Public financial management for an effective response to health emergencies: Key lessons from COVID-19 to balance flexibility and accountability – Global


Key messages

• Government revenues are the cornerstone of financing governments’ response to health emergencies; As such, public financial management (PFM) – the rules and mechanisms governing the allocation, execution and communication of public funds – was integral part of the health response to the COVID-19 pandemic.

• This rapid review highlights the importance of PFM for health emergencies, analyzing the experiences of various countries in financing their national health response to COVID-19 and identifying some early lessons. This review can help countries to improve their understanding of good practices and key requirements for adjustments to their PFM systems.

• To be able to adapt effectively and respond quickly to health emergencies, PFM may need to be overhauled. Key PFM policy actions summarized in Table 1 include adjustments for each phase of the budget cycle (formulation, expenditure and reporting), to ensure more agile health financingflexible and responsive to emergency needs, while ensuring transparency and accountability.

• One of the main lessons related to PFM emerging from the health response to COVID-19 is the need to move from item budgeting to program budgeting. Programme-based budgets are more easily structured to allow for more flexible allocation of public resources and are therefore more effective responses to health emergencies.

• The COVID-19 pandemic has shown the need for prepare expense management systems updating emergency spending protocols and proactively empower front-line providers to access, manage and account for public funds in an agile way.

• Adopting measures to balance speed and accountability is another key lesson. Better equip financial management information systems providing integrated reporting on emergency expenditures is an essential step in ensuring public confidence in the response.

• Countries can better prepare for future health emergencies by strengthen their regular PFM mechanisms and capacities, while limit the multiplication of parallel mechanisms which can exacerbate the fragmentation of health financing and hinder alignment with national response plans. The use of extrabudgetary mechanisms without well-defined procedures is unlikely to result in effective use of public resources for health emergency response.

Introduction: why PFM matters for health emergency response

Government revenues are the cornerstone of financing the response to health emergencies. While private funding can contribute to a country’s response, public sources account for the largest share of funding available for this purpose. This has been demonstrated during the current pandemic, with the health response to COVID-19 being funded primarily from public sources, even in countries facing revenue constraints. [1,2]. For example, in Ghana, health expenditure related to COVID-19 in 2020 was mainly financed by domestic public funds (83%), with external and private financing accounting for 10% and 7% of the total, and in Burkina Faso, domestic public funding accounted for 53% [2]. The dominance of public funding promotes coherence, efficiency and equity in the response [3].

Given the importance of public finances, the ongoing COVID-19 pandemic has also shown that public financial management (PFM) should be an integral part of the response. The effectiveness of financing the health response depends not only on the level of financing, but also on how public funds are allocated and spent. This is determined by PFM rules which guide how public funds are allocated, executed and reported, and in turn how the money flows to health service providers. [4,5]. Early assessments have shown that PFM systems range from a fundamental enabler to a barrier in the health response to COVID-19 [6,7].

When the crisis hit, national PFM systems in many countries were not ready or agile enough to support an effective emergency response. Common challenges faced by countries include [6,8-10]:

i) estimate and formulate budget provisions to align with response needs;

(ii) adjust spending modalities to ensure that funds are quickly available to service delivery units and disbursed flexibly and on time;

iii) adjust monitoring and reporting systems to ensure that public funds for emergency response are accounted for effectively and transparently.

Although service delivery issues have been widely documented [11]the underlying GFP mechanisms of the response also deserve attention. To highlight the importance of PFM in health emergency contexts, this policy brief analyzes various country PFM experiences and identifies early lessons learned in financing the health response to COVID-19. The guidance note focuses on documenting lessons learned from budgeting and expenditure mechanisms and processes; it does not address sources of funding, nor the content of fiscal policies in response to COVID-19, which are covered extensively elsewhere [12]. The evaluation is done by stages of the budget cycle: budget allocation, budget execution and budget control. Identifying lessons learned from the PFM modalities used to finance the health response to COVID-19 is fundamental for both health policy makers and financial authorities to improve the preparedness of the PFM system for respond effectively to future health emergencies. This can help improve understanding of best practices, as well as key requirements for future system adjustments.

The assessment draws on a non-systematic review of several activities initiated by WHO in 2020 to monitor countries’ health response from a PFM perspective (see Table 2). Evidence reviewed included a desk review launched in March 2020, which analyzed budgeting, spending and accounting arrangements in financing the health response in 183 countries. Technical consultations were conducted in 17 countries (Argentina, Australia, Brazil, Chile, China, Costa Rica, Dominican Republic, Ecuador, Indonesia, Lao People’s Democratic Republic, Malawi, Mexico, Mongolia, Peru, Philippines, South Africa, Ukraine ) between June and September 2020 by WHO to deepen understanding of PFM modalities. Complementary analyzes conducted in 2021 to break down specific PFM aspects of the health response, including an analysis of 40 extrabudgetary funds used to channel resources for the response [13]a mapping of PFM issues related to the deployment of the COVID-19 vaccine [7]and an in-depth assessment of PFM arrangements in selected countries, including Argentina, the Philippines and South Africa [14,15] were also reviewed. At the end of 2021, the emerging conclusions of this document were explored and validated during the 5th meeting of the Montreux Collaborative, a virtual meeting which brought together more than 900 participants and 50 speakers over 5 days to explore policy options to help countries rebuild and strengthen health financing. and PFM systems to make them more responsive to future shocks and able to support efforts towards universal health coverage (UHC). Finally, in early 2022, to gather the latest information on the response, another non-systematic review of published literature and publicly available audit reports on COVID-19 related expenditures was conducted to complete the understanding. the opportunities and risks associated with the use of emergency procedures.

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