June 24, 2022
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08:48 AM
Pakistan: PFM reforms at the heart of the success of the National Immunization Support Program
by Global Financing Facility Knowledge & Learning Platform
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Quratulain Hadi is a financial management specialist in SAR. She has extensive experience in public financial management reforms in the health sector with a particular focus on fiscal decentralization and health financing. Her work in immunization for sustainable immunization financing in GAVI transitioning countries is well known among development partners such as GAVI and Bill and Melinda Gates Foundation. She is a Chartered Accountant (Pakistan) and Certified Public Accountant (USA) by profession.
Angel Bombarda is a public financial management (PFM) consultant in the Health, Nutrition, and Population unit (East and Southern Africa). She is working mainly in the alignment of performance-based financing (PBF) with PFM systems, with the overall goal of improving performance in the health sector, particularly in Zimbabwe, Mali, Lesotho, and Tajikistan. She also provides project management and outreach support for the Governance for GFF initiative. Prior to joining the World Bank, she worked at the Department of Budget and Management in the Philippine government.
The authors would like to acknowledge the project TTLs Aliya Kashif and Iffat Mahmood.
The project was generously supported by GAVI and Governance 4 Global Financing Facility (G4GFF).
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Pakistan: PFM reforms at the heart of the success of the National Immunization Support Program
Challenge – Health service delivery in a fiscally decentralized context
Pakistan has undergone two periods of devolution, first in 2000 and again in 2010. Since 2010, provinces have made numerous amendments to their respective Local Government Acts, each time changing the structure and mandate of local government. These changes have further exacerbated problems in administration and reporting for different aspects of the health system.
It was in this context that the government of Pakistan launched its National Immunization Support Program (NISP) with the support of the World Bank. The project, which ran from 2015-2021, focused on strengthening the provincial-level management of the Expanded Program on Immunization (EPI) by building the capacities of those involved at every level of the program—from planning to management to procurement to surveillance, monitoring, and reporting.
Approach – Connecting the dots and improving systems
Overall, NISP’s goal was to improve the coordination between government and development partners within a results-oriented structure for routine immunization. One of the ways this goal was accomplished was by channeling all donor financing through a single streamlined platform.
Another vital part of the NISP financing agreement between the Pakistan government and the World Bank was the Public Financial Management (PFM) Strengthening Action Plan. At the time of NISP preparation, a series of analytical studies was commissioned by the World Bank and the Government of Pakistan from 2012-2014 to provide data to support the fiscal decentralization of the EPI function to provinces. The policy framework developed from the study resolved confusion around who’s responsible to procure and finance vaccines.
The assessment also noted two main PFM-related issues—inconsistencies in the financial accounts of the provinces and lack of transparency in the expenses of primary health care facilities—leading to poor utilization of the health budget. Therefore, the study recommended that well-functioning and transparent PFM systems and the transfer of technical PFM knowledge to the provinces were essential to the success of NISP.
One of the key PFM reforms that were implemented under NISP was a pooled procurement mechanism. A centralized procurement committee with equal representation from all provinces and the federal government was set up, and through pooled procurement, each province was able to determine its own vaccine demand, resulting in better predictability in funding. Shifting the immunization budget to the recurrent side of the budget significantly improved financing sustainability. Introducing a distinct budget line item for EPI expenditures also enabled tracking and strengthened accountability of the immunization budget and expenditure.
These PFM reforms were supported by the GAVI and Governance for GFF[1] initiative (G4GFF), which was established to make governance and PFM expertise available to support GFF countries like Pakistan in addressing issues related to PFM and overall domestic financing that will lead to better and more sustainable health results.
Results and lessons learned: Greater ownership and sustainability
The impact of PFM interventions resulted in greater ownership of EPI at the provincial level. The provincial share of total EPI expenditure almost doubled from 49.7% in 2011-12 to 89.2% in 2018-19.
Moreover, the results of the Third-Party Validation Immunization Coverage Survey (TPVICS), a national household health survey implemented by Aga Khan University, confirmed that substantial progress has been made in immunization coverage against vaccine-preventable diseases, including poliomyelitis, for children between 0 to 23 months during the duration of the project. Given the many challenges related to narrow fiscal space, the interplay of provincial politics, and the intricacies of the public sector budget-making process, NISP delivered results and is considered to be one of the most impactful reforms by the World Bank in Pakistan.
Aside from the success of NISP, there are lessons that can be drawn from the PFM reforms, particularly in fiscal decentralization, which can help governments to formulate universal health care (UHC) implementation road map. While policy interventions for EPI were specific to immunization, health managers can still learn from the NISP experience to tackle challenges and improve strategies in UHC implementation plans:
- Creating provincial ownership
What made this possible was consensus-building among federal and provincial health, finance and planning departments, and accountant general offices. Several consultative sessions, immense discussions, workshops, and seminars were conducted to design PFM reforms under NISP. To ensure broad ownership and to make the whole exercise inclusive and participatory, workshops were arranged at the federal level in Islamabad. Participants from all provinces and federal territories attended these workshops. This bottom-up approach to policy formulation made implementation smoother and allowed stakeholders to ultimately own the reforms.
- Developing a pooled procurement mechanism
As of June 30, 2020, provinces had paid $175M to the federal government to cover the costs of vaccine pooled procurement since 2016—showing that indeed, provinces have taken ownership of EPI. This is one of the most successful reforms in the context of devolution, as vaccine financing was one of the thorniest issues during the program design phase.
In this pooled procurement model, provinces have flexible payment arrangements wherein they can pay either upfront through transfers from the provincial finance departments or they can opt to have the amount deducted from the National Finance Commission share when it is transferred to the province. Provinces also have membership in the procurement committee, making them part of the federal-level procurement process and removing the need for a second round of scrutiny once the vaccines arrive.
- Making immunization financing sustainable
One of the key policy interventions of the NISP was shifting the EPI budget from the development side to the recurrent side—essentially making the provincial governments owners of the EPI program, meaning that they will allocate the budget for this from their own sources and absorb EPI as a regular function of their respective health departments.
This budget transition took place in two phases:
- Phase 1: EPI operational expenses including salaries were absorbed into the recurrent/regular budget while the vaccine costs funded by the Government of Pakistan were also transferred to the recurrent budget.
- Phase 2: Pakistan, at the moment, still receives GAVI support but over the next few years, Pakistan is expected to graduate from the GAVI financing program, resulting in a significant reduction in donor contributions. However, the Government of Pakistan’s investment as a share of co-financing obligation has increased by approximately 500 percent since the start of NISP. These NISP reforms were also followed by the devolution of other preventative care programs, like those for tuberculosis and malaria.
- Ensuring accountability in budget and expenditure tracking and off-budget in-kind grants
Prior to decentralization, EPI did not have a separate budget line item in the government’s chart of account, and its budget and expenditures were combined into other health functions. Under NISP, a new accounting framework was introduced to track and report on EPI budget and expenditures right down to the district level. To date, there is a distinct functional classification for EPI in the country chart of accounts that gives an aggregate view of the budget at the national level.
In-kind grants constituted 75% ($64M) of the total donor assistance in 2018-2019. An accounting framework for in-kind assistance was developed to harmonize efforts among development partners and align funding with EPI objectives. Channeling donor assistance through country financial management systems enabled oversight of how the grant money was used and monitoring of fixed assets that were created or acquired through in-kind aid. In-kind grants were also integrated into the government’s financial management system; however, it requires regular reporting by the development partners to the EPI and EPI to the government accounting offices.
Moving forward—Other PFM areas worth exploring
Other issues relevant to UHC that were unaddressed by the NISP were PFM capacity (especially in carrying out analytical and diagnostic work), the outdated payment system in health facilities, and the absence of a tracking and reporting system for physical assets and equipment of health facilities. These areas are opportunities for intervention for other World Bank partners later on.
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[1] GFF (The Global Financing Facility for Women, Children, and Adolescents) is a multi-stakeholder global partnership housed at the World Bank, which supports 36 low and lower-middle-income countries with financing and technical assistance to implement national health plans to scale up access to affordable and quality care for women, children, and adolescents.