2 minute read
3.7 Potential bottlenecks in the flow of funds in Indonesia
BOX 3.7
In Indonesia, more than five ministries and 20 laws govern the management and operation of villagelevel institutions, which are responsible for stuntingrelated interventions. At the central level, ministries provide policy, regulatory, and infrastructure investment support as well as guidance related to capacity building and technical assistance. Fiscal transfers flow from the central to the district level, the latter of which is responsible for funding operational activities such as health service delivery and water supply and sewage management. Before 2014, districts were responsible for supporting village-level activities; however, districts did not always carry out the transfers to the village level, which resulted in bottlenecks in accessing funding. To resolve these bottlenecks, the national government implemented two new direct transfers from the central to the village level. Despite the two new direct transfers, the nutrition public expenditure review identified additional bottlenecks in the flow of funds that were due to the proliferation of channels through which money was transferred. These multiple ways to transfer funds made it difficult to track the transfers and evaluate potential inefficiencies in the disbursement of funds.
In addition, the national health insurance agency reimburses providers such as village midwives directly for their services. Midwives who fall under district health centers that have financial autonomy receive payments through these health centers and not directly from the national health insurance agency. Most district health centers do not, however, have financial autonomy and do not receive direct transfers from the national health insurance agency. Instead, they pay the midwives through transfers made to district health offices, which transfer the funds to district health centers. These payment mechanisms vary across districts. Because of this convoluted payment structure, many village midwives do not receive their payments.
Source: World Bank 2020a.
Most low- and middle-income countries rely on external financing to implement their public programs. In these countries, the execution of planned interventions depends in some cases on the timely disbursement of financing from DPs. Depending on the availability of data on committed and disbursed funds from DPs, the NPER could also present information on actual disbursement. Understanding the actual disbursement rate can inform the design and implementation of corrective policies.
The Ethiopia health sector PER examined trends in committed and disbursed DP funds managed by the Federal Ministry of Health over a period of five years. To harmonize on-budget financial assistance from DPs, policy makers in Ethiopia implemented a range of measures, including the establishment of the Grant Management Unit within the Federal Ministry of Health in 2008–09. As a result, committed and disbursed funds from DPs have converged over time, reflecting an improvement in the disbursement rate from 55 percent in 2008–09 to 96 percent in 2012–13 (figure 3.10).
The Rwanda NPER used self-reported data from the country’s key DPs to examine trends in off-budget financing. It found significant complementarity between government and DP funding for nutrition activities. For example, DPs focused on sectors such as agriculture and food security and areas such as micronutrient supplementation; the government focused on water and sanitation as well as malaria interventions. For nutrition-enhancing activities, DPs focused mainly on capacity building, whereas the government focused on accountability incentives, regulation, and legislation (box 3.8).
