Scaling Up to Achieve the Health MDGs in Rwanda

1. Scaling Up to Achieve the Health MDGs in Rwanda Presentation of Rwanda Macro-Budget Framework by Ernest RWAMUCYO, Director General for Development Planning Ministry of Finance and Economic Planning Tunis Workshop - June 12 - 13, 2006

2. Outline of the Presentation • Planning & Budgeting Framework; • Improving the Management of Domestic & Foreign Resources; • The Vision 2020 macro-framework; • Implications for external financing; • Managing the Risks of Increased Aid; • Summary;

3. 1. Planning & Budget Framework • Long-term is reflected in Vision 2020 with goals consistent with the MDGs; • Medium Term reflected in EDPRS that is under preparation –informed by independent evaluation of PRSP; • Sector strategies produced or updated with donor participation - will be integrated within EDPRS; • Decentralised implementation via MTEF and annual budgets & work-plans of ministries, departments, agencies, & districts; • Budget support harmonisation group reflects on macro framework & progress of public finance management;

4. Planning & Budget Framework Continued • Sector clusters undertake Annual Joint sector reviews of progress. (For EDPRS preparation Clusters are in 2006 working as Sector Working Groups); • Sector reviews are reflected in Annual Review Of EDPRS; • EDPRS & sector reviews inform MTEF & Annual Budget – which will be structured around the EDPRS goals & become more focused on results; • A monitoring and evaluation framework is being established that tracks inputs, outputs, and outcomes.

5. Management of domestic & foreign resources • Significant PFM Improvements have been achieved and are being reinforced; • Action Plan successfully implemented, further phase being prepared; • MTEF links policies & strategies to budgets; • Increased budget both in social sectors as a whole and in growth-enhancing sectors; Priority spending has increased substantially from 1998 to 2005, partly financed by a reduction in military spending. See IMF country report, fifth review – September 2005; • Increased budget realism is reflected in improved execution rates- helped by improved budget support predictability;

6. Management of domestic & foreign resources Continued • Organic Budget law improves budget coverage, strengthens procurement & financial procedures; • Major improvements in cash management, financial reporting & accounts will be reinforced as computer based integrated financial management system is rolled out; • Comprehensive budget execution report issued for 2003, 2004 and 2005. The reports are presented to Parliament by the Auditor General for Parliamentary scrutiny. They are also circulated to Donors.

7. PFM Challenges • Clarify centre & local roles & decentralise more functions, responsibilities and resources; • Improve budget comprehensiveness, including capture of donor project funds and extra budgetary resources; • Reduce bureaucratic budget execution in (donor) projects - which is an obstacle to improved absorptive capacity; • Capture execution and monitoring information from districts and decentralized units; • Adjust chart of accounts to better reflect programs and sub-programs included in sector strategies.

8. Vision 2020 Macro-Framework Indicators 1. Growth has been at an average of 5% p.a. Even if GDP growth doubles, the poverty reduction MDG is not achieved by 2015. 2. Achieving faster growth will need much higher public investment in infrastructure. 3. There is little scope for financing it by borrowing or raising tax rates. 4. These competing demands will make it difficult to further increase the health share of public expenditure.

9. What Additional Resources Are Available For Health? (2005 US $ Per Capita)

10. Managing the Risks of Increased Aid • Increased aid can damage competitiveness – but the risk is reduced when aid is spent on imports or on investments that support higher economic growth in the short-term; • Grants must be long term, predictable, non-volatile and disbursed early in the year. Information must be clear in order for monetary authority to minimize Dutch disease impact; • If aid doubles and growth does not accelerate, aid would reach 25% of GDP by 2015 – making macro-economic stability & public services very vulnerable to aid shortfalls; • Long-term commitments of predictable aid reduce these risks; • Donors can also act collectively to ensure that shortfalls by one donor are compensated by others.

11. Linking the Medium Term to the Long Term • Vision 2020 & MDG scenarios require increased aid flows; • Donors may plan to increase aid to Africa– but actual commitments to Rwanda are short term & imply declining aid after the current year; • Rwanda can not risk basing budgets & spending plans on global promises not yet translated into country commitments; • Rwanda needs clearer long-term indications of likely aid levels before it can plan & budget for scaled up expenditure programmes.

12. Summary of Key Points Rwanda is establishing: • A sound planning & budget framework aimed at reaching our Vision 2020 Goals & the 2015 MDGs; • Systems to ensure resources are used effectively. Donors Can Help Us By: • Supporting a balance between social sector & infrastructure spending – both are priorities; • Maximising the impact of their aid by using it to finance the EDPRS instead of parallel projects; • Providing long-term commitments of predictable & transparent aid that builds our capacity by using national systems.