Assessing fiscal space analysis, Sudan

FAWZIA MOHAMMED IDRIS

MS.c. Health economicsChulalongkorn University

ASSESSING FISCAL SPACE FOR NATIONAL

HEALTH INSURANCE FUND IN SUDAN

Fiscal space is a relatively new term that refers to the flexibility of a government in its spending choices.

What is Fiscal space:

This study aims to examine the fiscal space potentiality for national health insurance in Sudan (NHIF). The methodology used is fiscal space categories, and in-depth interviews with stakeholders and economic expert in March 2014

Introduction

- Study conducted in the NHIF (Cost Benefit Analysis and Financial Sustainability)expected financial deficit (2014-2018).

-Specific deduction proposal for NHIF legalized by the national assembly in 2013.(how to fund it?)

Literature review:Countries experiences in assessing fiscal space for health:- Rwanda (2009), WB :

Efficiency gains- Indonesia (2009), WB :

Health re-prioritizing, tax improvement, grants and borrowing.- Uganda (2010), WB:

Efficiency gains- Nepal (2011), WB :

Health and aids re-prioritizing, efficiency.- Nigeria (2012), Unicef:

Domestic resources mobilization, aids, efficiency gain, political commitment.To conclude, almost all studies agreed upon that efficiency gains should be improved.

Fiscal space analysis & Projection

Fiscal space analysis

-Expected growth rates of GDP Real GDP growth (in percentage)

-Government revenues GDP % . GDP growth, budget revenue and public health expenditure,...-Tax reform. -Recent or potential shocks Inflation rate (GDP deflator, in percent)

-Flexible health spending with Relation to GDP -Trends in government health expenditure % GDPGovernment health expenditure and GDP, 1995-2011

1. Macroeconomic conditions:1. Macroeconomic conditions:

-The health budget % total government budget .

- budget on health per capita. Sudan per capita government expenditure on health 1999-2012

-Description of competing budget priorities

2. Re-prioritization of health in the government budget:

2. Re-prioritization of health in the government budget:

1-Universal –coverage .Universal health coverage

2-Efficiency gains. Infant mortality rates versus public health expenditure %... Efficiency gains

3. Health specific resources:

3. Health specific resources:1

3. Health specific resources:

3-Grant and aids. External sources of fund percentage of total health expen...External sources of fund percentage of total health expen.. GGrants and aids & Earmark tax

4-Earmark tax. Taxes on cigarette in Sudan 2012 Grants and aids & Earmark tax

Fiscal space projection:

-Arc elasticity was done for the years 2007 to 2011.-Public health spending to GDP health elasticity for:- (2007-2008) was 1.79.- (2008-2009) was 4.91.- (2009-2010) was 0.76.- (2010-2011) was 12.74.

Fiscal Space for Health Projections, 2015–24

Year 2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Nominal GDP (billions)

50.6 53.7 57.9 64.1 64.1 64.1 64.1 79 79 79

Real GDP growth rate

3 3.9 4.7 4.6 4.6 4.6 4.6 4.3 4.6 4.6

Population (millions) *

38.44

39.60

40.78

41.98

43.03

44.11

45.21

46.34

47.5 48.68

Baseline (1), lowest elasticity of the health budget to is 0.76: Year 201

5201

6201

7201

8201

9202

0202

1202

2202

3202

4Government health expenditure (billions)

1.15

1.59

2.07

2.24

2.24

2.24

2.24

2.58

2.76

2.76

Government health expenditure (% of GDP)

2.28

2.96

3.57

3.50

3.50

3.50

3.50

3.27

3.50

3.50

Government health expenditure per capita

0.03

0.04

0.05

0.05

0.05

0.05

0.05

0.06

0.06

0.06

GDP*e

H ex./pop.

30 US$ in 2015 to 60 US$ in 2024.

H%*N

Baseline (2), highest elasticity of the health budget to is 4.91:

Year 2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Government health expenditure (billions)

7.45 10.28

13.36

14.48

14.48

14.48

14.48

16.68

17.84

17.84


14.73

19.15

23.08

22.59

22.59

22.59

22.59

21.11

22.59

22.59


0.19 0.26 0.33 0.34 0.34 0.33 0.32 0.36 0.38 0.37

190 current US$ in 2015 to 370 US$

Baseline (3), average elasticity of the health budget to is 2.49:

Year 2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

Government health expenditure (billions)

3.78

5.21

6.78 7.34 7.34 7.34 7.34 8.46 9.05 9.05


7.47

9.71

11.70

11.45

11.45

11.45

11.45

10.71

11.45

11.45


0.10

0.13

0.17 0.17 0.17 0.17 0.16 0.18 0.19 0.19

100 US$ in 2015 to 190 US$

Economic growth is one of the important factors that play a critical role in generating fiscal space for health, beside government commitment.

In-depth interviews:

There was a common agreement among the interviewers upon economic situation affects on health, health reprioritize and the importance of allocating additional fund for health.

Findings:Fiscal Space generator

Main Information Anticipations forFiscal Space

Macroeconomic situations:

There would be expected growth in GDP 0.3 percent range, average per annum over the period 2012-2017; real GDP growth rate expected to steadily increase to 4.2 percent until 2017 and to 4.6 percent on average during 2018-32

Moderate potentiality to generate fiscal space because there is an expectation of a slight economic growth and it may not take place regarding to current economic and political situations.

Fiscal Space generator

Main Information Anticipations forFiscal Space

Re-prioritization of health in the state budget:

-The government does not reach Abuja commitment; to allocate 15% of the budget to health.-Assumed possibility for extra revenue as total represent 8.5% of GDP- The public revenue projected to decrease from 18.14 % of GDP in 2011 to 12.35 in 2018.

Limited feasibility for fiscal space because the public revenue projected to decrease. In addition the possibility to increase the revenue depends mainly on tax reforms. 5 years plan non health priority. 5 years plan non health priority. a health priority commitment needed.

Re-prioritization of health in the state budget:


Main Information Anticipations for F.S.

Universal health coverage 3. Health specific resources:1

:

Implementation of universal coverage affected by:- High informal sector size, ability to pay; poverty rate 47%, and urban population 33%.-Health services availability, accessibility and governance problems.-Stakeholder collaboration and commitment.

Limited possibility of fiscal space because of informal sector size and poverty rate. Moreover, it depends on the other categories improvement.

Universal health coverage



Efficiency gains:

3. Health specific resources:1

-Governance 2.5 which is nearly medium. -High infant mortality rate relative to regional countries.-Inefficiency in health care service distribution. beside 39.7% health spending on drugs; absence of regulate policies.

-Limited possibility to realize fiscal space for health because the indicators show low efficiency rate. But limited for NHIF because indirect gains.

Efficiency gains



Grants and aids:3. Health specific resources:

Earmark tax:3. Health specific resources:

-Low grants and aids rates.-No international commitments. Sudan is committed to international tobacco control. -12% of Sudanese smoking. -There are rooms in cigarette taxes.10% 8% (WHO)

-Limited feasibility of fiscal space because low grant rate and unstable.

-Good potentiality for fiscal space because Imposing of specific cigarette tax for health is a potential source of funding.

Grants and aids & Earmark tax

Recommendation

- Improving economic growth situations because this will effect on health spending and status and increase public revenue and therefore government capability to spend on health.

-Implementing specific tax for UC either from earmark tax or health reprioritizing after adopting tax reforms and expands the tax base.-Underline efficiency achievements in the public sector to secure efficient and effective uses of resources. - Improve grant and aids collecting procedure so as to increase it is rate.

Macroeconomic conditions:-Expected growth rates of GDP -Government revenues % GDP -Tax reform. -Recent or potential shocks -Flexible health spending with Relation to GDP -Trends in government health expenditure % GDP

Re-prioritization of health in the government budget:-The health budget % total government budget - budget on health per capita. -Description of competing budget priorities

Health specific resources:-Universal -coverage.-Efficiency gains.-Grant and aids.-Earmark tax.

Real GDP growth (in percentage) Fiscal space analysis

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

12.8

13.2

12.8

11.2

10 18.1

19.3

15.4

24 21.9

22.4

Oil and non-oil revenues

6.4 6.3 6.2 6.1 6.2 6.4 6.6 7 6.7 7.1 7.6 Taxes

3.1 3 2.7 2.8 2.7 10.5

11.5

7.6 16.5

13.1

12.5

Oil revenues

2.2 2.6 2.4 1.3 0.5 0.3 0.6 0 0 0.2 0.3 Grants

1.1 1.3 1.6 1 0.6 0.9 0.6 0.8 0.8 1.5 2 Other non-oil non-tax revenues

Sudan revenue structure %GDP, 2006-16 Fiscal space analysis

Source: IMF, 2013, actual 2006-201, 2012-16 projected.

Sudan revenue structure %GDP, 2006-16

Inflation rate (GDP deflator, in percent) Fiscal space analysis

Government health expenditure and GDP, 1995-2011 Fiscal space analysis

19951996

19971998

19992000

20012002

20032004

20052006

20072008

20092010

2011 -

10,000,000,000.00

20,000,000,000.00

30,000,000,000.00

40,000,000,000.00

50,000,000,000.00

60,000,000,000.00

70,000,000,000.00

GDP (current US$)Health expenditure, public

Indicators 2004 2005 2006 2007 2008 2009 2010 2011 2012

Budget revenue, GDP %

22.4 21.9 24.0 15.4 19.3 18.2 10.2

Health expenditure, public (% of government expenditure)

7.17 7.20 5.74 6.62 7.71 9.85 10.43 10.31

10.57

Source: Own adjustment based on W B, 2014 and IMF, 2013

GDP growth, budget revenue and public health expenditure, 2004-2012 1. Macroeconomic conditions: 2. Re-prioritization of health in the government budget:

GDP growth, budget revenue and public health expenditure, 2004-2012

Sudan per capita government expenditure on health 1999-2012 2. Re-prioritization of health in the government budget:

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

5

10

15

20

25

30

35

Per capita government expenditure on health at average exchange rate (US$)

Infant mortality rates versus public health expenditure % GDP in comparable countries 20113. Health specific resources:1

0 2 4 6 8 10 12 140

20

40

60

80

100

120

140

160

Series1

public health ex-penditure % GDPLinear (public health expenditure % GDP)infant mortality rateLinear (infant mortal-ity rate)

External sources of fund percentage of total health expenditure in Sudan 2002-20113. Health specific resources:

2002 2003 2004 2005 2006 2007 2008 2009 2010 20110123456789

10

External resources for health as a percentage of total expenditure on health

Taxes on cigarette in Sudan 2012 3. Health specific resources:

Item 2012

Specific excise 0.00%Ad valorem excise 57.90%Value added tax (VAT) 14.50%

Import duty taxes 0.00%Taxes and other charges 0.00%

Total approximate taxes 72.40%

Source: WHO, 2013

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Assessing fiscal space analysis, Sudan