REGIONAL COMMITTEE Sixty-second Session Kathmandu, Nepal 7–10 September 2009
Provisional Agenda item 7.3 SEA/RC62/5 21 July 2009
MATTERS RELATING TO PROGRAMME DEVELOPMENT AND MANAGEMENT A. PREPARATION FOR PROGRAMME BUDGET 2010-2011 INCLUDING IMPLEMENTATION OF THE REGIONAL COMMITTEE RESOLUTION SEA/RC61/R2 The Programme Budget for 2010-2011 was finalized over the last year, following up on the recommendations of the First Meeting of the Subcommittee on Policy and Programme Development and Management (SPPDM) and the Sixty-first Session of the Regional Committee. Because of the current financial crisis and the recommendations of the 124th session of the Executive Board, the Director-General decided to request a reduction in the proposed budget. The SEA Region’s proposed budget was reduced by US$ 60 million to US$ 544.5 million, although this still represents an 11% increase over the 2008-2009 budget. While Assessed Contributions (AC) decreased by 1.5%, the budget for Voluntary Contributions (VC) rose by 14%, thus increasing the proportion of VC funding to 81% of the total budget. The reductions in the proposed budget were not evenly distributed across the Strategic Objectives (SOs), with the largest reductions being effected in the area of communicable diseases that still form 48% of the total budget of the Region. This was largely due to the Member States requesting further support for Strategic Objectives related to the Millennium Development Goals and noncommunicable diseases. The paper discusses the current situation of VC in respect of the SEA Region and notes that there is still a tendency for donors to support the communicable diseases programmes. This makes it especially difficult for the Region to mobilize resources for other programme areas, a challenge to achieve full funding for the budgets of all SOs. Some progress has been made in following up on resolution SEA/RC61/R2, adopted at the Sixty-first Session of the Regional Committee. This includes requests for additional AC and VC funding for those programme areas where resource mobilization has been difficult. The resolution also requests further attention on the measurement of programme achievements, using the results to improve implementation. Steps have been taken to improve accountability and these will be reflected in the Region’s workplans for the 20102011 biennium. More AC funding has been provided to support country offices and this is likely to ensure improved implementation of WHO-supported work in countries.
The Second Meeting of the Subcommittee on Policy and Programme Development and Management (SPPDM) was requested to review these developments related to the 2010-2011 Programme Budget and make recommendations for consideration by the Sixtysecond Session of the Regional Committee. The SPPDM made the following recommendations: Action by Member States (1) (2) (3) Continue efforts to increase resource mobilization in underfunded programme areas; however, targets for these areas should be realistic; consider ways to promote more flexibility in funding programme areas that lack resources; and take steps to improve monitoring and assessment to ensure greater efficiency in implementation.
Action by WHO/SEARO (1) (2) (3) Enhance resource mobilization, especially in underfunded countries and programme areas; increase training in programme management, especially at the country level; and implement the Programme Budget 2010-2011 in a manner that is more responsive to efforts of respective Member States in mitigating the impact of the global financial crisis on health.
The paper is now submitted to the Sixty-second Session of the Regional Committee for its consideration.
SEA/RC62/5
Preparations for Programme Budget 2010-2011 including implementation of the Regional Committee resolution SEA/RC61/R2 1. During the budget process, the Medium-term Strategic Plan (MTSP) was revised to reflect minor updates of the original MTSP. The major changes include the addition of four new Organization-wide Expected Results (OWERs) in Strategic Objectives (SOs) 1, 5, 8 and 10, and the introduction of budget segments described in the introduction to the MTSP. 2. The proposed Programme Budget 2010-2011 for the SEA Region was developed through a process that began in March 2008. The budget was estimated on the basis of the expected work in each country and the Regional Office. The results of this exercise were discussed at the SPPDM held in July 2008 and at the Regional Committee held in September 2008. The proposed budget was then submitted to WHO headquarters and reviewed by the 124th session of the Executive Board in January 2009. 3. Subsequent to the 124th session of the Executive Board, the Director-General requested all regions to cut their proposed budgets by approximately 10%. This reflects discussions held at the Executive Board related to the financial crisis and the possible reduction in VC as well as the concern that the Organization might not be able to implement a large increase in the budget. Furthermore, the Director-General asked all regions and headquarters to give greater priority to SOs related to the Millennium Development Goals (MDGs) and to noncommunicable diseases (SOs 3, 4, 6, 7 and 9), at the request of Member States, to reflect the increasing priority for work in these programmes. The Director-General also decided not to request any increase in AC. In fact there was a slight decrease in the AC budget because of an estimated reduction in miscellaneous income that forms part of the AC income. 4. At the Sixty-Second World Health Assembly, the Programme Budget 2010-2011 was approved through a resolution adopted by the Member States. 5. Table 1 below shows the impact of these budget discussions over the recent months on the WHA approved budget. The SEA Region lowered its 2010-2011 budget by US$60 million (or about 10%) compared to the budget presented to the SPPDM in June 2008. Almost all of this decrease is in VC. The small drop in the AC budget was due to the Organization-wide reduction in miscellaneous income. Even with these reductions from the budget proposed last year, there is still an overall increase in the SEA Region’s budget of 11% compared to the 2008-2009 biennium. This budget seems to be prudent, given the current financial crisis and the concerns about Member States’ capacity to implement the budget.
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Table 1: Budgets for the last four bienniums and the Programme Budget 2010-2011 (SEA Region), approved by the World Health Assembly Budget for Assessed Contributions (AC) US dollars (million) 93.0 96.2 99.3 103.9 103.9 102.3 Increase over previous biennium -3% 3% 5% 0% -1.5% Budget for Voluntary Contributions (VC) US dollars (million) 100.5 191.5 258.0 387.6 500.6 442.2 Increase over previous biennium -91% 35% 50% 29% 14% Total Budget US dollars (million) 193.5 287.7 357.3 491.5 604.5 544.5 Increase over previous biennium -49% 24% 38% 23% 11% Proportion funded by VC
Programme Budget biennium
PB 2002-2003 PB 2004-2005 PB 2006-2007 PB 2008-2009 PB 2010-2011* PB 2010-2011**
52% 67% 72% 79% 83% 81%
* Proposed budget (June 2008) ** Sixty-second session of the World Health Assembly (May 2009)
6. A greater concern for the Region is the distribution of the proposed budget over the Strategic Objectives (SOs). On the request of the 124th session of the Executive Board the Director-General directed that the budget be increased for SOs 3, 4, 6, 7 and 9. Therefore, most budget cuts for the SEA Region were effected in SO1 (US$ 32 million) and SO2 (US$ 21 million). Table 2 shows that the Region already has resources (as of 31 May 2009) approaching the SO1 and SO2 2008-2009 budgets, thereby indicating that the 2010-2011 budget figures may be too low. On the other hand, the current resources under SO4 and SO9 are too low (only 32% and 29% of the 2010-2011 budget levels, respectively), thereby suggesting that the 2010-2011 budget figures are too high. The major cause of this is the uneven mobilization of VC in the SEA Region. As reported under Agenda item 2.2 and illustrated in Figure 1, the VC resources mobilized (as of 31 May 2009) were substantially, below the amounts planned under SO3, SO4, SO9, SO10 and SO11. Furthermore, the 2010-2011 budget figures increased under SO3, SO4 and SO9, as compared to the 2008-2009 figures. It is unlikely that VC resources will be mobilized during 2010-2011 to fill up these budget gaps. 7. The First Meeting of the SPPDM held in July 2008 and the Sixty-first Session of the Regional Committee held in September 2008 recognized these issues. In fact, the Regional Committee adopted resolution SEA/RC61/R2 to help ensure a better balance of funding for work in the Region. Steps have been taken to enhance resource mobilization and Core Voluntary Contributions for underfunded SOs. The resolution also urged Member States to plan more AC funding to support those programme areas with limited VC funding. Figure 2 compares planned AC funding in 2010-2011 with the 2008-2009 biennium. There has been some progress in AC funding for SO3, SO4 and SO11, while it fell back in respect of SO10 and SO9. The resolution also calls for more AC funding for SO12 and SO13 in order to support Member States’ capacity to implement the increased budget. In this area, there has been considerable progress that should contribute to the strengthening of country offices towards improved implementation.
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Figure 1: VC planned and resources for 2008-2009 compared to 2010-2011 country budget
Figure 2: Proportion of country AC budget (SO1 to SO11) planned in underfunded SOs
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8. The Regional Committee resolution SEA/RC61/R2 also calls for “identifying and developing practical indicators to measure programme achievements.” While preparing for the operational plans for 2010-2011, special attention is being given to this call. The 2010-2011 planning briefs show the Regional Expected Results with indicators, targets and baselines. Countries are also developing workplans with improved expected results, along with their indicators. Country workplans will be reviewed (by staff from both country offices and ministries of health) during a peer review in August 2009 so that countries in the Region can compare their workplans with other countries in order to improve the quality of results and indicators. Table 2: Budgets (AC plus VC in millions of US dollars) for the SEA Region showing proportions (%) of total budget allocated for Strategic Objectives Strategic Objectives 1. 2. 3. 4. 5. 6. 7. 8. 9. Polio, surveillance, IHR and neglected diseases AIDS, TB and malaria Noncommunicable diseases and mental health Health of mothers, children, adolescents and ageing Emergency preparedness and response Risk factors for health Determinants of health Health and environment Nutrition and food safety 2006-07 approved budget 113.0 32% 75.4 21% 12.5 3% 18.9 5% 17.0 5% 10.2 3% 4.9 1% 7.1 2% 3.8 1% 10. Health systems 11. Medical products and technology 12. WHO leadership and governance 13. WHO management and administration Total 31.9 9% 10.8 3% 12.6 4% 39.2 11% 357.3 100% 2008-09 approved budget 134.7 27% 81.0 16% 17.7 4% 50.6 10% 24.4 5% 14.6 3% 4.8 1% 13.8 3% 13.9 3% 57.8 12% 14.3 3% 14.3 3% 49.6 10% 491.5 100% Resources available (31 May 2009) 146.7 37% 70.9 18% 9.7 2% 14.2 4% 41.8 10% 13.3 3% 2.9 1% 8.5 2% 3.6 1% 32.7 8% 6.0 2% 13.0 3% 35.3 9% 398.7 100% 2010-11 proposed budget July ‘08 212.5 35% 105.0 17% 16.0 3% 46.0 8% 47.0 8% 16.0 3% 5.0 1% 14.0 2% 12.0 2% 55.0 9% 14.0 2% 17.0 3% 45.0 7% 604.5 100% 2010-11 WHA62 180.4 33% 83.5 15% 16.6 3% 44.7 8% 63.2 12% 13.7 3% 4.5 1% 11.0 2% 11.7 2% 44.3 8% 10.0 2% 16.5 3% 44.5 8% 544.5 100%
Note: Cross-walk from Areas of Work to Strategic Objectives used for 2006-2007 budgets; SO percentages may not sum exactly to 100% because of rounding off.
REGIONAL COMMITTEE Sixty-second Session Kathmandu, Nepal 7–10 September 2009
Provisional Agenda item 7.3 SEA/RC62/5 21 July 2009
MATTERS RELATING TO PROGRAMME DEVELOPMENT AND MANAGEMENT B. DISCUSSIONS ON IMPACT OF GLOBAL FINANCIAL CRISIS The current global financial crisis is unprecedented. It will affect the health development work of all stakeholders—people, governments, civil society, the private sector and international development agencies. The crisis is still unfolding, and its full impact is not yet known. This paper aims to provide information on the economic growth prospects for 2009 and consider the potential impact of the global financial crisis on the work of development agencies, including WHO. It explores how Official development assistance (ODA) has been affected by past economic crises, and presents key actions to be taken by WHO in the South-East Asia (SEA) Region under its Programme Budget 2010-2011. The Second Meeting of the Subcommittee on Policy and Programme Development and Management (SPPDM), held on 3 July 2009, considered this subject, and made the following recommendations: Action by Member States (1) (2) To strengthen the safety-net programmes aiming to safeguard poor and vulnerable people during crises; and to monitor the trend of the financial crisis and its impact on health at country level.
Action by WHO/SEARO (1) (2) (3) To promote and encourage high-level advocacy on the global financial crisis and its impact on health at global, regional and country levels; to advocate to development partners and donors for sustained ODA for health and other VC to WHO; and to apply more effective and efficient management of programme budget, including the development of an efficiency plan.
The paper is now submitted to the Sixty-second Session of the Regional Committee for its consideration.
SEA/RC62/5
Global financial crisis and preparation of Programme Budget 2010-2011 The current global financial crisis and economic growth prospects 1. In the prime of globalization, the world is unfortunately experiencing several accumulated and interrelated crises. Fuel prices rose at an average annual rate of 21% from 1999-2007. In 2008, food prices also increased at the highest rate in nearly 20 years. As a result, some 100 million people have been driven into extreme poverty1. 2. The global financial crisis came soon after the food and fuel crises, and is considered to be the most severe financial and economic downturn since the Great Depression began in 1929. It originated in the United States, has swept global economic powers (developed countries) in Europe and Asia and is now spreading to developing countries with a domino effect. This crisis will involve all stakeholders – people, governments, civil society and the private sector – and will affect the development process of the international community as a whole. 3. Multilateral agencies are likely to be no exception. Official development assistance (ODA), the main financial resource of multilateral agencies for development activities, may also be affected. 4. This paper does not aim to address the impacts of the global financial crisis on health in individual countries. Rather, it attempts to briefly discuss the current or potential impacts of the global financial crisis on voluntary contributions (VC) in WHO, as well as some key issues that the Organization may need to consider in the preparation/implementation of the Programme Budget 2010-2011. 5. For this purpose, this paper touches briefly on ODA trends during past crises; probable consequences for developing/developed countries and multilateral agencies; recent initiatives taken by international communities; and some issues potentially affecting WHO for consideration, especially at the time of preparation and implementation of the Programme Budget 2010-2011. 6. The graph on the following page shows the projected impact of the current global economic crisis on selected developing economies in Asia and the Pacific, in contrast with its impact on developed economies of the world, according to the Economic and Social Survey of Asia and the Pacific, 2009 published in March 2009 by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP). 7. As is visible in the graph, the Gross Domestic Product (GDP) growth in developing economies of the Region is expected to slow down by 2.2% from 2008-2009 (from 5.8% in 2008 to 3.6% in 2009). In the meantime, developed economies have already begun to contract, and are expected to face a downward trend over the course of the year 2009 (from -1% in 2008 to -3% in 2009). 1 2
2
World Bank, 11 Nov. 2008 .
Official financing flows administered with the promotion of economic development and welfare of developing countries as the main objective. ODA flows comprise contributions of donor government agencies, at all levels, to developing countries and multilateral institutions.
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Real GDP growth of selected ESCAP economies, 2003-2009
10 8 Developing ESCAP economies
6 Per cent
Baseline Downside Developed economies
4 2 0 -2 -4 2003 2004 2005 2006 2007
2008
2009
Official development assistance during past crises 8. Official development assistance comprises official financing flows that are administered with the main objective of promoting the economic development and welfare of developing countries. It consists mainly of grants; in the case of a loan, the grant components must be over 25%. The ODA flows comprise contributions of donor government agencies, at all levels, to developing countries and multilateral agencies and institutions. The major part of WHO’s voluntary contributions come in the form of ODA. 9. After a sharp decrease in the 1990s, ODA saw a rising trend from 2001 to 2005. However, 4
there was a slight decrease in 2006 in real terms, and a steeper decline in 2007 . The current financial crisis will deal a hard blow to ODA flows, dampening prospects for achieving the Millennium Development Goals (MDGs) by 2015. The current recession, as well as some of the stimulus measures being introduced, is compounding budget deficits and budget reallocations in many donor countries. ODA is a soft target in such situations—during the past banking crisis, it dipped anywhere from 20 to 40% . 10. The crisis that affected Finland, Japan, Norway and Sweden in the 1980s and 1990s was followed by a substantial decline in foreign aid, ranging from 10% in Norway to 62% in Finland . 6 5
3 4 5 6
Economic and Social Survey of Asia and the Pacific 2009, UNESCAP. Development Cooperation Report 2009, Organization for Economic Cooperation and Development (OECD). Policy Briefs No. 7 - March 2009, the UN Conference on Trade and Development (UNCTAD). Same Policy Briefs as above.
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11. Furthermore, the ODA levels tend to recover very slowly—in the case of Sweden and Norway, six to nine years after the crisis, according to the same study. The Finnish and Japanese aid flows, meanwhile, have yet to return to their pre-crisis peaks. Given the depth of today's crisis, the recovery period is likely to be similarly long. 12. The ODA for health tends to fall during periods of recession. However, that has not always been the case. For example, at the beginning of the 1990s, ODA for health fell, but then rose continually for some time. It then dropped again from 1997 to 2001, thus showing no clear pattern.
Some consequences of the global financial crisis 13. The global financial crisis is still unfolding and its full impact is yet to be known. 14. For developing countries, the crisis may translate into lower government budget allocations to the social sector; lessened prospects for attainment of the MDGs by 2015; rising poverty levels; and greater demand for ODA and foreign direct investment (FDI) flows and multilateral and NGO/foundation funds. 15. For developed countries, this may translate into lower ODA earmarking and allocations; abandonment of commitments previously made; a more pronounced trend towards lower ODA; less ODA for select sectors; less availability of discretionary funds and hence lower/stagnant levels of extrabudgetary contributions to multilateral organizations; and a lack of readiness to subscribe to new multilateral development initiatives. 16. Lower budget allocations to the social sector in developing countries are likely to make multilateral organizations look to UN agencies to fill their resource gaps. UN agencies themselves may be faced with lower budgets, as voluntary contributions to the agencies are likely to decrease and terms of use of said contributions may become less flexible.
Recent global initiatives 17. The G-20 Washington Summit (15 November 2008)–the G-20 Declaration of the Summit on Financial Markets and the World Economy outlined a roadmap for future action to stabilize and reform financial markets, to preserve an open global economy, to promote trade, to provide credit and liquidity and to restart economic growth and overcome recession. 18. The Declaration also highlighted the importance of rejecting protectionism and not turning inward in times of financial uncertainty, the impact of the crisis on developing countries, particularly the most vulnerable, the importance of achieving the MDGs, commitments on development assistance and reaffirmation of the development principles agreed at the 2002 Monterrey Conference on Financing for Development. 19. The G-20 message, however, may not be sufficient. It failed to mention the importance of investment in health for future development, as well as that of providing funds to other multilateral organizations apart from the Bretton Woods institutions (IMF and the World Bank group).
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20. The World Bank in January 2009 made a call to developed countries to dedicate 0.7% of their economic stimulus packages to a “Vulnerability Fund” for developing countries suffering from the global economic downturn. The World Bank also initiated a new health and education programme for 2009-2010 with US$ 12 billion allocated for a social safety net. 21. The Doha Follow-up International Conference to the Monterrey Consensus (28 November – 2 December 2008), attended by heads of state and governments and representatives from 160 countries, urged all donors to maintain and deliver on their ODA commitments under the current financial and economic crises.
Proposed actions 22. High-level advocacy on the impact of the financial crisis on health: At global and regional levels, it is important to build awareness of the ways in which an economic downturn may affect health, to make the case for sustaining investment in health, and to identify actions to be taken. WHO has already convened two high-level meetings–a high-level consultation in January 2009 in Geneva and a regional consultation in Colombo in March 2009. 23. Focusing on the poor and vulnerable: The people most at risk from the crisis are the poor, women, the youngest and older populations and socially excluded groups. Countries may need to take initiatives to establish/strengthen safety net programmes or health reforms to safeguard the poor and vulnerable. 24. Monitoring the impact of the crisis: There is an urgent need for sustained monitoring of trends of the global financial crisis and its impact at regional and country levels, and to initiate an immediate policy and operational response. It would be beneficial to Member States in the Region if the Ministry of Health, Thailand, were to set up a Health Intelligence Platform to monitor the crisis in the Region and Member States, as recommended at the Regional Consultation on the Health Impact of Financial Crisis, Colombo, Sri Lanka (19-20 March 2009). 25. Sustained ODA for health: Continued and increased investment in development assistance for health is essential–not only to minimize the health impact from the global crisis, but also for future global stability and prosperity. There is a need to undertake specific and effective advocacy with donor partners to maintain or increase ODA flow to health, especially at the country level, in order to attain the MDGs. 26. Enhanced resource mobilization: Voluntary Contributions (VC) are WHO’s main funding source, and are even more important for WHO in the SEA Region, where such contributions account for 81.2% of the Programme Budget 2010-2011. These VCs come either directly from governments, or through UN/international institutions as part of donors’ contributions. Mobilizing VC will be very difficult in 2010-2011, as the main contributors (donor governments) to WHO are already in serious economic recession. 27. More effective and efficient programme management: In view of the potential decrease in voluntary contributions, in May 2009 the World Health Assembly approved the revised Programme Budget 2010-2011 with a 10% reduction. It is therefore essential for WHO to develop and implement an efficiency plan for Programme Budget 2010-2011. This will allow the Organization to concentrate on and prioritize its work in the face of lower resource prospects,
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and to strengthen the critical areas where it can make a difference. It is necessary to focus on less-costly initiatives and to enhance WHO’s visibility with fewer resources, through effective and efficient programme management at all levels and areas of work. 28. Support to Member States: The impact of the financial crisis on each country is not yet fully known. However, in the course of implementation of the Programme Budget 2010-2011, WHO programme management must be responsive to the impact of the financial crisis and economic downturn in respective countries. Relevant country workplans for the 2010-2011 biennium could be re-prioritized or reoriented to support efforts of Member States in healthcare reform and to mitigate the impact of the global financial crisis.