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 Improving Health Services in Myanmar through Public Financial Management Reform © 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. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Improving Health Services in Myanmar through Public Financial Management Reform >>> To support socioeconomic development objectives and improve service delivery, the former government of Myanmar issued a public financial management (PFM) reform strategy (2019–2022). Plans were underway to modernize PFM legal and regulatory frameworks, systems, and practices to improve the efficiency of public expenditures and services that are critical for citizens. First COVID-19 and then recent political events in Myanmar not only disrupted service delivery, but also emphasized the criticality of public health service delivery. This brief offers a selective overview of a more in-depth assessment of the health sector conducted jointly by the former government and the World Bank in 2020 to support this effort (World Bank 2021). While it does not take into account the impact of political events that occurred in February 2021, it summarizes the assessment’s central findings and recommendations for enhancing health financing, service delivery, and efficiency at all levels of health care, when the conditions are right. The assessment is based on a large survey of health practitioners, including at the frontlines. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 3 >>> Introduction Public financial management systems focus on the stages of In addition to financial management challenges, the health the budget cycle from budget formulation and execution to ac- sector remains underfunded (see figure 1). Costs and risk counting and reporting as well as external security and audit. land on the shoulders of citizens. Out-of-pocket spending ac- A well-designed system can ensure public resources flow to counts for more than 75 percent of total health expenditure in agreed-upon strategic priorities and are reallocated from less- Myanmar. As a share of household spending, it is greatest for er to higher priorities when necessary. In short, the govern- the poorest, with adverse implications for financial protection. ment can achieve maximum value for money in the delivery While COVID-19’s effects are fluid and difficult to forecast, of services through a system that boosts financial and opera- they are expected to be deep and wide. Particularly hard hit tional efficiency. are the labor-intensive sectors of tourism, service, manufac- turing, and agriculture, which notably affect vulnerable groups After decades of conflict, underinvestment, and fragmenta- and the poor. tion, access to essential health services varies across the country. Myanmar has a mix of public and private systems, Novel approaches, including demand-side financing to in- both in financing and providing health services. The Ministry of crease the purchasing power of the destitute and underserved, Health and Sports (MoHS) is the largest health care provider are planned, and new laws could enable them in the coming and is responsible for delivering preventive, curative, and re- years. Beyond the bottlenecks, Myanmar needs to increase its habilitative services and promoting healthy living. Before the funding and make changes to the way it is used. crisis, it made significant attempts to address coverage and care bottlenecks, especially for maternal, neonatal, and child health, and to increase the number of health professionals. > > > F I G U R E 1 - Union Government Spending by Function and Fiscal Year 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2009/10 2010/11 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 Defense Agriculture Energy Education Planning and Finance Other Health Source: Teo and Cain 2018. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 4 >>> PFM’s Importance for Health Service Delivery in Myanmar The answer is simple though its implementation is complex While health outcomes in Myanmar improved steadily over the and requires careful planning and steadfast support and im- last few decades, they are now threatened by the pandemic’s plementation. Good PFM can identify and eliminate bottle- adverse effects. Life expectancy at birth rose steadily from just necks that cause inefficiencies in health care systems and 42 years in 1960 to 67 years in 2020. However, wide variations restrict the delivery of health services. The ultimate outcome in health outcomes and access to services are found across is a healthier population. A country’s future largely depends on the country based on geography, gender, and income. COV- the health of its people. For example, childhood and maternal ID-19 exposed a variety of gaps in vital public health services, undernutrition is a persistent public health and development including the insufficiency of funding, human resources, and concern in Myanmar. Nearly one in three children under the prioritization. The government and its development partners age of 5 suffers from stunting, which increases a child’s sus- swiftly reallocated resources to the health sector. While these ceptibility to disease and reduces cognitive abilities, educa- efforts helped lessen short-term impacts, they highlighted the tional achievement, and productivity. importance of long-term health care financing, especially for health security and pandemic preparedness. >>> Insights from the Frontline To achieve success, the government urgently needs to better Survey results also confirm MoHS subnational units manually understand the bottlenecks affecting frontline service delivery. prepare paper-based budget proposals that do not significant- In Myanmar, frontline providers are the township hospitals ly influence allocations decided by Union-level departments to and health departments that implement their own budgets, meet the tight calendar of the Ministry of Planning, Finance, together with the rural and subrural health centers managed and Industry (MoPFI). Anecdotal evidence indicates frontline by township health departments. All departments and facilities health workers are paying travel expenses out of pocket and are part of a centralized structure. Important fiscal responsi- seeking community donations to send specimens for testing bilities in the health sector are retained at the Union level and and fund outreach activities to support remote or difficult to subject to the Union budget processes. access communities. A range of financial management bottlenecks constrain the At the frontline, significant challenges also exist to match the ability of frontline health service providers to implement plans supply of health professionals with higher demand. These and respond to local health needs and priorities. Budget pro- include the unequal distribution of health professionals and posals are prepared on the basis of historic allocations rather greater demand due to population growth and increasing than needs and priorities, undermining the efficient distribu- life expectancy. Working in the public health sector also car- tion of scarce resources. Limited operating budget hinders ries significant disadvantages, including long hours, heavy the capacity of hospitals, health centers, and communities to workloads, difficult environments, and low rates of pay and effectively deal with public health emergencies, including the living conditions. transport of specimens or basic equipment, medicines, and supplies. Budget norms for travel allowances thwart service delivery particularly in remote areas. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 5 >>> Resolving Main PFM-Related Bottlenecks to Improved Service Delivery Major goals and recommended actions are grouped into four • Assets management ensures the provision of needed main areas along the budget cycle. Summaries for each fol- equipment and supplies. Only some MoHS departments low and, for ease of reference, include an indicator for related and programs maintain asset registers, and no national bottlenecks (e.g., BN 1), which can be found in the full as- guidelines or software programs support assets sessment report. Figure 2 arranges bottlenecks into four lev- management and maintenance. MoHS can explore els based on how MoHS could address them. affordable options for creating a simple Union-level digital register for physical and high-value assets that is accessible at the subnational level. It could incorporate Ensuring Priority Public Health financial and geospatial information, physical verification, working conditions, climate risk exposure, and Services Receive the Necessary maintenance requirements and costs. (BN13) Resources Ensuring Funds Flow Where and Another name for this goal is allocative efficiency, which oc- curs when resources are used in areas where they provide the When They Are Most Needed greatest value to society and industry as a whole. Actions to resolve bottlenecks follow: A common term is operational efficiency, or the ability to deliv- er products and services cost-effectively while ensuring high • Key service delivery ministries, such as health and quality. Ways to resolve related bottlenecks follow: education, must implement medium-term public policies and strategies, which require greater certainty or • Budget flexibility and proactive budget management, predictability in medium-term funding of priority programs along with real-time information on allocations and and construction projects. It can only come from the execution, are essential. The government could enhance early participation of the cabinet in setting national policy the contingency fund and treat it as an emergency or priorities over the medium term, including health priorities, disaster fund rather than routinely pre-allocate it to states, and making a political commitment to finance agreed-to regions, and ministries. Underspending is also a problem national strategic priorities. (BN 2) for MoHS, partly from multiyear planning limitations and the lack of an integrated financial management information • Until a PFM law and reforms can provide more timely, system. Steps to assure its resources are being allocated integrated, and reliable budget ceilings, MoHS could and spent based on priority and need include (i) tracking pursue a needs-based approach to annual budget domestic and external resources by program and location allocations by providing its own internal ceilings early to in its budget preparation and reporting tools; and (ii) subnational units, allowing them to generate more realistic working closely with MoPFI to ensure consistency with the and aligned proposals. It could also switch to an electronic revision of the unified chart of accounts. (BN 4 and 5) budget preparation process for the rapid consolidation of subnational budget proposals and for conformity with • Health infrastructure development depends on astute MoPFI guidelines and templates for budget submission. public investment management and procurement. (BN 1 and 3) IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 6 A single-year approach to planning, budgeting, and around a prioritized medium-term infrastructure plan. It execution of construction projects and the lack of would function within the MoPFI budget cycle and ceiling project readiness create allocative and operational by ensuring a pipeline of already-prioritized, agreed-to inefficiencies, under execution, and delays in critical projects with the necessary preliminary work done on health infrastructure projects. MoHS can still budget for stages such as design, specification, land, procurement, and implement construction projects that are sequenced and approvals. (BN 12) > > > F I G U R E 2 - Four Levels of Bottlenecks and How They Relate to Myanmar’s Ministry of Health and Sports Bottlenecks that MoHS can act on BN4: Program and location fields needed to BN1: MoHS plans and budgets not linked trace all health funds with 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 maintenance 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 management PIM BN18.1: Lack of mainstreaming of disaster readiness into MoHS PIP BN6: Health Financing Strategy needs BN2: Lack of national MTBF to reflect a strong partnership with MOPFI, with government policy or spending priorities government endorsement BN3: Manual paper-based budget BN16: External audit not focused on risk or preparation tools performance BN5: Contingency, supplementary budget BN15: Lack of SOPs for MoHS financial tools not used strategically management BN10: Budget norms restrict service delivery BN17: No risk-based internal audit function travel in remote locations BN11: Weak national procurement regulatory framework BN18.2: Lack of disaster readiness in national PFM and Procurement systems Bottlenecks that require other stakeholders’ support, i.e., MoPHI Source: World Bank 2021. Note: The boxes are positionally related to each type of bottleneck. BN = bottleneck; HR = human resources; MoHS = Ministry of Health and Sports; MoPFI = Ministry of Planning, Finance, and Industry; MTBF = medium-term budget framework; PFM = public financial management; PIM = public investment management; PIP = public investment plan; SOPS = simple standard operating procedures. IMPROVING HEALTH SERVICES IN MYANMAR THROUGH PUBLIC FINANCIAL MANAGEMENT REFORM <<< 7 Ensuring the Required Level of with emergency spending. Efforts are underway to identify new sources of financing and more flexible funding Human Resources to Manage channels for frontline providers to allow more efficient Financial Resources responses to local needs. Greater budget autonomy or flexibility would improve the level of readiness and resilience of subnational providers. Also, MoHS could Lack of financial management qualifications and skills is com- seek government endorsement of the proposed HFS in mon across most government sectors, including health. Also, close partnership with MoPFI, government agencies, and a recent study of human resources for health identified staff development partners. (BN 6 and 16) shortages in almost all states and regions, including major cit- ies, as well as wide disparities in urban and rural areas. • Enhanced and modernized external audit practices are being rolled out, and a strategy has been adopted for auditing expenditures related to COVID-19 responses. • Officials responsible for financially managing departments The Office of the Auditor General of Myanmar (OAGM) and hospitals at the subnational level may lack relevant is undergoing a process of modernization to introduce a qualifications or skills. In the medium term, MoPFI could risk-based methodology and adopt computer-assisted institutionalize PFM capacity building for all sectors and auditing techniques. MoHS could prepare for audits ministries through the PFM Academy, with modules that by ensuring compliance with MoPFI instructions and meet the needs of clerical finance staff at the subnational coordinating with OAGM to understand documentation MoHS level. MoPFI could work in partnership with MoHS and other requirements. Adopting the Government to adapt materials and modality to suit subnational Accounting System would allow for applying computer- requirements. (BN 8) assisted auditing techniques. Survey results confirm that very few MoHS subnational entities or facilities have been • The high vacancy rate of PFM personnel (60 percent) the subject of an internal audit. MoHS could consider undermines getting resources when and where they leveraging the existing cadre of internal reviewers to pilot are needed and achieving seamless health service an internal audit manual being developed with support delivery. Short- and medium-term solutions revolve from the International Monetary Fund. (BN 16 and 17) around recruitment, skills development, and performance recognition. MoHS could also provide guidelines for use It is important to note that consultation with MoPFI and its full at state and regional levels to manage the shortage of commitment are critical in making changes to health budget crucial finance staff, including temporarily hiring skilled allocation processes, treasury arrangements for purchasers contractors. A staffing and pay scale review for important and providers, and financial reporting and accountability re- PFM support functions could inform a more strategic sponsibilities of health service providers. approach to staffing levels, workforce composition, and allocation in remote and conflict areas. (BN 14 and 19) SOURCES • Teo, H.S., and J.S. Cain. 2018. “Myanmar — Health Managing Risks Financing System Assessment.” HNP Discussion Paper, World Bank Group, Washington, DC. • World Bank. 2021. Myanmar: Improving Public Financial Management for Health Services — Challenges and Fiduciary and climate risks and resilience must be considered Opportunities for Improving Service Delivery in the Wake when developing and implementing a new Health Financing of COVID. Washington, DC: World Bank. Strategy (HFS) and PFM systems. • World Health Organization. 2021. Crisis or Opportunity? Health Financing in Times of Uncertainty: Country Profiles from the SEA Region. New Delhi: World Health • Myanmar is one of the world’s most disaster-prone Organization Regional Office. countries. COVID-19 highlighted fiduciary risks associated