve COVID-19 and disaster readiness Sector Impact MoHS MoHS is currently consulting widely on the development of an HFS that will identify new sources of financing and options for more flexible funding channels for health providers such as hospitals or township/district managed health centers, allowing a more efficient response to local needs. This level of budget autonomy or flexibility would improve the level of readiness and resilience of providers for emergencies such as COVID-19. The HFS will need to include costings for frontline health providers and also for budget-funded suppliers such as Union MoHS departments or for any autonomous purchasing authority. Experience in other countries points to a strong partnership between MoHS and MOPFI as a critical success factor for ensuring integration of an HFS into government systems. BN6 - Recommended Action: MoHS could finalize and seek government endorsement of the proposed HFS in close partnership with MOPFI, relevant ministries (for example, SSB), and development partners. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 80 Time frame for action Medium term New reform action or existing action Current action Sequence or dependency on other BNs None Who will implement the action MoHS in partnership with MOPFI MoHS could finalize and seek GoM endorsement of the proposed HFS in close partnership with MOPFI, relevant government agencies (for example, SSB), and development partners. It is important that MOPFI in particular is fully committed to any change in health budget allocation processes, treasury arrangements for suppliers and providers, and financial reporting/ accountability responsibilities of health service providers. BN7 - Decentralized payroll and centralized (but fragmented) HR management reduce reliability of budget forecasts at the subnational level and contribute to underspending of the payroll budget. FinHealth PFM Function H13: Payroll controls COVID-19 or Disaster Impacts Indirectly Sector Impact MoHS Payroll management is decentralized, and paper based at the subnational level. But the HR information about staffing levels, vacancies, recruitment plans, and so on needed to prepare budget plans for payroll is held by Union-level MoHS departments. Payroll budgets for subnational budget units are therefore prepared by the Union-level departments on behalf of the subnational budget units in October, that is, after the financial year has commenced, when MoHS is advised of its approved budget by MOPFI. Also, during payroll budget preparation overly optimistic assumptions are made about the number and timing of vacancies to be filled. Both of these factors contribute to an overestimation of the payroll budget. Tracking of actual payroll spending at the subnational budget unit level is also paper based. Accurate information about the rate of spending and possible underspending can be delayed, making budget transfers between budget units difficult to coordinate and effect late in the financial year. This can also result in significant levels of underspending for payroll budgets. Underspent payroll represents an opportunity cost of service delivery and idle resources and should be minimized. BN7 - Recommended Action 1: MoHS could continue implementing two existing strategies: the centralized HR unit and database in the minister’s office with its own dedicated resources, and an Excel-based recording and reporting system. Time frame for action Immediate New reform action or existing action Current action Sequence or dependency on other BNs BN15.1 Who will implement the action MoHS Until a longer-term whole-of-government payroll solution is feasible, MoHS could continue to implement two existing strate- gies, that is, creating a centralized HR unit in the minister’s office with its own dedicated resources, and the implementation of the Excel-based budget and expenditure recording and reporting system. These will (a) allow more accurate payroll forecasts in the MoHS budget submission, both subnationally and aggregate MoHS; (b) ensure more realism in budgeting regarding IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 81 the number and timing of vacancies to be filled; and (c) provide the new MoHS HR unit and each budget unit with up-to-date, consolidated information on which subnational budget units are underspending and which are overspending to inform prompt decisions on budget transfers. BN8 - Officials who are responsible for financial management of departments and hospitals at subnational level do not have relevant qualifications or skills. FinHealth PFM Function H14 - Internal controls of non-salary expenditure H16 - Staff recruitment COVID-19 or Disaster Impacts Directly affects COVID-19 and disaster readiness Sector Impact MoHS Neither the directors/managers of subnational departments and hospital administration nor their clerical/accounting staff have relevant or sufficient skills to manage or account for budgets on behalf of MoHS. The directors or TMOs who hold the DLs are almost always from medical backgrounds. These low skill levels combine with high vacancy rates for clerical and accounting positions to weaken financial management capacity and reduce accountability for service delivery outputs and outcomes. As MoHS prepares to implement strategic purchasing reforms, these clerical and accounting staff from DPH/DMS units in states, regions, and townships will be at the forefront of delivery of financial management training to health providers who will be accountable for grants or other funds they receive from any autonomous purchasing authority. Improving subnational financial management skills will also improve responsiveness to health emergencies. BN8 - Recommended Action 1: In the short term, develop and deliver a financial management training program using a modality that recognizes the demands on clerical and accounting staff at subnational MoHS level, using lessons from earlier training programs, and leveraging the PFM Training Academy. Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs None Who will implement the action MoHS There is clearly a need for further basic bookkeeping, accounting, and financial reporting training at state, region, township, and hospital finance unit level, supported with written procedures. Valuable lessons have been learned from earlier financial management training programs delivered with World Bank support. These lessons should be used to develop and deliver a financial management training program that recognizes the unique needs and demands on clerical and accounting staff at subnational level. BN8 - Recommended Action 2: MOPFI could institutionalize the PFM capacity building for all sectors and ministries, through the PFM Academy, with modules that are appropriate to the needs of clerical finance staff at the subnational MoHS level. MOPFI could work in partnership with MoHS to adapt the PFM Academy materials and modality to suit sub national requirements. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 82 Time frame for action Medium term New reform action or existing action New action Sequence or dependency on other BNs As per MPFMP and PFM Strategy Who will implement the action MOPFI BN9 - Operating budget can be significantly underspent because of inflexible budget rules, exacerbated by the lack of up-to-date reporting of spending against budgets. FinHealth PFM Function H14 - Internal controls of non-salary expenditure COVID-19 or Disaster Impacts Directly affects COVID-19 and disaster readiness Sector Impact MoHS and other sectors Paper-based budget preparation tools and top-down budget preparation by MoHS Union-level departments can result in recurrent budgets that are not aligned either with the priorities of the NHP or with the local needs of subnational budget units. MoHS controls operating budget at the 4- digit budget line level which leaves budget unit managers with little flexibility to use their budgets to deliver the best service for local needs. Directors of budget units at the subnational level currently rely on delayed paper-based financial management reports and then need to seek approval from the Union level to transfer budgets between budget lines. Directors need up-to-date (that is, to the day) budget execution reports and they need the authority to shift recurrent (non-payroll) budgets around to the inputs needed to optimize local service delivery and, importantly, to respond quickly to health emergencies such as COVID-19. BN9 - Recommended Action 1: MoHS provide clear guidelines to accelerate approval of budget transfer requests. Time frame for action Immediate New reform action or existing action Current pilot action by MoHS Sequence or dependency on other BNs None – quick win Who will implement the action MoHS Pending the implementation of the proposed MOPFI-led IT strategy and GAS, MoHS could accelerate the rollout of the Excel- based budget and expenditure recording tool. The Excel tool will provide entities with more up-to-date information about their spending against their budget. Moreover, it will give Union-level departments consolidated information earlier, which they can analyze to decide which transfer requests should be given priority. Also, MoHS could provide subnational entities with clear guidelines on exactly when transfer requests can be submitted (for example, the last week of each quarter, with no requests accepted in the first quarter), what supporting information is required, and to whom they can email the soft copies of the requests (in parallel to sending hard copy requests by fax/pouch) at the Union level to expedite the review and approval process. BN9 - Recommended Action 2: Union MoHS to consider controlling recurrent (non-payroll) budgets at 2-digit level, giving subnational entities freedom to move funds around at the 4-digit level, using the existing discretion they have under the FRRs. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 83 Time frame for action Immediate New reform action or existing action New action Sequence or dependency on other BNs None – quick win Who will implement the action MoHS MoHS Union level could consider controlling recurrent (non-payroll) budgets at the 2-digit level only, giving subnational entities freedom to move funds around at the 4-digit level provided they seek approval for transfers between the 2-digit level. MOPFI has confirmed that FRRs leave give the director general of each ministry the discretion to decide how to manage transfers, provided they do not break the restrictions in the FRRs. This will significantly reduce the number of transfer requests that need to be referred to the Union level for approval. The Excel templates can track and control spending against budget at the 2-digit level but leave flexibility for spending to exceed budget at the 4-digit level. This will also be consistent with the direction of health financing strategic reforms (see H12) to give providers more local autonomy over use of their budgets. BN10 - Rigidities in MOPFI budget norms for travel allowances may constrain service delivery by MoHS and other ministries. FinHealth PFM Function H14 - Internal control of non-salary expenditure COVID-19 or Disaster Impacts Directly affects government’s and MoHS’ COVID-19 and disaster readiness Sector Impact MoHS and other sectors. There is evidence in the health sector that the current level of budget norms for travel allowance as set by MOPFI is restricting travel and negatively affecting service delivery, including on MoHS’ capacity to respond promptly and appropriately to the COVID-19 pandemic. If the budget norms were made more flexible or included criteria other than just duration and distance of travel, this would facilitate travel by frontline health workers, especially where they support remote or difficult to access communities. It is understood that MOPFI are already aware of this constraint and will review the norms. BN10 - Recommended Action: MOPFI could review budget norms for travel to ensure it does not restrict travel and support to remote communities. Time frame for action Short term New reform action or existing action Current action Sequence or dependency on other BNs None Who will implement the action MOPFI MOPFI could carry out a review of budget norms for travel, in consultation with MoHS and other service delivery ministries, to consider introducing more flexibility or other criteria for entitlement to travel allowance to ensure the norms do not unduly restrict service delivery in remote locations. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 84 BN11 - MoHS professional procurement capacity is limited; procurement activity is inefficient, fragmented and decentralized across MoHS departments and hospitals. FinHealth PFM Function H18 - Procurement management COVID-19 or Disaster Impacts Directly affects MoHS COVID-19 readiness Sector Impact MoHS and other sectors Until recently there has been no centralized pool of procurement skills in MoHS. Procurement of medicines and some medical equipment in MoHS has been the responsibility of medical staff in individual hospitals or departments, reducing the value for money and efficiency of MoHS’ medicines and equipment budget. Small-value procurements are made from local intermediary firms who in turn import in higher volumes from international suppliers. This results in higher prices than if MoHS were to centrally procure and also leaves open the possibility of rent-seeking behavior from these local drug supply companies in their dealings with individual hospitals and so on. In 2019/20, MoHS is piloting the centralizing of a large percentage (40 percent) of their medicines budget through a relatively new PSD Division and is also benefiting from procurement capacity building through development partners. National-level procurement reforms led by MOPFI and supported by World Bank will also provide a stronger regulatory and capacity- building framework through which MoHS can improve the efficiency and value for money of its medicines and equipment budgets. Centralizing procurement will allow Myanmar to make use of framework or panel contracts with pharmaceutical and medical equipment suppliers, which will also improve Myanmar’s readiness and responsiveness to health emergencies such as COVID-19. BN11 - Recommended Action 1: Continue centralization of medicine procurement; build capacity of PSD Division; participate in MOPFI procurement reforms for SOP, capacity building and framework contracts. Time frame for action Immediate New reform action or existing action Current MoHS reform Sequence or dependency on other BNs None – quick win Who will implement the action MoHS In the short to medium term, MoHS could continue with its current strategy of centralizing procurement of medicines and medical equipment and at the same time work with development partners (for example, World Bank, UNOPS) to build the procurement capacity of the PSD Division. BN11 - Recommended Action 2: It is strongly recommended that provision is made in the draft Procurement Law, or at a minimum in the Regulations to serve as mandate for decision makers to act. It is also recommended that the procurement manual under preparation takes this into account and includes a step by step procedure for MOHS procuring entities to follow. It is also important that MoHS participates in the MOPFI-led procurement reform plan to take early advantage of opportunities for capacity building, framework contracts, e-procurement, and so on. Time frame for action Immediate New reform action or existing action Current MOPFI reform Sequence or dependency on other BNs As per MPFMP and PFM Strategy Who will implement the action MOPFI IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 85 BN12 - A single year approach to planning, budgeting, and execution of construction projects and lack of project readiness means resources are allocated inefficiently and construction budget is underspent each year. FinHealth PFM Function H19 - Public investment management COVID-19 or Disaster Impacts Indirectly Sector Impact MoHS and other sectors Current approaches to budgeting for and implementing construction projects by MoHS are constrained by national practices and rules which unrealistically require a single year time frame in which to carry out all stages of construction for health facilities. Possible reform at the national level through implementation of a MOPFI-led MTBF which might give MoHS greater certainty about medium-term funding of construction is still some years away. Significant rates of underspend of construction budgets delay provision of much needed health infrastructure for service delivery. BN12 - Recommended Action 1: MoHS itself can still budget for and implement construction projects that are sequenced over the medium term around a prioritized MoHS medium term PIP. Time frame for action Short term New reform action or existing action New Sequence or dependency on other BNs None Who will implement the action MoHS MoHS itself can still budget for and implement construction projects that are sequenced over the medium term around a prioritized MoHS medium-term infrastructure plan. MoHS has experimented with a medium-term infrastructure plan in the past but did not prioritize its annual budget allocations to ensure implementation of the plan. A well-designed health sector-level PIP would function within the less than desirable single year MOPFI budget cycle and ceiling by ensuring a pipeline of projects which have already been prioritized by, and with the full agreement of, all state/region and township health departments. Once they are on board and committed to the medium-term health PIP, the state/region and township/district health departments would not waste their time preparing construction budget proposals each year that they know are not prioritized in the medium term. MoHS could strengthen project monitoring in cooperation with PAPRD and the geo-referenced project monitoring system. BN12 - Recommended Action 2: MoHS could improve project prioritization and readiness in cooperation with MOPFI and ensure as many preliminary activities as possible are completed before projects from the MoHS PIP are included in its annual budget submission to MOPFI. Time frame for action Medium term New reform action or existing action New Sequence or dependency on other BNs None Who will implement the action MoHS As existing MoHS projects at state/region/township level progress or are completed, MoHS departments can then commence preliminary planning, specifications, and so on for those projects which are next in priority on the internal MoHS PIP, with assistance from MoHS at the Union level. MoHS at the Union level would ensure that as health sector PIP projects progress on the budget priority list and, to the extent permitted by MOPFI budget rules, those projects then have the necessary preliminary work done on design, specification, land, procurement, approvals, and so on. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 86 BN13 - Weak assets management and maintenance, including lack of an assets register and associated maintenance plans and budgets; accelerating depreciation and loss of functionality. FinHealth PFM Function H20 - Physical assets management COVID-19 or Disaster Impacts Directly affects MoHS and government COVID-19 and disaster readiness Sector Impact MoHS Only some MoHS departments and programs maintain assets registers, and there are no national guidelines or software to support assets management and maintenance. Even where assets registers are maintained by individual MoHS departments, they are paper based, not consolidated and they do not include details of physical assets verification, working condition of the assets, maintenance plans, or budgets. This accelerates the deterioration of these assets with adverse impact on service delivery at the facility level if these assets are not available or not working and increases fiduciary risks around valuable mobile assets. BN13 - Recommended Action: MoHS could create a simple Union-level MoHS digital assets register for physical and high- value assets, with geo-spatial and financial data, that is accessible to subnational budget units. Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs None Who will implement the action MoHS MoHS could explore affordable options for creation of a simple Union-level MoHS digital assets register for physical and high-value assets, that is accessible by subnational budget units or DL holders. The assets register should incorporate key information about each asset, including geospatial information, financial information, physical verification, working condition, climate risk exposure, and maintenance requirements and costs. BN14 - High vacancy rates for clerical and accounting staff in subnational budget units exacerbates the effects of low financial management skills and causes poor budget management. FinHealth PFM Function H16 – Staff recruitment; H21 - Accounting, recording and reconciliation COVID-19 or Disaster Impacts Indirectly Sector Impact MoHS and other sectors The reasons for the high vacancy levels are complex (see H16) but include budget constraints and the high demands on and stress levels associated with these positions. Additional demands are also placed on these staff for other administrative or even clinical functions, which distract from their responsibilities for accounting and reporting. Moreover, these limited financial management resources face further demands on their time to meet the needs of accounting and reporting for donor funded programs. Some DPH and DMS directors/managers have managed the shortage of staff for clerical and accounting IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 87 positions better than others, for example, by using temporary hires to take on some of the workload that is normally borne by the branch clerical and accounting staff or by using the job descriptions for these positions to protect the clerical staff from unreasonable demands on their time. BN14 - Recommended Action: Union MoHS to provide guidelines for state/region Health Directors and TMOs and so on with options for managing shortage of critical finance staff, including the option of temporary hire of skilled contract staff. Time frame for action Immediate New reform action or existing action New action Sequence or dependency on other BNs None – quick win Who will implement the action MoHS To better manage the impact of the level of vacancies for clerical and administrative staff, combined with the impact of low financial management capacity, a possible action here is for MoHS departments at the Union level to provide a set of guidelines or options for TMOs and other department heads on how to deal with the level of vacancies and low skill levels, providing a set of options drawn from better practice across DPHs, DMSs, or hospitals. These options should include the option of contract hiring of staff with relevant skills in math, accounting, and so on who are better qualified to address the skill gaps. BN15 - Accounting, recording, and reconciliation processes are largely manual, paper based and not documented into standard operating procedures (SOPs). FinHealth PFM Function H21 - Accounting, recording, and reconciliation H22 - Financial reporting and budget execution reports COVID-19 or Disaster Impacts Indirectly Sector Impact All sectors including MoHS The assessment revealed that financial management skills are low at all levels of the health sector where mid-level to senior-level officials all have medical qualifications and backgrounds, with very little training in financial management. The MoE Financial Debottlenecking Analysis made a similar finding and recommendation. These low skill levels are exacerbated by the lack of any standard operating procedures, forms, and templates to serve as a baseline for financial staff induction, for training, for on-the-job reference, or for holding staff accountable for compliance. The current FRRs do not meet this requirement and need to be supported by more detailed procedures. BN15 - Recommended Action 1: MOPFI could lead the development of a national set of standard operating procedures to support the FRRs. Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs As per MPFMP (i.e. new PFM law) Who will implement the action MOPFI IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 88 There is a need for a national set of standard operating procedures and forms for PFM that address the planning, budget- ing, execution, recording, and reporting functions and which are consistent with the FRRs. Such a set of standard operating procedures are being prepared by MoE and could be adapted to MoHS to support service delivery. BN15 - Recommended Action 2: For recording, analysis and internal management reporting purposes, MoHS could con- tinue with the development and rollout of its Excel based recording and reporting tool (and later upgrade to the GAS when it provides the same functionality). Time frame for action Short term New reform action or existing action Current MoHS reform Sequence or dependency on other BNs None Who will implement the action MoHS To better manage the impact of the level of vacancies for clerical and administrative staff, combined with the impact of low financial management capacity, a possible action here is for MoHS departments at the Union level to provide a set of guidelines or options for TMOs and other department heads on how to deal with the level of vacancies and low skill levels, providing a set of options drawn from better practice across DPHs, DMSs, or hospitals. These options should include the option of contract hiring of staff with relevant skills in math, accounting, and so on who are better qualified to address the skill gaps. BN15 - Recommended Action 3: This assessment recommends the pilot testing and rollout of the Government Accounting System (GAS) and the adoption of a new chart of accounts led by MOPFI. Time frame for action Short to medium term New reform action or existing action Current MOPFI reform Sequence or dependency on other BNs As per MPFMP Who will implement the action MOPFI BN15 - Recommended Action 4: In view of the demands for additional transparency over the use of resources related to the COVID-19 crisis, MOHS compliance with MOPFI instructions on accounting and reporting over such funds is critical. On July 3, 2020, the MOPFI issued instruction 4/1/15 (2346/2020), ‘Matter to send expenditures for COVID-19 Prevention, Control and Remedy and CERP Action Plan’, directing all reporting units to maintain a separate register for COVID-19 prevention, control, and remedy related to the CERP Action Plan. MOHS could coordinate with MOPFI for further clarification or training related to this instruction as needed. Time frame for action Short term New reform action or existing action Current MOPFI requirement Sequence or dependency on other BNs None Who will implement the action MOPFI and MoHS IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 89 BN16 - External audit has historically been compliance based, and not focussed on risk or performance. FinHealth PFM Function H23 – External Audit COVID-19 or Disaster Impacts Directly relevant as MoHS needs to account for COVID funding Sector Impact MoHS Enhanced and modernized external audit practices are being rolled out by OAGM. OAGM has adopted a strategy for auditing Covid-19 related expenditures and is undergoing a process of modernization to roll out a risk-based methodology and adopt computer assisted auditing techniques. An Audit of Strong and Resilient National Public Health Systems (linked to SDG 3D) is also being planned. BN16 - Recommended Action: MOHS could prepare for these audits by ensuring compliance with MOPFI Instruction 4/1/15 (2346/2020), ‘Matter to send expenditures for COVID-19 Prevention, Control and Remedy and CERP Action Plan’ and coordinating with OAGM to understand audit documentation and other requirements. MOHS could create further efficiencies in the audit process by adopting the Government Accounting System, which would allow for application of computer assisted auditing techniques. Time frame for action Short term New reform action or existing action Current action Sequence or dependency on other BNs None Who will implement the action MoHS in consultation with MOPFI and OAG BN17 - There is no internal audit function in Myanmar, and the internal reviewer process within MoHS is not a risk based approach. FinHealth PFM Function H15 – Internal Audit COVID-19 or Disaster Impacts Indirectly Sector Impact MoHS While outsourcing the Internal Audit function would not be a cost effective solution, external resources could nonetheless be leveraged to complete a business process review of existing procedures and controls. BN17 - Recommended Action: MoHS could carry out a review of its business processes, procedures and controls. Such a review will not only highlight processing deficiencies and control weaknesses but is a necessary first step to engineer the new processes necessary to pave the way for an IPSAS/IFMIS reform. MOHS could also consider leveraging the existing cadre of internal reviewers to pilot an internal audit manual being developed with IMF support. Time frame for action Short term New reform action or existing action New Action IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 90 Sequence or dependency on other BNs None Who will implement the action MoHS BN18 - MoHS is vulnerable to climate change and natural disasters, but its investment plans and systems are not disaster ready nor are the national PFM and procurement systems. FinHealth PFM Function Most PFM in Health functions are affected COVID-19 or Disaster Impacts Directly affects MoHS and government COVID-19 and disaster readiness Sector Impact MoHS and other sectors Myanmar is one of the world’s most disaster-prone countries, exposed to multiple hazards, including floods, cyclones, earthquakes, landslides, and droughts. A lack of disaster readiness of MoHS and national governance, PFM, and procurement systems means that the negative impacts of these disasters are higher than they should be. MoHS’ responsiveness to natural disasters could be improved with greater preparedness in national systems and in MoHS systems. BN18 - Recommended Action 1: MoHS to mainstream epidemic risks, climate change, and disaster readiness assessments into its public investment and infrastructure planning, costing, and prioritization processes. Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs None Who will implement the action MoHS Given Myanmar’s high risk profile, MoHS will need to mainstream climate change and natural disaster assessments and preparedness into its public investment and infrastructure planning, costing, and prioritization processes and can leverage global public goods and tools to do so.53 BN18 - Recommended Action 2: MOPFI could review its national PFM and procurement systems to improve readiness and responsiveness to natural disasters or emergencies. Time frame for action Short term New reform action or existing action New action Sequence or dependency on other BNs None Who will implement the action MOPFI At the Union level, MOPFI could review54 and prepare its PFM and procurement systems for the response challenges that arise from emergencies such as COVID-19 or Cyclone Nargis. 53. https://www.who.int/ihr/publications/WHO_HSE_GCR_2018_2/en/; https://wbclimatescreeningtools.worldbank.org/ 54. There is guidance available to better prepare PFM and procurement systems for disaster recover, for example, “Preparing PFM Systems for Emergency Response Challenges,” IMF 2020, and “Disaster Response - A PFM Review Toolkit,” World Bank 2019. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 91 BN19 - There Public health service delivery and public financial management in the sector are constrained by multiple and mutually reinforcing institutional, organizational and human resources challenges, some of which can be eased by MOHS and MOPFI FinHealth PFM Function Multiple functions COVID-19 or Disaster Impacts Indirectly Sector Impact MoHS BN19 - Recommended Action: (i) MOHS could conduct a staffing and pay scale review for critical PFM support functions to inform the adoption of a more strategic approach to staffing levels, workforce composition, and allocation in remote and con- flict areas; (ii) proceed with batch recruitments of financial management staff outside of Yangon and carry out initial training of young accounting graduates to fill the vacancies; (iii) recruit contractuals and explore remote support options to address acute staffing constraints; (iv) develop and pilot incentives mechanism to foster staff performance and learning/ training. Time frame for action Medium term New reform action or existing action New Action except for (iii) which is a current action Sequence or dependency on other BNs None Who will implement the action MoHS (in cooperation with Union Civil Service Board) IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 92 >>> Annex 2: Bibliography Aide Memoire: Technical Assistance Mission for PFM IT Strategy Assessment, World Bank, December 2019 Article IV Consultation Report for 2019, IMF Country Report No. 20/88, IMF, March 2020 Auditor General of the Union Law, State Peace and Development Council, October 2010 Audit Report - Global Fund Grants in the Republic of the Union of Myanmar, Global Fund, August 2018 Constitution of the Republic of the Union of Myanmar, Ministry of Information, 2008 Country Cooperation Strategy, Myanmar, 2014–2018, World Health Organization, 2014 Demographic and Health Survey, 2015–2016, Ministry of Health and Sports, March 2017 Directive No. 1/2017: Tender Procedure for Procurement of Civil Works, Goods, Services, Rental and Sale of Public Properties for Government Departments and Organisations, President’s Office, April 2017 Essential Health Services Access Project, Project Appraisal Document, World Bank, Sept 2014 Financial Debottlenecking Analysis - Ministry of Education, Oxford Policy Management, November 2019 FinHealth: PFM in Health Toolkit, v4.0, World Bank, December 2019 Health Facility Assessment for Reproductive Health Commodities and Services, United Nations Population Fund (UNFPA), 2016 Health Financing System Assessment, Myanmar, Discussion Paper, Hui Sin Teo, Jewelwayne Salcedo Cain, World Bank, October 2018 Health Insurance in Myanmar: The Views and Perceptions of Healthcare Consumers and Health System Informants on the Establishment of a Nationwide Health Insurance System. M. van Rooijen, Chaw-Yin Myint, M. Pavlova, and Wim Groot, MDPI, August 2018 Health System Review, Republic of Myanmar, Asia Pacific Observatory on Health Systems and Policies, 2014 Modernisation of Public Finance Management, Project Appraisal Document, World Bank, February 2014 IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 93 Modernisation of Public Finance Management, Restructuring Paper on a Proposed Project, World Bank, April 2014 Myanmar: A Political Economy Analysis, Kristian Stokke, Roman Vakulchuk, Indra Øverland, Norwegian Institute of International Affairs, NUPI, 2018 Myanmar Economic Monitor, Building Reform Momentum, World Bank June 2019 Myanmar Economic Monitor, Navigating Risks, World Bank, December 2018 Myanmar Economic Monitor, Resilience Amidst Risk, World Bank, December 2019 Myanmar’s Human Resources for Health: Current Situation and its Challenges, Yu Mon Saw, Thet Mon Than, Yamin Thaung, Sandar Aung, Laura Wen-Shuan Shiao, Ei Mon Win, Moe Khaing, Nyein Aye Tun, Shigemi Iriyama, Hla Hla Win, Kayako Sakisaka, Masamine Jimba, Nobuyuki Hamajima. Helyon 5, 2019 Myanmar Human Resources for Health Strategy (2018–2021), Ministry of Health and Sports, March 2018 Myanmar National Health Plan 2017–2021, Ministry of Health and Sports, December 2016 Myanmar National Health Plan 2017–2021 - Monitoring and Evaluation Framework, Ministry of Health and Sports, May 2018 Myanmar National Supply Chain Baseline - Capability and Performance, Jessica Tolliver, Kathleen Bartram, PFSCM, May 2014 Myanmar Selected Issues, IMF Country Report No. 18/91, IMF March 2018 National Health Accounts - Myanmar 2014-2015, Ministry of Health and Sports, January 2018 Procurement Capacity Assessment Report, Asian Development Bank, August 2018 Procurement Options Analysis, OECD-DAC MAPS, procurement options analysis, supply chain analysis and SCMS action plan for further support to Ministry of Health, SCMS-PEPFAR, May 2014 Progress Towards UHC in Myanmar: A National and Sub National Assessment, Lancet Glob Health, July 2018 Public Expenditure and Financial Accountability Assessment (PEFA) Report for Myanmar for 2020, March 2020 Public Expenditure Review 2015: Realigning the Union Budget to Myanmar’s Development Priorities, World Bank, September 2015 Public Expenditure Review 2017: Fiscal Space for Economic Growth, World Bank, 2017 Reaching Every Child in Myanmar by 2030 - Priority Indicators for Action, UNICEF, December 2019 Regulations on Financial Management of Myanmar, Ministry of Planning and Finance, 2017 Review of Public Financial Management Diagnostics for the Health Sector, Sierd Hadley, Tom Hart and Bryn Welham, ODI, February 2020 State and Region Public Finances in Myanmar, G. Dickenson-Jones, S. Kanay De, and A. Smurra, The Asia Foundation, Discussion Paper No. 8, September 2015 IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 94 Strategic Directions for Financing Universal Health Coverage in Myanmar, Ministry of Health and Sports, National Health Plan Implementation Monitoring Unit, May 2019 Sub National Public Expenditure Review 2019 - Fostering Decentralisation in Myanmar, World Bank, 2019 Survey Report for Published Public Procurement Information, U Ye Htut Thein, June 2019 IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 95 >>> Annex 3: PFM Functions in the Health Sector The Key PFM Systems and Characteristics of Supply-Side Challenges Service Delivery Related Functions Physical access Examples (not Exhaustive) BUDGET FORMULATION Affordability Unclear health priorities 10.1 Strategic Planning Aquality Care Lacking links of budget management to expected H1. Sector planning coordination outputs H2. Sector plan costing and financing Central authorities unresponsive to provider needs Inadequate budget funding; 10.2 Budget Preparation Multiyear planning based on unreliable funding H4. Annual budget preparation process Fragmentation of funding sources H5. Budget classification Too many different reporting requirements H6. Forecasting of earmarked revenue H7. Merdium-term perspective in Budgeted funds do not reach service providers expenditure budgeting Unreliable or late in-year releases of funds H8. Transfers to subnational Inflexibility and delays of budget virements governments Slow staff recruitment procedures Slow procurement procedures BUDGET EXECUTION Poor selection of facility investments 10.3 Flow of Funds Construction projects delayed H9. Predictability of in-year resource allocation Inappropriate input mix H10. Collection of revenues Staff vacancies and high turnover H11. Accounting for health sector revenue Lacking incentives for staff productivity H12. Purchasing arrangements Shortage of drugs and medical supplies Drug wastage H13. Payroll management Poor drug quality H14. Internal controls of non-salary Inadequate building facilities expenditure Lacking diagnostic equiptment H15. Internal audit 10.4 Management of Physical Inputs H16. Staff recruitment H17. Staff performance management H18. Procurement management Other factors beyond the study scope: H19. Public investment management H20. Physical assets management Economic: Economic growth 10.5 Accounting and Reporting Macro-fiscal policies H21. Accounting, recording and External shocks reconciliation H22. Issue of budget execution reports Public Sector-Wide Issues: National budget allocation priorities BUDGET EVALUATION Fiscal decentralization 10.6 Oversight and Transparency Public sector pay levels H23. External audit H24. Public access to health finance Investment and services in other sectors: information Transport Education Utility services IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 96 >>> Annex 4: Survey Sample Selection and Survey Process Sample Selection (States and Regions, Districts and Townships, Entities and Facilities) After discussions with the TWG, 3 regions (Magway, • Township Health Department for both DPH and DMS Ayeyarwaddy, Mandalay) and 2 states (Mon and Shan functions East) were selected for the PFM in Health Assessment. The • Township hospital whenever one was present in that selection criteria included geographical, socioeconomic, township development, ethnicity and stability considerations. To include • One station hospital a Union-level hospital, a general hospital from Yangon region • One RHC was also selected. • One SC Using bed occupancy rate, average inpatient numbers, State and regional health departments of selected states immunization, and antenatal care indicators of each township and regions that oversee the medical services and public from the selected states and regions, a composite index was health services were also selected for assessment. A state developed to group townships into three categories: good, and regional-level hospital was therefore also selected. Two moderate, and not so good performers. One township from districts, one from Ayeyarwaddy and one from Shan East, each group was then selected for the assessment based were included. The following table provides the summary of on the logistics and feasibility for the assessment. In each sample include in the assessment. selected township, the following facilities and administrative entities (that is, DPH or DMS departments) were included in the assessment that would be representative of the township level health system and facilities: IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 97 > > > T A B L E 3 . 1 - Levels of Health System Where Assessment Was Conducted, Types of Administrative Entities, and Facilities Included in the Assessment Assessment Level Administrative Entity Facilities Union Level • Hospital • State and Regional Health • State and regional level hospitals State and Regional Level Departments that do procurement District Level • District Health Departments • District hospitals Township Level • Township Health Departments • Township hospitals whenever (for both DPH and DMS applicable whenever applicable) Sub-township Level • Not applicable • Station Hospitals • RHCs • SCs Preparation for Data Collection Data Collection The questionnaires for both facilities and administrative entities Data collection was conducted in the selected states and were prepared in consultation with the TWG and field tested regions between November 5 and December 10, 2019. in the Naypyidaw region between August 28 and September Before travelling to the relevant regions and states, the 10, 2019. Field testing was then conducted together with the enumerator teams first contacted the heads/directors of the staff from MoHS (Union level) at all types of admin entities and relevant departments or facilities and explained the purpose facilities that were to be included in the assessment. A short and assessment process and also listed the documents to briefing about experiences of field test and process for data be gathered in advance of the assessment. Station hospitals, collection with TWG members was made on October 29, 2019. RHCs, and SCs to be included in the assessment in each township were discussed and agreed with the TMO who is Planning officers from state and regional MOPFI planning the head of township health department. Criteria for selection units were selected as enumerators to participate in the data of these lower-level facilities included performance of the collection exercise, along with independently contracted facilities, logistics, and availability of key respondents. enumerators. The training of enumerators on the use of the questionnaire and guidelines was conducted from 29 October 29 The assessment was conducted with the heads, accounting/ to November 1, 2019. The Minister of Health and Sports issued administrative staff, and focal persons for human resources the approval letter for the assessment on October 30, 2019. and medicines after explaining the assessment and obtaining consent. Detailed information about number and types of facilities and administrative entities included in the assessment are in Table 3.2. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 98 > > > T A B L E 3 . 2 - Number and Types of Facilities and Admin Entities Included in the Assessment Regions included in the assessment 3 (Mandalay, Magway, Ayeyarwaddy) States included in the assessment 2 (Mon, Shan East) Sample - Type and level of entity No. 1 Hospitals 1.1 Union Level 1 1.2 State level 2 1.3 Regional Level 3 1.4 District Level 2 1.5 Township Level 8 1.6 Station Level 14 2 Rural Health Center (RHC) 15 3 Sub Rural Health Center (SC) 15 Total facilities 60 4 Administrative Entity (Department of Public Health) 4.1 Regional Health Department 3 4.2 State Health Department 2 4.3 District Health Department 2 4.4 Township Health Department 13* Total DPH entities 20 5 Administrative Entity (Department of Medical Service) 5.1 Regional Health Department 3 5.2 State Health Department 2 IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 99 Sample - Type and level of entity No. 5.3 District Health Department 2 5.4 Township Health Department 8a Total DMS entities 15 Total sample size (facilities and admin entities) 95 Note: a. One township health department from each state and region does not have a DMS function as it is located within the city area. Some Challenges Arising During of state and regional hospitals, and township medical officers (who oversee both township admin entity and hospital) are the Survey very busy persons. Interviews at township health departments were the longest as key informants also oversee both the township health department and township hospital. Time Taken and Number of Interviewees for an Interview Sub-township level facilities such as station hospital, RHC, Asking questions at administrative entities and state-/ and SC are relatively quicker to interview as they do not regional-/Union-level hospitals usually took more than one have much authority on finance matters and there were less hour because of the number of questions and number of documents to be collected. informants needed. Interviewees included heads (who are key as they hold budget drawing limits), finance clerks who Number of Documents to Collect prepare the budgets and work on financial matters on a daily The assessment collected a wide range of documents for basis, and focal persons for human resources and medicines. data and evidence —including human resource, submitted Most administrative entities had both DMS and DPH functions and approved budgets, previous year’s final approved budget, to be assessed. returned (underspent) amounts, additional budget requests, workplans for infrastructure plans, and audit. All respondents Although it was expected from field testing and data collection were cooperative. However, it took time to collect information could be managed, it is worth noting that the respondents and data (sometimes going back again to the respondents in particularly state/regional directors, medical superintendent person or remotely via Viber) and to check the documents. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 100 >>> Annex 5: List of MoHS Entities and Facilities Surveyed 1. Departments of Public Health No. State/Region Township Location Facility Type 1 Shan (East) Tachileik Tachileik District Health Department 2 Shan (East) MengPyinn MengPyinn Township Health Department 3 Shan (East) KengTong KengTong Township Health Department 4 Mandalay Mattaya Mattaya Township Health Department 5 Mandalay ChanAyeTharzan ChanAyeTharzan Township Health Department 6 Mandalay ChanAyeTharzan ChanAyeTharzan Regional Health Department 7 Magway Magway Magway Township Health Department 8 Magway Minhla Minhla Township Health Department 9 Ayeyarwaddy KanGyiDaunt KanGyiDaunt Township Health Department 10 Ayeyarwaddy MyaungMya MyaungMya District Health Department 11 Mon Paung Paung Township Health Department 12 Mon KyaikMaYaw KyaikMaYaw Township Health Department 13 Mon MawLaMyine MawLaMyine State Health Department 14 Shan (East) KengTong KengTong State Health Department 15 Mandalay Tada_U Tada_U Township Health Department 16 Magway Yaenanchaung Yaenanchaung Township Health Department 17 Magway Magway Magway Regional Health Department 18 Ayeyarwaddy Pathein Pathein Township Health Department 19 Mon MawLaMyine MawLaMyine Township Health Department 20 Ayeyarwaddy Pathein Pathein Regional Health Department IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 101 2. Departments of Medical Services No. State/Region Township Location Facility Type 1 Shan (East) Tachileik Tachileik District Health Department 2 Shan (East) MengPyinn MengPyinn Township Health Department 3 Mandalay Mattaya Mattaya Township Health Department 4 Mandalay ChanAyeTharzan ChanAyeTharzan Regional Health Department 5 Magway Minhla Minhla Township Health Department 6 Ayeyarwaddy KanGyiDaunt KanGyiDaunt Township Health Department 7 Ayeyarwaddy MyaungMya MyaungMya District Health Department 8 Mon Paung Paung Township Health Department 9 Mon KyaikMaYaw KyaikMaYaw Township Health Department 10 Mon MawLaMyine MawLaMyine State Health Department 11 Shan (East) KengTong KengTong State Health Department 12 Mandalay Tada_U Tada_U Township Health Department 13 Magway Yaenanchaung Yaenanchaung Township Health Department 14 Magway Magway Magway Regional Health Department 15 Ayeyarwaddy Pathein Pathein Regional Health Department 3. Health Facilities No. State/Region Township Facility Level Name of Facility 1 Sub-Center Kada SC 2 RHC Chaung Hna Khwa RHC Kyaikmayaw 3 Station Hospital Chaung Hna Khwa Station 4 Township Hospital Kyaikmayaw Township Hospital Mon 5 Sub-Center Yin Nyein SC 6 RHC Yin Nyein RHC Kyaikmayaw 7 Station Hospital Yin Nyein Station Hospital 8 Township Hospital Paung Township Hospital IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 102 No. State/Region Township Facility Level Name of Facility 8 Sub-Center Muu Yauung SC 10 RHC ngan Tae RHC Mawlamyine 11 Station Hospital Kat Toe Station Hospital 12 State Hospital/Self-Produced Hospital Mawlamyine State Hospital 13 Sub-Center Wat Saung Sub-Center 14 Kengtong RHC Kat Thaung RHC 15 Township Hospital Keng Tong Hospital 16 Sub-Center 2 Mile Sub-Center 17 Meng Pyinn RHC Tar Kaw RHC Shan East 18 Township Hospital Meng Pyinn Township Hospital 19 Sub-Center Yan Kin Sub-Center 20 RHC Mine Koe RHC Tachileik 21 Station Hospital Tar Lay Station Hospital 22 District Hospital Tachileik District Hospital 23 Sub-Center Ma Gu Kyun SC 24 RHC Ta Gone Gyi RHC Kankyidaunt 25 Station Hospital Kyaik Latt Station Hospital 26 Township Hospital Kan Gyi Daunt Township Hospital 27 Sub-Center Chaung Ka Lay SC 28 RHC Asu Gyi RHC Ayeryarwaddy Myaungmya 29 Station Hospital Pyin Ywar Station Hospital 30 District Hospital Myaung Mya District Hospital 31 Sub-Center Linn Win Gyi SC 32 RHC Tha Latt Khuar RHC Pathein 33 Station Hospital Tha Latt Khuar Station Hospital 34 Regional Hospital/Self-Produced Hospital Pathein General Hospital 35 Sub-Center Linn Mwe Chaung Sub-Center 36 RHC Kyauktada RHC Mandalay Madaya 37 Station Hospital Oo Min Station Hospital 38 Township Hospital Madaya Township Hospital IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 103 No. State/Region Township Facility Level Name of Facility 39 Sub-Center Thin Pan Sub-Center 40 Sub-Center Hta Naung Kine (Kone Sub-Center) 41 RHC Yay Ka Moe RHC 42 Tada-U RHC Taung Pyoe RHC 43 Station Hospital Taung Pyoe Station Hospital 44 Station Hospital Theindikan Pyoe Station Hospital 45 Township Hospital Tada-U Township Hospital 46 Kyauk Sae Regional Hospital/Self-Produced Hospital Kyauk Sae General Hospital 47 Sub-Center Sal Sub-Center 48 Yenanchaung RHC Kan Gyi RHC 49 Township Hospital Yenanchaung Township Hospital 50 Sub-Center Pan Taw Pyin Sub-Center 51 RHC Yaynanma RHC 52 Min Hla Station Hospital Linn Lal Station Hospital 53 Magway Station Hospital Yaynanma Station Hospital 54 Township Hospital Min Hla Township Hospital 55 Sub-Center Nyaung Pin Sub-Center 56 RHC Kan Pyar RHC 57 Magway Station Hospital Michaungye Station Hospital 58 Station Hospital Thit Ywar Kauk Station Hospital 59 Regional Hospital/Self-Produced Hospital Magway Township Hospital 60 Yangon Regional Hospital/Self-Produced Hospital Yangon IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 104 >>> Annex 6: Questionnaires Used for Survey Refer to separate PDF files provided for Entity version of the questionnaire and for Facility version of the questionnaire. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 105 >>> Annex 7: Joint Task Force Members No. Name Position Agency MOPFI 1 Daw Naw Wilmar Oo Director, Budget Department MOPFI 2 Daw San Thida Director, Budget Department MOPFI 3 Daw Nyunt Nyunt Shwe Director, Planning Department MOPFI 4 Daw Kyi Cherry Director, Planning Department MOPFI MOPFI 5 Dr. Thant Sin Htoo Director, Asst. Permanent Secretary, NIMU MoHS 6 Dr. Win Yee Mon Director, Planning, DMS MoHS 7 Dr. G Seng Taung Director, Planning, DPH MoHS 8 U Win Oo Director, Finance, DMS MoHS 9 Daw Khine Khine Kyi Director, Finance, DPH MoHS 10 Dr. Ye Min Htwe Deputy Director, NIMU MoHS 11 Dr. Maung Maung Htay Zaw Deputy Director, Planning, DPH MoHS 12 Daw Yamin Nwe Deputy Director, Budget, DMS MoHS 13 Daw Sandar Deputy Director, Finance, DPH MoHS IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 106 >>> Annex 8: The Health Sector in Myanmar Health Sector Goals, Priorities, and Service Delivery Approach 240. The GoM stated its vision of UHC by 2030 for the 242. The government reaffirmed its commitment to UHC first time in the Myanmar National Health Policy when it formalized its approach to achieving the (1993). Translation of this high-level vision into a Sustainable Development Goals (SDGs) through concrete plan at the sectoral level came to fruition the formulation and implementation of the Myanmar only in 2016 when the National League for Democracy Sustainable Development Plan (MSDP). (NLD)-led government came into power. MoHS successfully led the formation of the five-year NHP 243. Recognizing the detrimental effects of undernutrition (2017–2021) through an inclusive, transparent, and on cognitive development, future productivity, learning, evidence-informed process with multiple government, and earning potential, MoHS has led the government’s nongovernment, and ethnic stakeholders, and the NHP effort to develop a Multi-Sectoral National Plan of Action was approved by the State Counsellor and the Cabinet. for Nutrition (MS-NPAN) to coordinate and intensify multisectoral interventions to reduce undernutrition. 241. The NHP laid out a strategic direction for achieving Following the overarching national plan, subnational the goal of UHC by 2030 through a phased and level MS-NPANs are now being developed for each prioritized approach. It aims to improve access to state or region based on their burden and causes a basic package of essential health services through of undernutrition. substantial investments in frontline primary health care service delivery units and through a range of reforms in 244. The Myanmar National Health Policy (MNHP). In the health system, including on health financing. The late 2019, the Union Minister of Health and Sports NHP also calls for engagement with key stakeholders committed to and launched the process to formulate and health care providers such as private sector, a new MNHP covering 2020–2030, to replace the old NGOs, and ethnic health organizations (EHOs). The MNHP developed in 1993. The new MNHP is expected MoHS also developed a Monitoring and Evaluation to be drafted and adopted by the end of 2020. Framework and designated a unit called National Health Plan Implementation Monitoring Unit (NIMU) 245. Essential preventive and curative services are at the minister’s office level to track implementation being delivered by MoHS’ public facilities, as well progress of the NHP. Costing of the NHP, including as private sector, EHOs, and NGOs. In peri-urban costing of the basic package of health services, was and urban areas, private provision is significant. In also carried out to inform on the financing gaps, along rural areas, while the formal private sector services with annual operational plans (see section 3.1.2). are sparse, public providers on the government IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 107 payroll undertake private practice during their off-duty Legal and Regulatory Arrangements hours, and small private pharmacies/drug shops and laboratory investigative services are not uncommon. of the Health Sector55 For populations in conflict-affected areas and vulnerable and marginalized populations in parts of the country, primary health care and emergency humanitarian 248. Legal and policy guidelines for health service health services are primarily being delivered by provision and development have been provided community-based organizations, NGOs, and EHOs, in the constitutions of different administrations. In either separately or jointly with public sector. the 2008 Constitution of the Republic of the Union of Myanmar, Article 28, 32, 351, and 36756 clearly state the 246. In addition to the MoHS, some other ministries responsibility of the state to protect the right to access are contributing to health care. They include the health care and the provision of health care, especially Ministries of Defense, Railways, Mines, Industry, for vulnerable people such as mothers, children, the Energy, Home Affairs, and Transport, which provide elderly, and the disabled. The National Health Policy health care for their employees and their families. The of 1993 provides the overall legal framework for the Social Security Board (SSB), under the Ministry of health sector. Among other things it aims to raise Labor, has its own networks of hospitals, clinics, and the level of health of the country and to promote the private providers to provide services to those entitled physical and mental well-being of the people with the under the social security scheme. The Ministry of objective of achieving ‘health for all’ using a primary Industry, which is now integrated into MOPFI, is running health care approach and to expand health services a Myanmar Pharmaceutical Factory and producing not only to rural areas but also to border areas to meet medicines and therapeutic agents to meet some of the health needs across the country. domestic needs. 249. The majority of current health laws are related to the 247. With decades of conflict, underinvestment, and Public Health Law enacted in 1972. Existing health fragmentation, coverage of essential services laws may be categorized into three broad categories: varies across the country. Since 2011, MoHS has health laws for promoting or protecting health of made significant attempts to address the bottlenecks to the people; health laws concerned with standard, increasing coverage of essential services, in particular quality, and safety of care; and laws relating to social related to improving reproductive, maternal, neonatal, organization. Most of the existing laws address issues child, and adolescent health. It continues to expand of service delivery, health workforce, and safety and the number of basic health professionals, in particular standards of care. midwives and public health supervisors, and scaled up technical training of these frontline providers. It 250. There is only one law related to health financing, has also increased budget allocation at the township that is, the Social Security Law (2012), which focuses level and below to cover the operational and recurrent on health care, paid sickness and maternity leave, and costs. Major donors such as the Global Fund, the retirement for formal sector employees. While the Social Vaccine Alliance (GAVI) and the 3MDG Fund (now Security Law provides a legal and regulatory pathway Access to Health Fund) have supported basic health or opportunity for Myanmar to improve health financing, professionals and voluntary health workers to conduct due to the rather limited coverage of the current community outreach activities and thereby expand scheme with unclear institutional agreements between community-level service delivery for prevention and the MoHS and the SSB, the law has yet to bring full control of communicable diseases, health promotion, and tangible benefits at population and system level. immunization, and maternal and child health. 55. Health Policy Mapping 2014, Ministry of Health. 56. Article 28: The Union shall:(a) earnestly strive to improve education and health of the people; (b) enact the necessary law to enable National people to participate in matters of their education and health; Article 32: The Union shall: (a) care for mothers and children, orphans, fallen Defense Services personnel’s children, the aged and the disabled; Article 351: Mothers, children and expectant women shall enjoy equal rights as prescribed by law. Article 367: Every citizen shall, in accord with the health policy laid down by the Union, have the right to health care. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 108 251. The government also enacted a more recent law Under the RHCs, there are SCs staffed by midwives and relating to Private Health Care Services (2007). public health supervisors and supported by volunteer However, given the growing size and scope of the private networks of auxiliary midwives and community health sector in health, there is a need for the government to workers. Health committees had been established at fully leverage and strengthen regulatory measures for various administrative levels down to the wards and the private sector to improve the population health and village tracts to enhance engagement with community increase financial risk protection. and relevant sectors. The level of functioning of these health committees, however, varies significantly and MoHS is revitalizing the health committees through the Institutional Arrangements for Health “Township Health Working Group” under the NHP. 255. The health care delivery system in Myanmar is fragmented. This is due to parallel programs financed 252. Myanmar has a mix of public and private system by external aid and challenges posed by MoHS’ both in financing and the provision of health reorganization in 2015 of the single largest service services. Health care is organized and provided delivery department (Department of Health) into two by public and private providers. MoHS is the largest departments (DMS and DPH). Parallel and fragmented provider of health care and is responsible for providing systems present a challenge for the government promotive, preventive, curative, and rehabilitative and MoHS to effectively implement stewardship services to raise the health status of the population. functions. There has been significant attention to improve the oversight of the sector in recent years, 253. The MoHS as a whole is headed by the Union including establishment of mechanisms to coordinate Minister who is assisted by a Union Deputy Minister. and collaborate across government, NGOs, and The ministry is organized into the Office of the Union private sectors. Minister, which is headed by a Permanent Secretary and a Director General, and seven departments based on 256. For coordination with other related government their respective functions. Each of these departments agencies, donors, implementing partners (community- is headed by a Director General, that is, Departments based organizations [CBOs], NGOs, EHOs) and of Medical Services, Public Health, Human Resources private sector and stewardship of the health sector, the for Health, Food and Drug Administration, Medical MoHS had transformed a former Country Coordinating Research, Traditional Medicine, and Sports and Mechanism (CCM) for the Global Fund into a broader Physical Education. and more inclusive platform called the Myanmar Health Sector Coordination Committee (M-HSCC) in 254. DMS and DPH combined play a major role in 2014. Several Technical and Strategy Groups are now providing comprehensive clinical and public health organized under the M-HSCC. In 2019, MoHS initiated care throughout the country. DPH is responsible for a reorganization to transform M-HSCC from a platform primary health care and basic health services including for information sharing and endorsement to one geared immunization, nutrition, environmental sanitation, for active coordination and collaboration among the maternal and child health, school health, and health actors. To date, one key Executive Working Group for literacy promotion. DMS is responsible for clinical or Communicable Diseases has been reorganized with hospital-based services, including the national health expanded scope and membership to improve synergy, laboratory and national blood bank. Disease Control coordination, oversight, and representation. Services is responsible for the control of Malaria, TB, vector born diseases, HIV/AIDS, leprosy and NCDs. 257. During the current administration (2015 present), the There are 17 state and regional health departments, 73 government introduced Sector Coordination Groups district health departments, and a township hospital in (SCGs) as a platform for intersectoral collaboration every township. Under the township hospital, there are: and coordination on the country’s development station hospitals managed by station medical officers; priorities. The M-HSCC serves as the health SCG and urban health centers and maternal child health facilities the National Nutrition Steering Committee chaired by where urban dwellers can access primary health care the Union Minister of MoHS serves as an SCG for the services; and RHCs staffed by health assistants, lady nutrition agenda. health visitors, midwives, and public health supervisors. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 109 258. More needs to be done to address the challenge that the rest of critical services remains available to of fragmentation. While fragmentation has been the public, though a reduction in utilization of health improving over the recent years, significant and services in general from the people due to concerns ongoing reforms are still needed in the governance and of infection was noted. However, with the drastic scale oversight arrangements of the government and MoHS and speed of the second wave hitting the country hard to better address the two challenges of fragmentation over a very short period, Government and MoHS have and the transition of donor-financed programs to the a real struggle on their hands to carrying out a timely government budget in near future. In addressing and effective responsive to contain the pandemic and these challenges, MoHS will also need to harness maintaining delivery of essential services. and leverage the growing private sector in health and promote conflict-sensitive and inclusive service 262. Decades of underinvestment in health sector delivery in parts of the country if Myanmar is to realize before 2011 have resulted in the weakened health its aspirational goal of UHC by 2030. infrastructure and technology. This need is more pronounced in the context of COVID where effective 259. The transition of donor-financed and vertical and timely response requires hospitals and laboratories programs to the government budget will depend to be fully equipped and set up with sufficient supplies on whether health financing reforms can provide to handle infectious respiratory outbreaks of a national a reliable and credible funding channel directly scale. Shortage of human resources for health is also to facilities that are given the capacity to manage a persistent challenge with many public health facilities those budgets. As discussed in H12 (section 3.3.3), and departments having only between a third to half of its experience in other countries that have successfully sanctioned positions filled to deliver on their increasing implemented strategic purchasing of services from local responsibilities. COVID has made this shortage more health providers is that once such a purchaser-provider acute as more health workforce is required to run and funding model is in place and the financial management deliver health care at the designated COVID hospitals and accountability capacity of local providers has been and treatment centers and to also be responsible strengthened, both donors and ministries of finance for quarantine facilities, when the health workers are willing to channel greater levels of discretionary themselves are also succumbing to COVID infection. budgets through those funding channels. 263. A large portion of the additional resources allocated for health sector response are going towards The Unfolding Impact of the COVID-19 strengthening of the critical health infrastructure and technology for both immediate pandemic Pandemic on the Health Sector response and medium to longer term preparedness. To address the acute shortage of HRH, State and Regional Government has helped to recruit volunteers 260. Myanmar reported its first confirmed COVID-19 for the operation and logistics support at quarantine and case on March 23 and first wave of COVID-19 treatment centers; MoHS has deployed health workers had relatively minor impact with less than 350 from various parts of the country to high burden areas confirmed cases and 6 deaths recorded over 21 such as Yangon and Rakhine, mobilized postgraduate weeks. However, from 16th August when a new local and undergraduate students from medical and nursing transmission case was confirmed in Sittwe, Myanmar universities and volunteer medical professionals from was hit hard with a second wave of COVID-19. Within private sector and retirees to strengthen the health a span of 6 weeks, close to 7,000 new cases were workforce. In addition, MoHS delegates more authority confirmed and more than 120 new deaths were reported. to the region and state health departments and superintendents of the COVID hospitals, and increased 261. During its first wave, even though a few health services the physical presence of its senior management at such as immunization and outreach health activities that the frontline of the response to COVID second wave typically gather people had to be suspended for a period in order to facilitate communication and coordination due to social distancing and stay-home measures, across various government agencies and smoother MoHS was able to take adaptive measures to ensure and faster decision making process. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 110 >>> Annex 9: The National PFM System Overview 267. The most relevant laws and supporting regulations are as follows: Planning: National Plan Law (2017–2018) provides • 264. The current PFM legal and regulatory framework the legal basis for the national development in Myanmar is incomplete and fragmented and is planning process; sector objectives; and the being reformed. The MoPFI is currently preparing a preparation and approval of annual, medium, and new PFM law and regulation, with the support from long-term national development plans. the World Bank and building on the findings of the 2020 PEFA assessment. This represents a unique Budgeting: An annual Union Budget Law • opportunity to modernize the country’s public financial (for example, the Union Budget Law and management, consolidate recent reforms and address Citizen’s Budget for 2018–2019) sets out the some of the bottlenecks identified by this study. GoM’s economic and fiscal policies, aggregate fiscal information including Union revenues, 265. A thorough assessment of the national PFM system expenditures, and forecast deficit using the MOPFI was completed in March 2020 through the most budget classification system. This law is under recent PEFA assessment and report. The summary revision to include the other MOPFI PFM functions. below draws heavily on this 2020 PEFA assessment to provide a detailed analysis of the PFM system as it Accounting: The 2017 Financial Rules and • currently stands. Regulations (FRRs) cover the duties and powers on PFM; spending of public funds; duties and powers of the MOPFI Treasury Department; the Legal and Regulatory Provisions procedures for submission of monthly statements for PFM57 by budget entities to the Treasury Department; and improvement in the reporting on budget execution using the GoM FRRs. 266. The 2008 Constitution contains basic provisions on Audit: The Law Amending the Auditor General of • public finances, including the Executive Power of the the Union Law, 2018 (The Pyidaungsu Hluttaw Law Union Government. Under the Constitution, the law No. 2/2018) provides the operational framework making Assembly of the Union is the national-level for the external audit institution, the Office of the bicameral legislature, the Pyidaungsu Hluttaw, which Auditor General of Myanmar (OAGM). is made up of two houses: the Amyotha Hluttaw, a 224- seat upper house, and the Pyithu Hluttaw, a 440-seat Intergovernmental fiscal relations: Myanmar’s • lower house. 2008 Constitution created states and regions, 57. This section of the report has largely been drawn from the 2020 PEFA Assessment for Myanmar, March 2020. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 111 which are ‘subnational’ governments with their own Auditor General of the Union Law of 2010 specifies legislature, judiciary, and executive. All financial that the term of office of the Auditor General of the matters and transactions are to be administered, Union and the Deputy Auditor General is the same as and responsibilities taken by the respective officials that of the President of the Union. One of the duties of are described in the Budget Laws. The region or the Auditor General of the Union is to “submit at least state governments are able to receive grants and once a year and in unusual circumstances, from time to loans from the Union fund in accordance with time,” audit reports on the accounts of the receipt and the Constitution. payments of the Union in the session of the Pyidaungsu Hluttaw, Pyithu Hluttaw, or Amyotha Hluttaw. The Joint Public Accounts Committee: The Public • Auditor General of the Union Law does not apply to the Accounts Committee comprises not more than 15 Ministry of Defense. The OAGM has offices at all levels Hluttaw representatives in accordance with Sub- of government, including Union, states, regions, self- section 115 (a) of the Constitution. The committee administered areas (SAAs), districts, and townships. is responsible for scrutinizing the budget of the Union Government and the reports of the Union State and Regional Governments Auditor General, reviewing whether or not the 270. The 2008 Constitution recognizes four different budget approved by Pyidaungsu Hluttaw has been types of subnational government under the Union. efficiently spent for the purposes intended in line There are seven states, seven regions, six SAAs, and with the 2017 FRRs. one Union territory (Nay Pyi Taw). The states and regions are a conventional de jure subnational level of Internal control system: The legal and regulatory • government created by the Constitution with legislative arrangements for the internal control system and executive arms and limited revenue generating (a useful summary is provided in Annex 2 of the powers. Section 188 of the Constitution authorizes PEFA, including around MOPFI Circular 35/2017). the executive, led by an unelected Chief Minister and a Cabinet of state/region ministers, the right to Procurement: Procurement Directive No. 1 /2017 • promulgate laws over matters for the eight sectors was announced in April 2017. This covers the tender listed in Schedule 2 of the Constitution. procedures for procurement of civil works, goods, services, rental, and sale of public properties for 271. Levels of government administration below states government departments and organizations.58 and regions serve primarily as deconcentrated units of central government. They are not regarded as independent subnational authorities. They include Institutional Arrangements for PFM59 72 districts that form the states and regions and 330 townships that form districts. Townships are further divided into towns, villages, and urban wards, but these have only limited governance structures. 268. Myanmar is a parliamentary republic as defined by the 2008 Constitution, which established three 272. Budget preparation is shared between budget and branches of government: executive, legislature, and planning department offices in each state or region, with judiciary. These branches of government are briefly the latter preparing both strategic plans (and economic described in this section, followed by a description of targets) and developing the budgets for current and other key institutions which have a significant role in capital expenditure. State/region budget departments PFM in Myanmar. consolidate monthly financial reports from the various state/region government departments and submit these Office of the Auditor General of the Union to the Union-level MOPFI Treasury Department, copied 269. The Auditor General is appointed by the President to the relevant OAGM office in each state/region and to with the approval of the Parliament. The Auditor the relevant state/region office of MOPFI. General reports to the President of the Union. The 58. The new draft Law on Public Procurement and Asset Disposal has been approved by the Cabinet and is expected to be submitted to Parliament for its approval sometime in 2020. 59. This section of the report has largely been drawn from the 2020 PEFA Assessment for Myanmar, March 2020, and greater detail can be found in that PEFA Assessment report. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 112 273. According to current 2018 Constitution, health and Organization, Central Equipment Statistics and education are considered union subjects and their Inspection Department, National Archives Department, budget is managed directly by the union line ministries Myanmar Economic Bank [MEB]). Until 2013, the without intergovernmental transfers to the state Central Bank of Myanmar (CBM) was part of the Ministry or region government. However, state or regional of Finance, but in 2013 it was separately established. government plays an important role in review and approval of the capital budget plan proposed by the 277. There is no equivalent unit fulfilling the functions of what respective state or regional health department to the in many countries is called the ‘Office of the Accountant union line ministry and during execution of approved General’ (although there are plans to move to such a capital budget (e.g., chairing the tender committee). model). Accounting and reporting functions are carried out through the combined efforts of the Treasury 274. In the context of COVID-19 response, State or Regional and Budget Departments of MOPFI, the MEB, and governments are taking more active role in the health the CBM. service delivery such as chairing the state or regional level multisectoral coordination committee for COVID Line Ministries response, implementing administrative measures 278. The 36 ministries under the Union Solidarity and for stay-at-home orders and curfews, mobilizing and Development Party (USDP) government were initially providing maintenance support for community based reduced to 21 ministries but in 2019, 4 more-line quarantine centers, coordinating on the transportation ministries were established. Each line ministry has of suspect cases and patients, etc. the responsibility for implementing tasks assigned under the 2008 Constitution. This includes managing 275. The 2018 Constitution mandates the subnational and monitoring the performance of State Economic governments to inspect, supervise and coordinate Enterprises (SEEs) under their control. the functions of all union ministries in their jurisdiction. Formalizing reporting and accountability structures between subnational governments and union line ministries, establishing an overarching Key Features of the PFM System social accountability framework and mechanism at subnational government level to seek community voices collectively on essential social services (e.g., health, 279. The Constitution establishes a Union Fund and education, electricity, water, waste management, etc.), various Region or State Funds, and the 2017 FRRs localizing the limited sets of HR functions of union further outline how these funds are to be operated. ministries (including health and education) such as The Union Government budget is operated through transfer of civil servants within the same state or region, a Union Fund account, and the 14 state and region recruitment and deployment of non gazette level staff, budgets are operated through their own State and and shared responsibility in staff performance review Region Fund accounts. The MOPFI Budget Department to the subnational governments are a few short term is responsible for preparing the budget calendar measures that can help to enhance the role of state or covering the annual budget, supplementary grant regional government in the service delivery. budget, Union Budget Law, and Union Supplementary Appropriation Law. The MOPFI Planning Department is responsible for leading and coordinating preparation of Ministry of Planning, Finance and Industry the capital budget. The Internal Revenue Department 276. The current MOPFI was formed following the is responsible for tax collection and assisting with merger of the Ministry of Planning and Economic taxpayers’ services. The MEB provides commercial Development with the Ministry of Finance in 2016 banking services and development banking services to and the merger with the Ministry of Industry late both the public and private sectors. The government’s in 2019. MOPFI now comprises 25 departments, Union Fund bank account is located at the MEB, and all organizations, or enterprises (for example, Budget, government agencies need to operate their respective Treasury, Planning, Project Appraisal and Progress agency bank accounts through the MEB to spend their Reporting Department [PAPRD], Central Statistical budget allocations and to deposit revenue collections. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 113 280. The MOPFI Treasury Department is responsible for or renewal; managing of the surplus or deficits of UFAs. cash and debt management and for reporting and With effect from October 1, 2018, the fiscal year now accounting for financial statements. The CBM plays runs from October 1 to September 30. the roles of issuer of domestic currency, banker to the government, inspector and supervisor for the financial 281. Provides a convenient overview of the structure of institutions, and banker for the financial institutions. government across Myanmar using the International At the beginning of each financial year, ministries and Monetary Fund (IMF) Government Finance Statistics departments, through their Ministry Department (MD) (GFS) system of classification of the different levels bank accounts at the MEB, and within the limit of their of government and public sector. The amounts shown quarterly cash drawing limit (DL), can start incurring as financial turnover are gross figures, that is, before expenditure. The payment system is centralized by the any consolidation or netting out of grants or transfers MEB, which maintains Union Fund Accounts (UFAs) for to lower levels of government or to SEEs. Around accepting receipts and making payments on behalf of 85 percent of the state and region revenues come all Union-level agencies, including SEEs. The Treasury from Union transfers or grants. Although districts Department manages the consolidated account of and townships are shown administratively as being the government, ‘the Government Deposit Account’, under states or regions, nearly all of their expenditure which is held at the CBM. The CBM maintains this is financed by the Union. In the case of health and Government Deposit Account for receipts or payments education expenditures by townships, districts and in respect of tax collections; subsidies or grants for states/regions, all of this is financed by the Union state and region governments; SEEs’ contributions; through the relevant ministries of MoHS and Ministry of treasury bonds/bills issuance, repayment, redemption, Education (MoE). > > > T A B L E 5 - Structure of Public Sector by Number of Entities and Scale of Financial Turnover Public Sector General Government Public Corporation Central Government Name Subsector Total Government Subsector Social Local Extra Security Budgetary Government Nonfinancial Financial Budgetary Funds Public Public Unit Units Corporations Corporations Union # 147 2 1 26 6 182 Union financial turnovera 18,272,489 States, regions, SAAs # 20 20 State/region/SAAs 2,555,715 financial turnovera Districts # 74 74 Townships # 330 330 Source: MOPFI. Note: a. Financial turnover is total expenditure amount of the 2017–2018 year; amounts are in MMK million. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 114 PFM Reforms, Ongoing and Planned consolidation of earlier reforms, improving allocative and operational efficiency of spending and the quality of corresponding public services—including in health and education. The World Bank’s Modernization of 282. There is a well-established PFM reform program in PFM Project (2014–2021) continues to support the Myanmar led by MOPFI, supported by development first two phases of the reforms while also laying the partners, mainly through the Modernizing PFM foundation for phase 3. project. In 2012, the government conducted a PEFA assessment and the IMF completed a Review of Public 284. The GoM has published a new Public Financial Finance Management. The 2013 PEFA assessment Management Reform Program Strategy (2019 to informed the development of a phased reform program 2022). The World Bank is supporting this strategy coordinated by a PFM Executive Reform Team (ERT) through more in-depth analysis in key areas including led by the Deputy Minister for Planning and Finance. the 2020 PEFA assessment, PFM capacity building, The GoM articulated a PFM reform strategy in 2013 PFM in Health service delivery, development of an that focused on a phased modernization of the PFM implementation strategy for the proposed Public system to develop the internal capacities needed to Procurement Law, domestic revenue mobilization, effectively manage the phased reform program and development of accounting standards, and support improved service delivery. The IMF review led improvement in financial reporting. This PFM in the to the establishment of a Treasury Department and Health Sector assessment and report will also include an analysis of tax administration and tax policy that an action plan to address PFM bottlenecks to health identified reform priorities. service delivery. 283. The PFM reform strategy aims to modernize the Chart of accounts and Integrated Financial Management PFM legal and regulatory framework, systems, and Information System (IFMIS) reforms led by MOPFI will practices to support Myanmar’s socioeconomic be supportive of other reforms in the health sector. The development objectives and to improve service ministries of health and education have large service delivery delivery. The scale of the necessary reforms required programs at state, region, township, and district levels. Their a phased approach. The first phase looked to establish ability to prepare timely and reliable consolidated budgets the legal and regulatory foundation, basic systems and consolidated financial reporting is limited by the current for fiduciary management, and capacity building in chart of accounts and by the lack of distributed or remote information and communication technology (ICT) access to any national level IFMIS or related data analytical and English language. The second phase further tools. The review of PFM functions that affect health service strengthens the regulatory framework and information delivery (discussed in the next section) will need to balance systems in line with international standards and good MoHS’ urgent needs for more timely and reliable consolidated practices, as well as an increased focus on macro- budgeting and financial reporting with MOPFI’s medium-term fiscal stability and tax policy and administration reforms time frame for reform of the chart of accounts and rollout of to create the fiscal space needed for Myanmar’s any new IFMIS. development. The third phase will be focused on the IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 115 >>> Annex 10: Procurement Steps Required for Average Construction Project Budget Approximate Dates Under Year (BY) Activity or Milestone Current Practice BY-1 End of September Budget approved by Parliament in the year before (BY-1) the Budget Year. BY-1 End of September Budget letter from MOPFI to MoHS to start the budget execution process should be received before the beginning of the new Budget Year. BY Early to mid-October Departments submit proposal to MoHS Executive Committee on the level of construction and for which facilities. BY Mid to late October MoHS sends the letter to State and Region Government for formation of committee for procurement/tender process BY Late October to mid-November State/Region Chief Minister assigns the Social Minister to set up committees for procurement/tender process and convene the committee. (Note: These committees are constituted afresh each year and do not carry over into a new budget year. This is not dependent on budget and could be done in September of BY-1. For 2019/20 the Health Minister assigned a Director General to inform and consult each State Minister to speed up formation of committees). BY Mid-November to mid-December Tender Committee approves release of tenders or advertising of invitation to bidders including in the newspapers. BY Mid-December to mid-January Tender Committee convenes to consider specific tender proposals. BY Late January Tender Committee report with recommendation of winning bid sent to State or Region Chief Minister. BY February Chief Minister reviews the Tender Committee report and recommendation in consultation with Cabinet of State/Region. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 116 Budget Approximate Dates Under Year (BY) Activity or Milestone Current Practice BY Early March Cabinet of State/Region notifies the State/Region Health Department of the decision. BY Mid-March State/Region Health Department negotiates contract with winning bidder. Contract signed. BY Late March Contract work can commence work, that is, construction site assessment, soil testing, and so on. (Note: Winning bidder sometimes will insist on this before signing contract. This early work on feasibility, construction site assessment, and so on could ideally be financed or contracted separately in the previous financial year (BY 1). But currently that is not allowed or possible.) BY April Construction (but labor is generally scarce as it is Myanmar new year long break) (Note: April is Water Festival period) BY May to September Construction can continue. Progress can be monitored. Payments can be made to contractor. (Note: Monsoon season is June to early November, so construction can be delayed. Bricks are generally produced during the dry season from December to May.) BY End September Progress payments to contractor can no longer be made as budget lapses at the end of September. BY+1 October New Budget Year (BY+1) IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 117 >>> Annex 11: Alternative Arrangements for Procurement During Travel Restrictions Due to Spike in Corona Virus (COVID-19) in Myanmar Project Implementing Agencies are encouraged to take the following additional remedial measures to ensure that procurement for project activities do not grind to a halt, whiles ensuring that enough interest and competition is generated among potential bidders. Subject Normal Practice Additional Measures Publication of Invitation for bids/ Request for In addition to publishing invitation for bids/ request for Procurement expression of interest/Invitation of expression of interest/Invitation of prequalification in Opportunities Prequalification are published in newspapers and UNDB, consider publishing on Ministry’s newspapers and UNDB freely available website. Issuance of bidding Sell hard copies Make the bidding documents available for download on a documents to freely available web site or make them available via email to interested bidders interested bidders Pre-Bid meeting and Bidders travel to Employer Due to travel restrictions as a result of COVID-19 pandemic, site visits country and visit sites there will no Pre-bid Meeting and site visit. The Employer will send the short video of the sites to the registered prospective bidders. Bid security Bid security required Consider requesting for bid securing declaration in lieu of bid security because of the difficulties bidders may have due to the COVID-19 pandemic. If you insist asking for bid security, the bid security can be submitted via SWIFT (Society for Worldwide Interbank Financial Telecommunication) or a printed copy of the bid security, subject to the original arriving at a later date through courier (please state the date). IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 118 Subject Normal Practice Additional Measures Submission of Power Original documents must be Be flexible and clear: The bidding document should specify of attorney, bid submitted the treatment of bids that are submitted through emails. form and other legal You should include a language stating that copies of such documents in original documents as bid form, bid securing declaration and power of attorney etc. are accepted while arrangements to submit the original are sent through courier to be received by a certain deadline. Payment receipts for the courier should be attached to the bids to be considered valid. The copies will then be treated as if they are originals until the originals are received by the deadline. Bid submission Bids are submitted in hard copy Alternative to the option of submitting bids in hard copies either physically or by courier must be allowed. The following options could be considered to be acceptable: a. technological solutions: permit bids to be submitted by electronic means, for example: scanned and attached to an email. When this option is allowed: (i) agency’s email shall be stated clearly in the BD; (ii) the bid must be encrypted or password protected documents as an attachment(s); (iii) clients/purchasers should regularly check Inbox and SPAM folders for the receipt of electronic bidding documents or electronic bids and any related communication; (iv) Clients/purchasers will confirm receipt of each bid; (v) there must be arrangements to ensure that bids submitted by email are all opened at the same time, to ensure the integrity of the process; (vi) in the case of password protected bids - within one hour after the bid submission deadline bidders must send the password of their password protected bids to the email address specified in the bidding documents. b. authorized representative: request interested bidders to instruct a third party in-country representative to print the bid and deliver copies to the purchasing agency. The representative could be a business partner, diplomatic mission or a print store that couriers the bid. In such cases, representatives should submit letter of authorization or power of attorney when submitting the bid on the bidder’s behalf. Bid Openings and Face to face public bid opening Consider use of virtual bid openings and pre-bid meetings. pre-bid meetings and meetings and site visits Site visits may also be conducted virtually and recorded and site visits shared with interested bidders. Minutes of bid Signed minutes of bid opening by opening committee shall be opening shared with all bidders by email. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 119 Subject Normal Practice Additional Measures Monitoring Procurement staff and task teams Increased use STEP to monitor progress with implementation procurement use STEP to monitor progress of the procurement plan for all procurement under the project. progress with implementation of the During this period additionally emphasize and follow up with procurement plan especially for the Borrower to regularly update STEP for procurement contracts subject to prior review. subject to prior and post review. This includes entering the relevant bidder information in a timely manner. This will enable the Bank to monitor progress remotely based on updated STEP data and to initiate procurement post review. Submission of Submission of complaints Emphasize the option of electronic submission of complaints complaints following the same medium as including ensuring that Procurement Documents provide an bid submission i.e. submission of email address to which complaints should be sent. Someone physical copies or via courier in the implementing agency team should be elected to regularly monitor such accounts and acknowledge receipt of such complaints. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 120 >>> Annex 12: Note on Myanmar Budget Flexibilities to Deal with Shocks, Such as COVID-19 (6 June 2020) I. Introduction This note considers flexibility under existing law, Regulations 3. 10% re-appropriation - every line ministry can do the on Financial Management 2017, to allow budget reallocation 10% re-appropriation on their FY2019/20 budget estimate for COVID-19 relief expenditures and recommendations for (BE) for COVID-19 response excluding loans and grants future changes enhancing the ability to response to emergency for financial expenditure. If they cannot spend 10% of their expenditures. It further proposes provisions for the new PFM budget estimate, they must surrender the leftover amount law to improve budget flexibility and emergency financing. to the General Reserve Fund (GRF). Every ministry can request COVID-19 expenditure from GRF and they need In response to COVID-19 pandemic, MOPFI has issued the to submit cabinet for approval. Once cabinet approves, budget instructions to line ministries and agencies in order to they need to send MOPFI for financial approval. facilitate budget reallocation as follow: 4. Track of the reallocations: MOPFI, Budget department 1. Contingency fund - FY2019/20, the spending of will prepare a track of the reallocation for GRF. contingency fund has been incurred with the approval of Administrative Committee of Line Ministries and State and 5. A new budget line for COVID-19: Recently, MOPFI has not Region Cabinet. FY2020/21, MOPFI will be allocated with created yet a new budget line for COVID-19 within the year. additional 50 billion Kyat in contingency fund. 6. General Reserve Fund - the following disciplines for 2. Procurement - the President Office issued the special (No.1/2019) have been eased by MOPFI on 5th March case approval to ease tendering rules. For example, 2020 for immediate response to COVID-19 pandemic. exemption of tender procedure and direct procurement Since, the MOPFI issued the instruction (No.1/2019) on for health equipment and medicines which was submitted December 2nd, 2019 addressing the re-appropriation and by MOHS to President Office for urgently needs for reallocation from General Reserve Fund (GRF) referring COVID-19. to the Financial Management 2017, Chapter VI, Managing IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 121 Budget Allotment. Regarding the re-appropriation from II. Budget Reallocations Under GRF, the following items are allowed. 2017 FRR • Expenditure related to additional foreign grants and loans receipts after the approval of Union Budget Law and Supplementary Budget Law Clause 43 of the Financial Management 2017 provide four • Essentials expenditure related to unexpected and methods for changing expenditure during the fiscal year. urgent activities, special activities in line with GOM’s policies after the approval of Union Budget Law and 43. Although the essential matters are not included in Supplementary Budget Law the budget estimate in the financial year, this can be • An increase in expenditure due to market price spent by the options of re-appropriation, requesting increase for same quantity for procurement as planned supplementary grant, incurring from surplus amounts • An increase in expenditure for purchasing fund and contingency fund. machineries due to exchange rate fluctuation which in line with GOM’s instruction (41/2018) (instruction for 1. Re-Appropriations (Clauses 44-47) contracting) Union level departments at the level of Director General • Expenditure for purchasing urgent/emergency health can move from account head to account head within the equipment and others office equipment department and from one department to another department • Insufficient fund for re-appropriation as per 2017 FRR provided that this does not involve moving: Regarding the re-appropriation from GRF, the following • salary or entertainment or reserved expenses items are not allowed. • capital from one account head to another (example between machinery and other expenditures within • Utilization for surplus fund of salary, entertainment, a project) reserved expenses and tender under current capital • capital to recurrent or recurrent to capital • Expenditure for activities which have been already cut • contribution, investment, interest or debt financing by Hluttaw and tender announcing nearly end of FY expenses to another account head or vice versa • Expenditures excluded in the National Plan (translation a little unclear on vice versa) • Expenditure for surplus of re-appropriation which has • for the purpose of new expenditure for both current and been done re-appropriation process previously capital (like COVID related) • Expenditure for different approved specification as per Procurement directive Expenditures for reallocations must be reported in the • Expenditure at next FY although it includes in the revised estimate submitted to the Hluttaw. Expenditures for approved budget estimate reallocations after the submission of revised estimate must be • Expenditure for unrelated taxation payment from reported in the actual expenditure report to the Legislature. surplus fund of tax exemption • Utilization of expenditure from surplus fund of foreign FRR Clause 46: Transfer of surplus funds of current grant and loan which could not utilized during FY. expenditures of one department/organisation within a Ministry Since this expenditure has been approved to utilize can be moved to another department/organisation with a from GOM’s fund deficit in accordance with MOPFI directives provided that this • 2nd time Re-appropriation (example: Dept deposited does not involve moving: back to MOPFI as a surplus fund for those account heading then requested again for insufficient fund for • capital to recurrent or recurrent to capital same account heading) • contribution, investment, interest or debt finance expenditure to another account head or vice versa The following areas are not allowed for re-appropriation • for the purpose of new expenditures and re-appropriation from GRF Expenditures for reallocations must be reported in the • Purchasing of luxury equipment which exclude in the revised estimate submitted to the Hluttaw. Expenditures for approved budget estimate reallocations after the submission of revised estimate must be • Purchasing more office equipment under which in reported in the actual expenditure report to the Legislature. consistent with the approved budget estimate IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 122 MOPFI can move surplus current expenditure from a oversight. The PFM law would typically specify these checks department/organisation/ministry to another department/ and balances and thresholds. organisation/ministry where there is a deficit. 2. Supplementary Grants MOPFI can move capital under an account head of one There is a very broad power for ministries and organisations department to an account head of another department with insufficient budget estimates or where re-appropriation if Construction Work Coordination Board (Capital) and does not apply, to seek a supplementary grant. Funds cannot Equipment Control Committee agree. be spent until the Supplementary Appropriation Law has been passed and once passed this money cannot be re-allocated so MOPFI can move surplus from current (including contribution it needs to be structured in a sensible way in the appropriation and interest), capital, debt finance expenditure of subordinate law (clause 56). department of a union level administrative organisation or ministry to current (including contribution and interest), capital, Comment: A current issue is that these supplementary debt finance expenditure of another department provided that budgets in Myanmar tend to be large, across spending units the surplus first goes through the general funds account. and distort the original budget passed, forming a de facto second budget process. A possible way to restrict this is to This re-appropriation by MOPFI can be for new expenditure limit the number and scope of supplementary budgets only approved by the Union government, however if it is capital to significant and selective reallocations (above the 5 % (projects) it must be included in the national plan of the virement flexibility to be provided to MOPFI) and to urgent financial year. and unforeseen additional expenditures (such as COVID) once the enhanced budget reserve/ contingency fund has There are also many specific provisions relating to re- been exhausted. With increased virement flexibility and an appropriation of SOE funds, Council, States, Regions, and enhanced budget reserve/ contingency fund, there should be Central Bank not discussed here (clauses 48-55). less need for supplementary budgets every year. Ceasing having large supplementary budgets would also improve Comment: In practice, in-year budget adjustments are incentives for line ministries to improve their budget estimates difficult to process due to a lack of understanding of the rules, and execution (no systematic second chance), increase fiscal lack of information on budget execution and commitments transparency and reduce transaction costs for MOPFI. and a lengthy approval process. Rules should be simplified with clearer guidelines on when, how and to whom to submit Furthermore, the introduction of a fiscal responsibility transfer requests. To improve flexibility for reallocation, framework into the PFM law involving medium term measurable the prohibitions should be reduced to fewer at the Director fiscal objectives (including debt, budget balance) linked to General level within their organisation or ministry, for example fiscal responsibility principles, would help frame the annual by prohibiting movements of: budget and include transparency requirements and deviation procedures. This can improve the quality of forecasting, fiscal • capital to recurrent policy, budgeting and reporting and enhance accountability • into travel or personnel or entertainment from any other for fiscal performance. Tabling a supplementary budget that account head deviated from the measurable fiscal objectives would trigger • out of transfers and benefits to other account heads the deviation procedures and require the government to explain itself and to take action to correct the deviation. In the unless MOPFI approves these movements. absence of this framework, it is hard to recognise emerging fiscal issues in a timely way and to discourage increases in At the level of a ministry or organisation the power to reallocate expenditure during the budget year. could be permitted to another ministry or organisation, with government/ MoPFI approval, up to x% of the entity having 3. Contingency Fund the money removed (e.g. 5% needs to be modelled) and with This fund is for expenditure that has to be incurred that has not a limit of x% of the budget (e.g.5% needs to be modelled) for been included in the budget. It must be approved by the Union total movements of all funds between entities in any financial Government which must submit the “matters incurred”, the year. Beyond this, the approval of the Legislature should be expenses and the reasons, to the next convening session of sought to avoid undermining Legislature its decision rights and IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 123 the Pyidhaungsu Hluttaw (clause 57). This appears to permit within the year precludes its treatment as an emergency or ex post approval. disaster fund. The reserve is often underspent for several reasons, including inflexible budget rules. As an alternative Comment: This is a very broad power without the usual limits to using small appropriated reserves or in addition to these, on purposes and size. It should give the government scope to it is therefore recommended to increase the contingency use the Contingency Fund as a mechanism for the COVID-19 fund and clarify the condition and modality of its use situation, assuming there are no other legal instruments including for disaster financing, such as natural disaster of restricting its use, however, the use of the contingency fund COVID epidemics. should be restricted to exceptional circumstances such as natural disaster and emergency financing to avoid the creation 4. Surplus Amounts Fund of arrears and fiduciary issues. FRR clause 43 stated that department and agency can re- appropriate their budget for essential expenditure although it In practice, contingency reserves are budgeted under the was not included in their original budget estimate during the MOPFI and are appropriated in-year. However, the amount fiscal year through supplementary grant (RE) from surplus of the reserve is low, on average only 0.4% of the approved amounts fund and contingency fund. budget, and has proven to be inadequate to respond to the unforeseen needs resulting from the Covid 19 crisis. Surplus funds mean “a fund which is unspent and re- Furthermore, the allocation of the reserve across MOPFI, deposit back to MOPFI from BE, RE, GRF and Contingency/ states, regions and line ministries as additional allocations emergency fund”. III. Summary Clause 43 of the Financial Management 2017 provide four methods for changing expenditure during the fiscal year. Methods Can Can’t 1. Re-appropriations • Union level departments: DG can • salary or entertainment or reserved FRR 2017 (clauses re-appropriate from one account head expenses 44-47) to another account head under same • capital across account (e.g. machinery to department construction under same project) • Line ministry: reallocate surplus current • capital to recurrent (vice versa) expenditure from one department to another • contribution, investment, interest or debt department under the same ministry per financing expenses to another account MOPFI’s directives head new expenditure (like COVID related) • MOPFI: reallocate surplus current • must be reported to the parliament expenditure from a department/ (Pyidauggsu Hluttaw) as part of a Ministry’s organisation/ministry to another department/ revised estimates organisation/ministry 2. Supplementary Ministries and organisations with insufficient BE • Supplementary Appropriation Law need to grants FRR 2017 or can’t re-appropriate, can seek a supplementary be approved (clauses 56) grant (which occur after 6 months into the FY) • Once approved cannot be re-allocated 3. Contingency fund Must submit the “matters incurred”, the expenses FRR 2017 (clauses 57) and the reasons, to the next convening session of the Pyidhaungsu Hluttaw IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 124 Methods Can Can’t 4.Surplus amount department and agency can re-appropriate their fund FRR 2017 budget for essential expenditure although it was (clause 43) not included in their original budget estimate during the fiscal year through supplementary grant (RE) from surplus amounts fund and contingency fund 1. Rather than trying to work at a micro level with a myriad expenditures, the Minister may issue a warrant for of prohibitions around reallocations, to accommodate emergency expenditure as may be necessary and in the the COVID-19 spending changes, it would be best to public interest and propose Estimates for Emergency use the contingency fund and a supplementary budget and an Emergency Appropriation Bill to authorise and to update the financial rules for re-appropriations such expenditure. and virements and for the contingency fund. The main options are below: The contingency fund could be Expenditure under a warrant for emergency expenditure used immediately as it does not appear to have any may be made in anticipation of the passing of the preapproval requirements from the legislature. If it lacks Emergency Expenditure Appropriation Bill.” funds for COVID response it can be increased through donor financing. “Emergency expenditures” would need to be defined possibly with reference to a declaration of emergency. However, defined 2. The Supplementary budget currently being finalized should it should not involve a time-consuming process to trigger its reflect the significant new COVID expenditures, and any use. A process for dealing with emergency expenditure not movements of funds from one appropriation to another approved by a subsequent Emergency Appropriation Act or movements above and beyond the limited flexibility could be set out, such as an “excess expenditure procedure” provided under the current FRR for re-appropriations (e.g. often included in modern PFM laws. virements across departments or to current expenditures). Medium Term Option 3. Less urgent and significant COVID/ CERP expenditures As noted above, a modern PFM law is required that includes should be incorporated into the 2020/2021 budget fiscal responsibility requirements, a robust annual budget proposals currently discussed with line ministries. This is process and execution, more flexible re-appropriation rules, notably the case for the revision and reprioritization of the an improved contingency fund, comprehensive financial public investment portfolio and pipeline foreseen in CERP management provisions, modern accounting and reporting action 7. requirements, and entity accountability frameworks for the various types of government institutions that are tailored to 4. A short-term amendment of the FRR is recommended to provide incentives for delivery and sanctions for misconduct. revise and modernize the rules for re-appropriations and Policy notes have been prepared to that effect and the PFM virements within the executive as well as improve the working group is working on their incorporation. contingency fund, which can then be consolidated by the new PFM law under preparation. Examples of Provisions for the New 5. use emergency spending powers under other laws, if any. PFM Law Below are some examples of drafting provisions for the PFM law to increase budget flexibility and responsiveness, through 6. Call the legislature back and pass under urgency a law (i) supplementary estimates, (ii) the enhanced contingency that has the following provision: fund, and (iii) reallocations and virements (re-appropriations) provisions. These would need to be discussed and refined to “If the funds available under current spending flexibilities be fully applicable to Myanmar. in the law are not sufficient to meet emergency IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 125 Supplementary Estimates, Supplementary 4. The Government may propose Supplementary Estimates and a Supplementary Appropriation Bill to reduce Appropriation Bill expenditure or reallocate expenditure when such 1. Any expenditure proposed during the year by a Public reallocation is not within the power of the Government to Entity that is not within the Appropriations approved by make without an appropriation. the Legislature in the Annual Budget shall be- 5. The Government shall endeavour to present the a. funded through the virements authorised under this Supplementary Estimates and Supplementary Act; [called re-appropriations in the regulations but Appropriation Bill as soon as practicable and no later than this isn’t the correct term as it isn’t appropriated again- the end of the financial year to which the Estimates and instead better to use the terms virement of changes Bill relate. by managers of a budget for an entity and reallocation for changes by government between the budgets of different entities] Example of Drafting Provisions in the PFM b. funded through an allocation from a Reserve Act for a Contingency Fund Appropriation consistent with the procedures set out 1. There shall be a Contingency Fund established by this Act. in this Act; c. deferred until future financial years if this can be done 2. The Minister may authorise the use of the Contingency without substantially harming the public interest; or Fund for unforeseen expenditure which in the context of d. if funding by the ways set out in subsection (1) (a) to this section means the expenditure- (c) is not possible then Supplementary Estimates and Supplementary Appropriation Bill shall be presented a. is for a significant need that cannot be delayed until to the Legislature. future financial years without harming the public interest; 2. If in respect of any Financial Year it is found- b. cannot be funded using the virement provisions under this Act, or other flexibilities for managing expenditure a. that the amount appropriated by the Appropriation Act available; for any purpose is insufficient or that a need has arisen c. has not been adequately provided for in the Annual for expenditure for a purpose for which no amount has Budget; and been appropriated by the Appropriation Act; or d. does not relate to an increase in salaries or in the b. that any moneys have been expended for any numbers of permanent Public Officers or Public purpose in excess of the amount appropriated for Office Holders. that purpose by the Appropriation Act or for a purpose to which no amount has been appropriated by the 3. The Contingency Fund shall not exceed X% of the Appropriation Act; recurrent expenditure of the Annual Budget. Supplementary Estimates showing the sums required 4. The Permanent Secretary of the ministry responsible or spent shall be tabled in the Legislature and when the for finance shall ensure that all expenditures made from Supplementary Estimates have been approved by the the Contingency Fund are allocated to the relevant Legislature, a Supplementary Appropriation Bill shall be budgets of the recipient entities and are subject to the introduced providing authorisation for such sums and same requirements for the management and reporting of appropriating them to purposes specified therein. other expenditures. 3. The Supplementary Estimates and Supplementary 5. The Permanent Secretary of the Ministry responsible for Appropriation Bill shall be accompanied by an finance shall report on the Contingency Fund in the Mid- explanation from the Minister as to the impact of the Year Review Report and the Financial Statements of the additional expenditure or financing on the performance Government required under this Act, and shall include of the Government against the fiscal objectives in the information on the date of withdrawal, amount, the entity Fiscal Strategy Report and other fiscal responsibility receiving the funds, and the purpose. requirements in sections * to * IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 126 6. The Auditor-General in scrutinising the utilisation of the b. vire capital funds between projects if the projects have Contingency Fund shall assess whether the monies the same source of funding. withdrawn have been allocated and utilised in the manner consistent with this Act and shall report to the Legislature 2. A Managerial Head shall not - on any improper utilisation. a. vire from capital to recurrent; Example Drafting for the PFM Act for b. vire into travel or personnel or entertainment from any other account head; or Virements and Reallocations c. vire out of transfers and benefits to other account (Re-Appropriations) Provisions heads; Reallocations unless the Financial Secretary approves such virement. The Government shall not reallocate funds between top tier 3. When making virements of expenditure, the Managerial budget entities [this would usually be ministries, etc] without Head shall have regard to the obligation to deliver the authorisation by the Legislature through Supplementary performance in the Annual Budget and Annual Plan in Estimates and a Supplementary Appropriation Bill or resolution relation to the funds appropriated, and the Financial except that the Government may reallocate up to 5% in total Secretary shall have regard to such obligation in issuing for a financial year of a top tier entity’s budget to another top a warrant. tier budget entity, provided that the total of all reallocations made by the Government in a financial year shall not exceed 4. The Managerial Head shall submit a report on the 5% of the total annual budget. details of any virements made under this section and the performance of the service affected, to the Ministry Virements responsible for finance in the form and within the timeframe set by the Ministry responsible for finance. 1. A Managerial Head of a top tier budget entity may- 5. The Minister shall report to the Legislature on all virements a. vire funds between non-salary recurrent economic made under this section and the performance of the items as specified in Regulations, Rules or Directions; Appropriations affected in the Mid-Year Review Report or and Financial Statements. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 127