Precipitated aid transition in health – priority actions for low-and-middle income-countries

• Establish baseline by identifying, mapping, and quantifying the in-country stakeholders, services, and programmes that aid supports to provide greater visibility of the external funding flows. This includes the modality of aid (e.g. through government PFM systems or non-governmental entities), as well as differentiating cash from in-kind support (e.g. medicines, vaccines, technical assistance). This mapping should consider funding source, funding direction, programmatic area, as well as cost category (e.g. salaries, goods and services, capital).
• Assess alignment of current and planned donor funding to domestic priorities and systems, including by using the Lusaka Agenda financing and PFM alignment indicators, to identify potential efficiency gains through re-programming/re-channeling of existing/planned commitments.
• Identify at-risk expenditures including those where funding has frozen, have a short time-horizon, or could become ineligible based on future donor priorities, to mitigate risks for large unplanned liabilities to domestic budgets (e.g. as is the case in the Philippines).
• Consider transferability and complementarity of existing donor commitments within overall donor budget funding availability. This includes convening a process with all donors to consider sequencing options and whether other donor funds can help cover funding as an interim measure to complement domestic resources.
• Negotiate for adjustment in current aid modalities to allow greater flexibility in resource allocation and use, including through pooling mechanisms, to better meet needs and priorities. Conditioned, domestic co-financing requirements (i.e. domestic financing conditioned by global health funding agencies) can also be revisited in terms of both quantity and focus in light of overall fiscal scenarios and the health budget envelope.

• Conduct a rapid assessment of the macro-fiscal and health financing landscape by analyzing recent trends in government revenues, overall public expenditure, and health spending in relation to GDP and on a per capita basis. As a complement, undertake a spending review to identify potential efficiency gains, including from fund allocation procedures, channeling modalities and spending rules (e.g. gains through improved budget execution).
• Engage in strategic discussions with finance authorities and parliamentarians to showcase the financial repercussions of actual and anticipated reductions in aid overall, and specifically for health, and its broader implications for labor, productivity, and the overall economy. Establish scenarios for budget re-prioritization, including within health envelope, in collaboration with budget authorities and mobilize senior leadership and support coalitions, including with civil society, to mitigate immediate funding shortfalls and plan for broader strategic re-allocations within PFM regulatory frameworks (see Kenya’s experience).
• Evaluate additional sources of revenue, and based on debt status, explore with finance authorities potential avenues for additional borrowing to augment fiscal capacity (e.g. in Nigeria with a new World Bank loan), including through leveraging newly established funding mechanisms for health-related purposes such as the International Monetary Fund Resilience and Sustainability Facility, as well as potential debt relief options.
• Streamline PFM procedures within existing regulatory frameworks, making domestic resources better allocated and executed in health, including through contracted NGOs, and ensure consolidated financial monitoring and reporting through established financial information systems, potentially connected with health information systems to enable accountability for results.
• Avoid the new creation of, and integrate existing, extra-budgetary, parallel, separate entities and processes (e.g. donor-related project implementation units or issue-specific contingency funds) to channel and account for both domestic and external resources through government structures and spending units.
• Work toward reducing financial fragmentation through a planned consolidation process of existing financing schemes and harmonization of health purchasing functions.

• Identify functional areas for integration within programmes and across the health system through a clear transition plan that focuses on efficiency enhancements and targets areas where duplication likely already exists (e.g. supply chains, information systems, supervision, surveillance). This process should ensure continuity in services, including for vulnerable population groups.
• Develop an integration framework and roadmap to carefully guide the service integration process ensuring smooth delivery of integrated health services, with primary care at the core. This includes ensuring that PFM procedures support effective and efficient use of resources at the front lines that should be able to access and use resources in a flexible and accountably way.
• Assess the cost-effectiveness of donor-supported programmes and interventions as a means to re- or de-prioritize certain activities, including those that should be introduced or scaled up, as well as those that are not aligned with domestic priorities, fit within fiscal realities, or are an inefficient use of resources. This system re-orientation process involves shifts in both funding modalities, as well as in service delivery mechanisms, in particular to strengthen integrated, primary care services.
• Focus on transitioning human resources-related costs to domestic funding to ensure service continuity, including by focusing on salary alignment, cadre integration, and provider payment and contracting modalities. Consider implications of major capabilities gaps at service level caused by aid freezes or reductions (e.g. contracted personnel) and re-focus existing funding on strengthening domestic institutional and technical capacities.
• Review existing procurement modalities across donor-funded activities as a starting point to streamline, integrate and capacitate for domestic procurement, supply distribution, and support efforts to develop domestic production of key products and medicines.