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  • Effectiveness and efficiency of budget expenditures: analysis of budget inquiries of the Ministry of Health of Ukraine


    Life expectancy in Ukraine is lower than in EU member states, while the mortality rates from noninfectious diseases, e.g. diseases of circulatory system and cerebrovascular diseases, are much higher. This is partially explained by the low efficiency and effectiveness of healthcare system in Ukraine. Most care is provided at more expensive secondary level, while primary level remains undeveloped. Preventive and health promotion measures are nearly absent. Low access to quality health care pushed the Government to startthe healthcare reform. In particular, in the beginning of December 2016 it approved the Concept of health financing reform, according to which each individual will be provided with the list of financed health assistance free of charge.

    The elaboration of the guaranteed package of health care will be the next essential challenge faced by the Government as available public financing is very restricted. Therefore, it is important to ensure increase in efficiency and effectiveness of spending in healthcare sector. At the same time, the assessment of the effectiveness requires clearly defined key performance indicators (KPI) of the Ministry of Health (MoH), as well as of each budget program financed through the Ministry.

    Today, the Government Regulation on the MoH does not envisage the strategic goal of the Ministry’s activities, while defined tasks reflect the operational work of the MoH rather than an attempt to reach a goal. Besides, the strategic goals of the healthcare system are also not defined.

    Recommendation.In the Regulation on the MoH it is important to define strategic goal of the Ministry’s performance. Tasks of the MoH should be clearly formulated and be oriented on the achievement of the goal. It is essential to clearly define KPIs of the MoH. The Strategy of healthcare development, which is to be approved, should define long-term goals, the annual analysis of which would allow monitoring and assessing the Ministry’s performance.


    Budget inquiries of the MoH (as well as of other Ministries) rarely comply with the criteria defined in the orders of the Ministry of Finance and best international practice. The major drawbacks and deficiencies of current budget inquiries include:

    • Insufficient detail and often lack of appropriate justification of budget programs;
    • Definition of goal as a process rather than as a strategic goal;
    • Definition of tasks as the process of implementation of ongoing activities rather than the process focused on achieving results;
    • Wrong performance indicators that often do not assess the efficiency of budget program.

    In particular, the goals of many budget programs are oriented on the process rather than on the achievement of a result. These are ensuring the process of activities, creating conditions for activities, etc. Besides, programs sometimes have very different goals. It is important to attempt to define one strategic goal for each program, which defines the expected result from the program financing. The tasks should clearly define activities, which are directed towards ensuring the achievement of strategic goal of the program.

    Performance indicatorsoften do not allow the assessment of the efficiency and effectiveness of a particular budget program. Many indicators relate primarily to the resources and product indicators, which are defined for a particular budget program rather than for a separate task. This makes assessment more complicated. Moreover, such indicators as numbers of executed requests and answered letters as well as rented premises (and the rent value) are not informative indicators.

    The section of budget inquiries on Assessment of result usually provides information on the budget spending on a particular program rather than assessment of KPIs defined in budget programs for a particular year. In some programs the information in this section is absent.

    Budget inquiries of the MoH are not always informative and thus do not allow to assess the efficiency of budget program implementation. In particular, inquiries do not provide more detailed description of expenditures. They lack information on the list of institutions and organisations, which are subordinated to the MoH and are financed within a particular program.

    Recommendation.The Ministry of Health would benefit from clear identification of strategic goal of each budget program. The tasks should envisage activities, which would allow to reach this goal. Clear-cut KPIs should be elaborated for each task, envisaged in budget program, which would enable the assessment of the efficiency of the program. Besides, it is important to provide the description of each budget program and define the list of organizations and institutions, the activities of which are financed within a program. The Government would benefit from involvement of civil society and health professionals to the process of KPIs elaboration.


    Currently, Ukraine does not have medium-term public expenditure framework (MTEF). This results in low efficiency of budget spending, high level of uncompleted projects. Besides, budget process becomes very sensitive to political shocks. Therefore, it is essential to introduce full-scale MTEF, which would allow the transparency and predictability of future financing, increase efficiency of financing, reduce impact of budget approval on the health financing.  

    Recommendation.TheGovernmentshouldintroduce full-scale medium-term public expenditure framework. In particular, the Ministry of Finance should elaborate the Major guidelines of budget policy for 2018-2020 and publish it for public discussion in February 2017.  

    The report is prepared in the framework of the project “Effectiveness and efficiency of budget expenditures: analysis of budget inquiries of the Ministry of Health”, which was conducted by the Institute for Economic Research and Policy Consulting under the support of Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on the request of Governments of Germany and the United Kingdom


    Oleksandra Betliy's presentation and the video of her speech in Ukrainian are available here 

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