Why health budget remains underutilised and how it can be remedied

Budget execution rates are mostly an indication of the credibility of the budget. Unfortunately, returning an unexpended budget to the Ministry of Finance (MOF) at the end of each fiscal year has become a common practice for the Ministry of Health and Family Welfare (MOHFW), even though the budget allocation for the health sector is not prioritised. 

According to the World Health Organisation (WHO), Bangladesh is one of the few countries with the lowest health budget. The national budget 2022-23 had an allocation of 5.44% for the healthcare sector in Bangladesh, which is less than 1% of GDP.

While the health budget allocation is significantly less, the utilisation rate of the health budget could be better. The total health budget utilisation plummeted from 96% in FY2011 to 69% in FY2021. Moreover, the utilisation rates for the health sector's operating and development budget have been less than 80% for the last two years, reflected in the figure below. 

This article highlights the underlying causes of the low health budget utilisation rate and potential solutions in the health sector from the global learning and country perspective to improve the scenario to provide maximum health services.

WHO framed the health budget execution into three phases – 1) budget formulation, 2) budget execution, and 3) budget monitoring. First, budget planning is essential to submitting a realistic budget to get the allocation for a year. The more realistic the budget planning is, the higher the possibility of budget execution. However, the health facilities usually prepare budgets by increasing 5% to 10% of all line items from their previous years' budget and submit them to respective departments. That is to say, no specific budget allocation formula is followed while preparing the health budget in Bangladesh.

The health financing system of Bangladesh is a centralised one; the budget items are managed from the centre. For instance, the delegation of financial powers follows central-level approval, and there is no power for local-level health managers to readjust the budget's approved line item. Getting approval to readjust the budget line item is time-consuming and requires complex administrative procedures, which is a systematic barrier and negatively affects budget utilisation.

However, it is crucial to remember that a high health budget utilisation rate only sometimes indicates better access to and provision of high-quality health services for people. A reasonable health budget does not merely depend on high budget execution, rather, it entails areas of priorities, timely budget disbursement, and flexibility for health managers to shift the budget items considering evolved emergencies by maintaining the public finance rules. 

Public Financial Management (PFM) rules are complex, and all-level budget owners must comprehensively understand budget formulation. Health facility managers are primarily medical professionals unfamiliar with financial rules. Therefore, prioritising the capacity building of health managers should be a routine task. 

Interestingly, health facility managers are hardly found accountable for their low-budget execution. In contrast, some health facility managers fear expending the maximum budget as local procurement steps give them many hurdles, and they rarely get support from higher authorities. Accountability of all health facility managers is necessary for efficient budget execution, which requires appropriate roles and responsibilities across various levels and a risk protection system from audit and local political context. 

In addition, a burn rate tracking system from the national level and its proper navigation can be a push factor for budget owners and can bring into an accountable mechanism. It is easy as Integrated Budget and Accounting System, popularly called iBAS++, operates the total financing system, and all day-to-day expenditure from health facilities is updated regularly. 

Ideally, preparing a realistic budget is a co-production among parties and liability for relevant stakeholders. Unfortunately, this practical approach is seldom exercised. Apart from this, coordination between MOHFW and its various divisions and MOF is crucial. 

Execution of the budget with efficiency is a shared responsibility among relevant stakeholders. Coordination and timely decisions are rarely reflected in the budget implementation phase. The lack of coordination was visible during the Covid-19 pandemic lockdown. Guidance from MOF regarding financial regulations is essential, whereas case-based support is needed from MOHFW to health facilities. 

Only these policies and attempts could not alone accelerate the utilisation rate better if the budget owners, especially health facility managers, are not allowed some flexibility from higher levels. The delegation of the financial powers of the health facility managers from a tertiary hospital to Upazila Health Complex needs to be extended to make decisions and expenses of the approved budget. 

Besides, national-level high officials from MOHFW can create an enabling environment for budget owners and mitigate the risks, particularly during procurement in health facilities. Such support will amplify confidence among health facility managers to utilise the budget on time and maintain the financial regulations.

It is time to acknowledge that low-budget utilisation has become the culture, and breaking the current practice will take time. However, the most important thing is to consider and realise the field-level scenarios, and then take necessary actions to execute the optimum budget within the financial rules and regulations, which is paramount to delivering better health service.

Monaemul Islam Sizear and Md. Shah Paran are public health system researchers working on a global public health project. 

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.