Budget Execution in the Health Sector in Lao PDR : Technical Note (English)

Strong budget execution practices are central to ensuring universal health coverage (UHC) by 2030, an important target of the Sustainable Development Goals. Delivery of health services is dependent on effective budget execution practices that ensure financing flows to identified health priority areas. Health financing reforms therefore should focus on ensuring budget execution rules and practices facilitating this objective. Poor budget execution rates have long been recognized as a major issue in many health sectors in low and middle-income countries (LMICs). This indicates that the poor quality of the budget rules and practices being applied in these countries are strongly linked to the poor health outcomes being achieved. The causes for poor budget execution can be rooted in weaknesses in the overall Public Financial Management (PFM) system as well as more health sector specific issues. General PFM issues could be delays in budget releases, diversion of resources to other sectors, or rigid appropriation rules that do not allow enough flexibility to respond to changing circumstances. Health sector specific problems might include low quality planning and budget preparation processes, unrealistic revenue and expenditure estimates, bureaucratic cash disbursement approval processes, or procurement processes that do not comply with recognized good practice. Overall, the budget execution rate in the Lao PDR health sector is good. Budget execution by the Ministry of Health (MOH) outperforms the rest of government. However, a closer analysis of the performance of the MOH's budget execution identified some issues. Health spending by the central level performs much better than by the provincial level.