What is Fiscal Space for Health?
The analysis of fiscal space specifically for health rests on a forward-looking assessment of the availability of additional resources for the health sector, without prejudice to a country’s financial sustainability.
Potential Sources of Fiscal Space for Health includes:
- Conducive macroeconomic conditions such as economic growth and increases in overall government spending that, in turn, lead to increases in government spending for health;
- A re-prioritization of health within the government budget;
- An increase in health-specific grants and foreign aid;
- An increase in other health-specific resources, e.g., through earmarked taxation and the introduction of mandatory health insurance; and
- An increase in the efficiency of government health outlays
Fiscal space for health can be visualized using a spider plot. The figure below shows one scenario for fiscal space for health for a hypothetical country. There are five different axes, each representing a different means of increasing fiscal space for health, and the "spokes" represent the predicted increase along each axis in terms of percentage increases in real government health spending over any base year. The figure shows that, in our hypothetical example, a 1% increase in real government health spending can be expected to come from increases in overall government spending (e.g., as a result of economic growth), a 2% increase is expected from re-prioritization of health in the government budget, a 6% increase from external sources, a 3.5% increase from sector-specific sources such as introduction of mandatory insurance premiums or the like, and a 2.5% increase from efficiency improvements.
Fiscal space for health is a key focus for the 2007 World Bank Strategy for Health, Nutrition, and Population (HNP) Results under the strategic objective of improving financial sustainability in the HNP sector and its contribution to sound macroeconomic and fiscal policies.
The HNP Anchor in collaboration with partners in the regions has been working on developing and applying a simple analytical framework for assessing fiscal space for health. The framework has been applied to selected pilot countries.
Country Case Studies:
Fiscal Space Brief
Presentation: A Framework for Assessing Fiscal Space for Health (PDF 1.32MB), Ajay Tandon
Publication: Assessing Public Expenditure on Health From A Fiscal Space Perspective (PDF 2.31MB)
For additional information please contact Ajay Tandon.