BUDGET EXECUTION Qurat ul Ain Hadi IN HEALTH: FROM Johan Verhaghe Hammad Yunus BOTTLENECKS TO SOLUTIONS CASE STUDY SERIES PAKISTAN Cover images: Upper © Dusit/Adobe Stock Lower © DFID - UK Department for International Development Health, Nutrition and Population (HNP) Discussion Paper BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS CASE STUDY SERIES PAKISTAN Qurat ul Ain Hadi Johan Verhaghe Senior Financial Management Specialist, Health, Consultant, World Bank, Washington DC, USA Nutrition, and Population Global Practice, World Bank, Washington DC, USA Hammad Yunus Consultant, World Bank, Islamabad, Pakistan ABSTRACT: Pakistan’s overall national health budget had a high rate of execution from 2016 to 2019, averaging 95 percent. However, execution rates between provinces as well as between categories of spending varied significantly. At the health facility level, execution of spending is notably challenging, particularly for non-wage expenditure. Good practices that facilitated better budget execution included strong integration of payroll and personnel records in most provinces as well as the contracting out of the provision of primary healthcare services to the private sector in Sindh, Baluchistan, and Punjab Provinces. This approach has facilitated more consistent budget execution rates and evidence of resources reaching the facility level. There remain challenges, however, with ensuring the accountability of how these resources are used. The main bottlenecks holding back the quality of budget execution include an inability to track primary, secondary, and tertiary healthcare budgets and their execution; systematic over-estimation of resources by the provinces; weaknesses in budget preparation processes; inefficiency in spending control processes; lack of autonomy for primary healthcare facilities; insufficient integration of vertical programs in local health systems; and lack of a process for capturing spending arrears. Disclaimer: The findings, interpretations and conclusions expressed in the paper are entirely those of the authors, and do not represent the views of the World Bank, its Executive Directors, or the countries they represent. Correspondence Details: Qurat ul Ain Hadi qhadi@worldbank.org Budget execution in health: from bottlenecks to solutions © The International Bank for Reconstruction and Development / The World Bank, 2025 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. 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Because The World Bank encourages dissemination of its knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes as long as full attribution to this work is given. Any queries on rights and licenses, including subsidiary rights, should be addressed to World Bank Publications, The World Bank, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2625; e-mail: pubrights@worldbank.org. Graphic design. David Lloyd Design (DLD). Unless otherwise credited, all images used in this report were created in part with Midjourney AI and overlayed with graphics created by DLD. Any resemblence to a real individual is accidental. This interactive document has been optimised for use on computers and tablets in portrait orientation. Click on this square to return to the contents page SECTION NAME Click on this section to return to the beginning of the section CONTENTS CONTENTS ACKNOWLEDGMENTSII 1. HEALTH FINANCING CONTEXT 01 2. BUDGET EXECUTION IN HEALTH 07 3. PUBLIC FINANCIAL MANAGEMENT CONTROLS FOR HEALTH SPENDING 10 4. GOOD PRACTICES AND BOTTLENECKS 14 REFERENCES18 LIST OF FIGURES FIGURE 1: PUBLIC HEALTH SYSTEM STRUCTURE IN PAKISTAN 03 FIGURE 2: STRUCTURE OF HEALTH SPENDING PER CAPITA IN PAKISTAN, 2016-19 06 FIGURE 3: SHARE OF HEALTH BUDGET IN TOTAL FEDERAL AND PROVINCIAL BUDGETS 2016/17-2019/20 06 FIGURE 4: ORIGINAL HEALTH BUDGET EXECUTION, FISCAL 2016/17-18/19 08 FIGURE 5: EXPENDITURE ACROSS ECONOMIC CLASSIFICATION, FISCAL 2018-19 09 FIGURE 6: DISTRICT HEADQUARTER HOSPITAL BUDGET EXECUTION LEVELS, 2016 09 LIST OF TABLES TABLE 1: SIZE OF THE HEALTH SECTOR 04 TABLE 2: SUMMARY OF BUDGET EXECUTION GOOD PRACTICES AND BOTTLENECKS IN PAKISTAN 15 BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN i ACKNOWLEDGMENTS ACKNOWLEDGMENTS This study is part of a broader analytical collaboration between the World Health Organization (WHO) and the World Bank to address budget execution problems in the health sector. The study’s findings feed into a synthesis report, which is released concurrently: Budget Execution in Health: From Bottlenecks to Solutions. This study was authored by the Pakistan World Bank team, including Qurat ul Ain Hadi (Senior Financial Management Specialist, World Bank), Johan Verhaghe (Lead Consultant), and Hammad Yunus (Public Financial Management Consultant). The study was also benefitted from the review of Jahanzaib Sohail (Senior Health Specialist) and Hnin Hnin Pyne (Program Leader, HNP). It follows a case study protocol developed by Hélène Barroy (Senior Health Finance Specialist, WHO), Moritz Piatti-Fünfkirchen (Senior Economist, World Bank), and Amna Silim (Senior Consultant). Quality assurance was provided by Hamish Colquhoun (Senior Consultant) and Moritz Piatti-Fünfkirchen (Senior Economist). Technical editing and communication support was provided by Zac Mills (Senior Consultant), Hamish Colquhoun (Senior Consultant), and Alexandra Michele Beith (Senior Consultant). The study benefitted from management oversight by Agnès Couffinhal (Global Program Lead for Health Financing) and Monique Vledder (Practice Manager, HNP). It was made possible through generous financial support from the Global Financing Facility (GFF). The authors are grateful to the World Bank for publishing this report as an HNP Discussion Paper. ii BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 1.0 HEALTH FINANCING CONTEXT HEALTH FINANCING CONTEXT Health became a fully provincial mandate At the district level, Basic Health Units when the 18th Constitutional Amendment (BHUs), Rural Health Centers (RHCs), in 2010 removed the Concurrent Legislative Maternal and Child Health Centers (MCHCs), List (i.e., the federal–provincial concurrent and Dispensaries deliver primary healthcare. powers) from the Constitution. This change A Basic Health Unit has a catchment area of allowed provinces to pass local health laws 10,000-15,000 inhabitants and mainly provides (Punjab 2010, Sindh 2014, and Khyber preventive and basic care, including maternal Pakhtunkhwa (KP) 2015) and implement and child health services, immunization, devolution at the district level. Despite diarrhea and malaria control, child spacing, weaknesses, the 18th Amendment is generally mental health, school health services, considered a milestone towards fiscal prevention and control of locally endemic decentralization and provincial autonomy. diseases, and provision of essential drugs. In principle, the shift allows for the design A Rural Health Center has a catchment area of provincial and district Annual Development of 25,000-50,000 inhabitants and provides Plans, including priority-oriented health preventive and outpatient healthcare, mainly policies and relevant budgets. curative services for common diseases. Maternal and Child Health Centers are part The National Finance Commission makes of the integrated health system and focus a single-line budget transfer to the provinces on maternal and child health. Secondary care from the federal divisible pool of revenues is provided in Tehsil Headquarter Hospitals (see Figure 1). Provinces then decide on the (THQs), which cover 100,000-300,000 intersectoral budget allocations. Based on individuals, and District Headquarter Hospitals a pre-established formula, the Provincial (DHQs), which cover 1-2 million individuals. Finance Commission distributes available Primary and secondary healthcare constitute resources, including federal transfers and the district health system. Major hospitals provincial-generated revenue, between the (with specialized facilities) provide tertiary province and the districts. Before devolution, healthcare and operate under the authority provincial health departments exercised direct of Provincial Departments of Health (See Table administrative control over districts, including 1, page 3). supervision and authority for allocating primary healthcare budgets. Today, tertiary healthcare remains under the provincial health department, but primary and secondary healthcare have been devolved to the districts.1  varying degree and different institutional arrangements of the health mandate are devolved to districts across the provinces; this is 1A regulated in the Local Government Acts. 02 BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN HEALTH FINANCING CONTEXT Figure 1 Public Health System Structure in Pakistan Federal Provincial Government Governments (Special (Provinces Balochistan, regions) KP, Punjab, Sindh) Provincial MoDefense MoKANA MoNHSR&C Departments fof Health DHOs Provincial DHO Tertiary Cantonment Federal Departments care Boards (44) Hospitals Islamabad fof Health hospitals District Health System Referral Tertiary Military BHUs Catchment Area: DHOs care hospitals (14) Secondary health care 1-2 million inhbitants hospitals (CGHs) DHQs Third level Second Catchment Area: Referral referral level 100-300,000 inhbitants Vertical referral BHUs Programs THQs Research First institutions level Catchment Area: referral 25-50,000 inhbitants Legend: RHC MoNHSR&C = Ministry of National Health Services, Regulation & Coordination Catchment Area: Primary health care 10-15,000 inhbitants MoKANA = Ministry of Kashmir Affairs and Gilgit Baltistan Region KP = Khyber Pakhtunkhwa 5-10 CGH = Cantonment General Hospital BHUs RHC = Rural Health Centre Dispens- MCHC aries MCHC = Maternal and Child Health Centre BHU = Basic Health Unit Community THQ = Tehsil Headquater Hospital outreach DHQ = District Headquater Hospital services LHW = Lady Health Workers LHW CMW LHW = Lady Health Visitors LHV CMW = Community Midwives Source: Pakistan Bureau of Statistics 2021. BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 03 HEALTH FINANCING CONTEXT Table 1: Size of the Health Sector Locality Pop.* Hospitals RHC BHU MCHC Dispensaries Beds Federal -- 9 4 81 2,571 Punjab 114.7 389 284 1,286 60,387 Sindh 50.2 473 220 2,819 38,623 Khyber 37.5 277 153 983 24,329 Pakhtunkhwa / Federally Administered Tribal Areas Balochistan 13.2 134 95 574 7,797 Gilgit Baltistan (na) 44 163 426 (na) Azad Jammu (na) 17 (na) 79 (na) and Kashmir Total 1,343 723 5,719 919 6,248 133,707 Source: Pakistan Bureau of Statistics 2019. Note: * Estimated population size, millions (2019); RHC–Regional Health Center; BHU–Basic Health Unit; MCHC–Maternal and Child Health Center. The Sehat Sahulat Program is a micro-health selected hospitals, called panel hospitals. insurance initiative of the Federal Government In KP, the National Health Card is accessible of Pakistan in partnership with the provinces. to all on condition of being a KP resident The Sehat Insaf Card (National Health Card) and having a computerized identification. offers access to free inpatient healthcare, Total coverage for treatment is PRs 1 million particularly for low-income households. per annum per person and two dependents Implemented in 2019-20, the program is now (USD 5,000 in 2022).2 Benefit packages vary fully operational in Khyber Pakhtunkhwa (KP). from province to province.3 The program is The program signs local contracts with pre- financed by both the central government 2 See https://sehat insafcard.com  enefits usually include emergencies, general surgeries, maternity care (including C-section), inpatient care and (particularly 3B expensive) treatment for diabetes, cardiovascular disease, cancer, kidney transplant and liver disorders, HIV and hepatitis complications, burns, and road accidents. 04 BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN HEALTH FINANCING CONTEXT (USD 18 million in fiscal 2017-18) and provincial services such as family planning, new-born care budgets. However, challenges have delayed and child nutrition receiving less attention. the rollout to the whole country.4 Diagnostic services were only partially boosted, with private providers investing in more visible X-rays Sindh and Baluchistan Provinces have and ultrasounds imaging but overlooking low-cost contracted out the management of laboratory testing required for routine disease Basic Health Units to the private sector.5 management. Moreover, limiting the NGOs [non- These companies operate under Section 42 governmental organizations] to facility control, of the Companies Act (2017)6 and sign a without involvement in the health outreach programs, partnership agreement with provincial health restricted the downstream community impacts.”9 departments to provide services in contracted- out health facilities.7 In Sindh, the private sector Out-of-pocket spending totals more than manages about 85 percent of primary healthcare 60 percent of the total health expenditure facilities in 22 districts; in Baluchistan, the private and an estimated 83 percent of patients sector manages 653 (73 percent of) primary use private health facilities10 (see Figure 2).11 healthcare facilities in 33 districts.8 A 2011 This finding indicates that a large portion independent evaluation indicated the need for of the population seeks healthcare in private- improvements in staffing, drug availability, run facilities rather than in public facilities. equipment, and the material condition of The primary reasons for choosing private facilities, including the rehabilitation of facilities include overstretched public health dysfunctional Basic Health Units. However, facilities and most of the registered laboratories recent research by Zaidi (2022, p.2) identified (X-ray, ultrasound, MRI, and CT-scans) operate “serious gaps in the continuum of care with essential in the private sector. 4 Issues with Insaf Sehar Card (National Health Card) have been reported in the press, such as resistance in hospitals to accept the card and identification of eligible beneficiaries. In Punjab, 5 million families received a card, but only 93,000 (2 percent) benefited from the Sehat Sahulat Program. The program reportedly targeted 7.2 miilion families, but 2.2 million could not be traced or registered (The Express Tribune 2020). Most private hospitals do not accept the card to treat diseases covered under the Sehat Sahulat Program or use delaying tactics (such as, waiting lists) to discourage patients. Both private and public hospitals (in Bahore) continue refusing treatment for patients under the Sehat Sahulat Program, while the government makes claims about its success (Dawn 2022). 5 KP stopped participating in 2016. 6 The Companies Act (2017) regulates how not-for-profit associations with charity activities are established.  ervices include treatment/curative health services, emergency, outdoor/indoor, 24/7 services, mobile health services, community 7S health education, health services at your doorstep, diagnostics, lab tests, radiology, X-ray and ultrasound, medicines, preventive healthcare, Tuberculosis dot, awareness and health education, nutrition advisory, public health-related education and advocacy; electronic medical record (EMR), and referral. The list may vary from province to province. (https://pphisindh.org/home/, https:// pphib.org/pphi-b/, https://phfmc.org/). Contracted-out facilities comprise: dispensaries, Basic Health Units, Rural Health Centers, filter clinics, 24/7 health facilities, Maternal and Child Health Centers, mobile health units, Unani Tibi dispensaries, medical camps, community outreach activities (https://pphisindh.org/home/, https://pphib.org/pphi-b/, https://phfmc.org/).  PHI Sindh and Baluchistan, Sindh and Baluchistan Health Departments; Punjab Health Facilities Management Company (PHFMC) 8P audited annual financial statements 2020-21.  aidi, S. 2022. Re-Imagining Public Private Partnerships for Better Health Coverage. Lahore: Consortium for Development 9Z Policy Research. 10 Figures were updated in the 2021/22 National Health Accounts but were unavailable at the time of writing. 11 Pakistan Bureau of Statistics. 2021. National Health Accounts 2017-18, p. 77. Islamabad: Government of Pakistan. BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 05 HEALTH FINANCING CONTEXT Figure 2 l Externally financed l OOP Structure of Health Spending per Capita l Domestic general government in Pakistan, 2016–19 (%) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2016 2017 2018 2019 Source: World Bank 2025, based on World Bank data (data.worldbank.org/) and WHO Global Health expenditure database (apps.who.int/nha/database). The total health budget allocation averaged Sindh Provinces exhibited the largest increase 4 percent of the combined federal and in share over the period. In Balochistan and provincial budgets (see Figure 3).12 Provincial KP Provinces, the share allocated in 2019/20 health budget allocations vary, and Punjab and was less than the share in 2016/17. Figure 3 Share of Health Budget in Total Federal and l 2016-17 l 2018-19 Provincial Budgets, 2016/17–2019/20 l 2017-18 l 2019-20 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Federal Balochistan KP Punjab Sindh Total Source: Finance Division Annual Budget Statements 2016/17–2019/20. 12 Data were not available for the special regions of Kashmir and Gilgit Baltistan. Furthermore, the absence of reliable data prevented the inclusion of the Army Health Budget in the total health budget. 06 BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 2.0 BUDGET EXECUTION IN HEALTH BUDGET EXECUTION IN HEALTH In Pakistan, health budget execution rates are significant variations across years and averaged 95 percent for the original health across provinces. Punjab Province averaged budget and 104 percent for the revised 100 percent budget execution but had the budget estimates in the annual budget most variation year to year, while Sindh had statement (see Figure 4).13 However, there the lowest execution rate among provinces. Figure 4 l 2016-17 Original Health Budget Execution, l 2017-18 Fiscal 2016/17–18/19 (%) l 2018-19 120% 100% 80% 60% 40% 20% 0% Health budget Federal Balochistan KP Punjab Sindh total Source: Financial and Budgeting System 2016/17–2018/19. Wages and salaries were the highest had near perfect execution rates, 103 and spending category, averaging 70 percent 99 percent, respectively. The second largest of expenditure at the provincial level; budget line was operating expenses, which however, execution across provinces varied had even more execution variation. Very little significantly (see Figure 5). KP and Punjab was spent on physical assets, civil works, and executed only 42 and 72 percent, respectively, repairs and maintenance, which collectively of their wage bill, while Balochistan and Sindh had volatile execution rates.  inancial and Budgeting System (FABS) is a Government Integrated Financial Management Information System (IFMIS) owned and 13 F operated by the Controller General of Accounts. 08 BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN BUDGET EXECUTION IN HEALTH Figure 5 l Punjab l KP Expenditure across Economic Classification, l KP district l Balochistan Fiscal 2018-19 (%)14 l Punjab district l Sindh Share of Expenditure Execution Rates 100% 180% 90% 160% 80% 140% 70% 120% 60% 100% 50% 80% 40% 30% 60% 20% 40% 10% 20% 0% 0% Wages and salaries Operating expenses Physical assets Civil works Repairs and maintenance Wages and salaries Operating expenses Physical assets Civil works Repairs and maintenance Source: Financial and Budgeting System 2018/19. Health facility budget execution rates vary high execution rates at the aggregate level significantly. From a random sample of nine (101 and 144 percent, respectively). For these two hospitals in Balochistan Province, the average facilities, wages and salaries were over-executed; budget execution rate was only 56.5 percent while drugs, operating expenses, repairs, and (see Figure 6). At a lower level of care, by contrast, maintenance were all significantly under- a random sample of a Basic Health Unit and a executed. An in-depth investigation is needed Regional Health Center in Punjab Province found to fully understand the underlying causes. Figure 6 District Headquarter Hospital Budget Execution Levels, 2016 100% 87.8% 80% 77.3% 63.5% 58.4% 60% 51.5% 46.5% 44.5% 39.9% 38.9% 40% 20% 0% Ja erabad Kohlu Gwadar Kharan Jhal Dera Bugti Awaran Kachhi Harnai Magsi Source: Financial and Budgeting System Balochistan 2016. 14 Data are limited to fiscal 2018-19, including for Punjab and KP Districts, which are available in the Financial and Budgeting System. BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 09 3.0 PUBLIC FINANCIAL MANAGEMENT CONTROLS FOR HEALTH SPENDING PUBLIC FINANCIAL MANAGEMENT CONTROLS FOR HEALTH SPENDING Pakistan has a unified public financial facilities may be assigned to one Drawing management (PFM) system15 at all three and Disbursing Officer (as is the case of levels of government (federal, provincial, the Basic Health Units). and district). The PFM is structured as follows:16 Tertiary hospitals are the only healthcare ■ The Controller General of Accounts (CGA) delivery unit with autonomy over their is the premier accounting office of the operating expenses. Primary Healthcare government and produces financial Centers (PHC) do not manage their budgets, statements for the federation. are completely absent from the budgeting process (planning, allocation, and execution), ■ Accountant Generals (AGs), one for each and depend entirely on the District Health Office province, operate under the authority (DHO) for decision-making. Primary healthcare of the Controller General of Accounts. centers must submit requests and bills to the Accountant Generals prepare and submit District Account Officer (DAO) for payment, the annual provincial statements to the which significantly affects the day-to-day Controller General of Accounts. management. (Basic Health Unit must submit requests and bills first to the District Health ■ District Accounts Officers (DAOs) work Office for approval, then to the District Account under the authority of the Provincial Officer for payment.) Tertiary care hospitals Accountant General. District Accounts and large District Headquarter Hospitals can Officers are responsible for all accounting procure their own medicines. operations at the district level. They pre- audit bills, make payments (including salaries Payroll is generally documented and and pensions), and keep records of checked against data from the previous payments/receipts for federal and provincial month. Staff hiring requires budget availability. transactions (in separate ledgers). Changes in personnel records and payroll are clearly defined in the General Financial Rules ■ Drawing and Disbursing Officers (DDOs), (2018) and the Accounting Policies and also called “cost centers,” approve local Procedures Manual (1999, APPM): procedures spending. They are the lowest for paying salaries and wages (pp. 4.37-4.46). organizational level where budget control Payments are transferred to employee bank happens. All service delivery units, such as accounts as per the pre-defined schedules and schools and health facilities, have their own protocols. Provincial Public Expenditure and Drawing and Disbursing Officer; however, Financial Accountability undertaken from 2017 depending upon the facility size, several to 2020 found a strong integration of the payroll  irectives are outlined in the System of Financial Control and Budgeting (Finance Division, 2006), the Public Financial Management 15 D Act (2019, Chapter IV, Art. 21-29), and the General Financial Rules (Finance Division, 2018). These are synthesized in the Budget Manual (Finance Division, 2020a). Procurement is regulated in the Public Procurement Rules (2004). If most documents are relevant for federal government, each province has (similar) own budget laws, Public Financial Management laws, and procurement rules. The Accounting Policies and Procedures Manual (1999) sets out detailed policies and procedures in accounting for public financial transactions and is applicable all over the country. 16 Main source: Fundamentals of Public Financial Management, A Training Handbook for Officials of the Sindh Government (2019). BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 11 PUBLIC FINANCIAL MANAGEMENT CONTROLS FOR HEALTH SPENDING and personnel records in KP, Punjab, and Sindh ■ Payment made to the Drawing and Provinces. However, in Balochistan, manually Disbursing Officers instead of directly kept staff files were not reconciled on a regular to the vendor basis with the payroll system. ■ Cash withdrawn from the Drawing Non-wage expenditure controls involve and Disbursing Officers account instead several measures: expenditure sanction of issuing a crossed cheque to the supplier (as defined in the rules on the delegation of financial powers), administrative and ■ Non-transparent tendering for the technical approvals for works-related purchase of medicine expenditure, fulfilment of responsibilities related to accounts maintenance, regular ■ Irregular purchase of medicine, such as reconciliation of expenditure, and purchasing at rates higher than market compliance with the different levels of rates, misreporting in stock registers, and controls on the Financial and Budgeting purchasing medicine with a short shelf life System. However, there are inefficiencies due to the controls applied to all transactions ■ Non-utilization of assets procured, such irrespective of value. For example, the APPM as ultrasound machines, in health facilities lists nine distinct controls for pre/post-audit (RHCs, DHQs) and payment certification. Consequently, a bill of PRs 200 undergoes the same level ■ Not maintaining proper books of accounts of scrutiny as a bill of PRs millions and requires and non-availability of records. duplicate internal controls of six different officers in two different entities. The process The current Chart of Accounts is not is bureaucratic and requires supporting aligned with healthcare services. There is documents and multiple approvals. no expenditure classification by level of healthcare, so it is not possible to track budget Provinces procure drugs, vaccines, and allocation or execution for primary, secondary, health supplies centrally through the and tertiary healthcare through the Financial Procurement Committee at the Office and Budgeting System. This also complicates of Health Secretary via a pooled the rollout of performance-based budgeting procurement process, and these are (which was mandated by the 2019 Public distributed to PHC units via the DHO. Financial Management Act but requires a Pooled procurement allows economies of scale modification of the Chart of Accounts to and decision-making transparency. However, become practical). audit findings noted issues when procurement was conducted at the DHO level, including: 12 BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN PUBLIC FINANCIAL MANAGEMENT CONTROLS FOR HEALTH SPENDING Despite the decentralization reforms, ■ Outstanding public financial management the integration of federally supported concerns on future procurement, payment vertical programs17 into local health arrangements, and the availability of funds. systems remains limited and faces challenges. These challenges include:18 Arrears cannot be calculated separately, because there is no accrual accounting ■ Vertical programs that operate in parallel and no systemic way to calculate budget and rely on different structures that cause arrears for line departments. There is duplication19 evidence of the accumulation of arrears, particularly for obligations like pensions and ■ Lack of coordination and disagreement unpaid contractor invoices. However, none of on the new modus operandi between the provinces have a system in place to monitor the federation and the provinces and record the stock of arrears. There is no operational commitment accounting in place.  he public health sector provides preventive healthcare services through vertical programs such as the Expanded Program on 17 T Immunization (EPI), the TB Control Program, the National Program for Family Planning and Primary Healthcare, the AIDS Control Program, the Malaria Control Program, the Nutrition Program, and the Reproductive Health Program. Fiscal decentralization significantly changed their modus operandi. Previously top-down financed, they are now the financial and institutional responsibility of the provinces. mplementing PFM Reform for UHC in a Decentralized Service Delivery System: Lessons from the Pakistan National Immunization 18 I Support Program, 2021. https://documents1.worldbank.org/curated/en/099744306132234962/pdf/ IDU049440c8b03be30429a0b46e0d6b552a4cfc5.pdf n Punjab, PPHI tried to integrate vertical programs into their primary healthcare, but this did not happen systematically or 19 I on a large scale. BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 13 4.0 GOOD PRACTICES AND BOTTLENECKS The overall national health budget was executed at an average of 95 percent over the period of analysis. However, the execution rates between provinces as well as between categories of spending varied significantly. At the health facility level, execution of spending is notably challenging, particularly for non-wage expenditure. Table 2 provides a summary of key good practices and bottlenecks for executing health spending in Pakistan. GOOD PRACTICES AND BOTTLENECKS Table 2: Summary of Budget Execution Good Practices and Bottlenecks in Pakistan Issue Explanation Good Practices Payroll In most provinces, there is strong integration of payroll and personnel records. Contracting out of health Baluchistan, Punjab, and Sindh Provinces have contracted services to the private sec-tor out the provision of many primary healthcare services to the private sector. This has facilitated more consistent budget execution rates as well as evidence of resources reaching the facility level. Ensuring ac-countability for resource use, however, remains a challenge. Bottlenecks Inability to track primary, The Chart of Accounts is not aligned with the care levels secondary, and tertiary of the health system (i.e., primary, secondary, and tertiary healthcare budgets and their healthcare) or the activities and programs within the execution sector more broadly. This makes it difficult to track budget allocations and their execution and to link spending to service delivery. Over-estimation of re-source The provinces systematically over-estimate their availability budget resources. Weaknesses in budget Budget estimates are generally not based on costing preparation processes studies, mean-ing allocations are often not aligned with needs. PHC facilities also generally are not involved in determining their budget allocations, contributing to a misalignment between needs and allocations. PHC budget allocations are also not based on the type, size, and catchment area (local demography) of the health facility. Rather, they are generated from historic allocation decisions. …table continued next page BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 15 GOOD PRACTICES AND BOTTLENECKS Table 2: Summary of Budget Execution Good Practices and Bottlenecks in Pakistan Issue Explanation Inefficient spending control Expenditure commitment controls are not always processes followed. Excessive controls for operational expenses and inefficiencies prevail and are applied to all transactions irrespective of the value. For example, a bill of PRs 200 undergoes the same level of scrutiny as a bill of PRs millions and involves duplicate internal controls of six different offic-ers in two different entities. Lack of autonomy for pri-mary Primary healthcare facilities are entirely dependent healthcare centers on District Health Offices for their spending (with the exception of facilities managed through the contracting- out mechanism in Baluchistan, Punjab, and Sindh). District Health Offices can ignore, delay, or only partially pay spending requests. Reportedly, facilities are routinely unable to carry out core activities, including paying utility bills and carrying out basic repairs or maintenance, among other. Vertical programs are in- The recent decentralization of vertical programs, sufficiently integrated in the particularly those focused on preventive care (e.g., local health system immunization, tuberculosis, and AIDS) from top-down federal management to the provinces contin-ues to face challenges, including incomplete integration of federally supported vertical programs into local health systems. There are also duplication and gaps in planning and oversight roles, which affect budget planning and execution processes. Arrears cannot be tracked There are no means to capture arrears in the Financial and Budget-ing System (the Integrated Financial Management System). …table continued next page 16 BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN GOOD PRACTICES AND BOTTLENECKS Table 2: Summary of Budget Execution Good Practices and Bottlenecks in Pakistan Issue Explanation Possible Solutions ■ Revise the Chart of Accounts to allow expenditure tracking at the service delivery level ■ Provide budget and spending autonomy to service delivery units ■ Cost health services ■ Devise a payment mechanism for the service providers ■ Strengthen the accountability mechanism by introducing results-based financing. BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 17 REFEERNCES REFERENCES Auditor General of Pakistan. n.d. Audit Report of Expenditure Incurred on COVID-19 by Federal Government, Audit Year 2020-21. 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Accounting Policies and Procedures Manual. Islamabad. https://finance.gos.pk/Home/Download?path=Rules%5CManuals%5CAccounting%20 Policies%20and%20Procedures%20Manual.pdf Maxwell, R.J. 1992. “Dimensions of Quality Revisited: From Thought to Action.” Quality in Health Care 1(3):171-177. doi: 10.1136/qshc.1.3.171 Pakistan Bureau of Statistics. 2019. Pakistan Statistical Yearbook 2019. Islamabad: Government of Pakistan. Available at: https://www.pbs.gov.pk/publication/pakistan- statistical-year-book-2019 Pakistan Bureau of Statistics. 2021. National Health Accounts 2017-18, p. 77. Islamabad: Government of Pakistan. Available at: https://www.pbs.gov.pk/sites/default/files/national_ accounts/national_health_accounts/national_health_accounts_2017_18.pdf Public Procurement Regulatory Authority. 2004. Public Procurement Rules. Islamabad: Government of Pakistan. Available at: https://www.ppra.org.pk/rules.asp Pyne, H.H. 2022. Islamic Republic of Pakistan National Health Support Program, Fiduciary Systems Assessment. Washington DC: World Bank. Available at: http://documents.worldbank. org/curated/en/099415105162234692 United Nations (UN). 2000. Statistical Papers, Series M No. 84, Classification of the Functions of Government (COFOG), pp.15-31. New York: Department of Economic and Social Affairs, Statistical Department. Available at: https://unstats.un.org/unsd/publication/seriesm/ seriesm_84e.pdf World Health Organization (WHO). 2001. Macroeconomics and Health: Investing in Health for Economic Development, Report of the Commission on Macroeconomics and Health. Geneva. Available at: https://iris.who.int/bitstream/handle/10665/42435/924154550X. pdf;jsessionid=23EF1645AF70F320E51A13192609360F?sequence=1 Zaidi. S. 2022. Re-imagining Public Private Partnerships for Better Health Coverage. Lahore: Consortium for Development Policy Research. Available at: https://www.cdpr.org.pk/insights- for-change/re-imagining-public-private-partnerships-for-better-health-and-security/ Quratulain Hadi.2020. Implementing PFM reform for UHC in a Decentralised Service Delivery System: Lessons from the Pakistan National Immunization Support Program, 2021. Pakistan https://documents1.worldbank.org/curated/en/099744306132234962/pdf/ IDU049440c8b03be30429a0b46e0d6b552a4cfc5.pdf BUDGET EXECUTION IN HEALTH: FROM BOTTLENECKS TO SOLUTIONS - CASE STUDY SERIES - PAKISTAN 19 ECO-AUDIT Environmental Benefits Statement The majority of our books are printed on Forest Stewardship Council (FSC)–certified The World Bank Group is committed to paper, with nearly all containing 50–100 reducing its environmental footprint. In percent recycled content. 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