Giving but not receiving it

There have been consistent calls for more and more spendings on education and health year after year. A parliamentary report released in February 2018 recommended the government to spend more on “important infrastructures and social expenditures such as Education and Health”. The same report boasted that the most recent six-month budget allocation from April to September 2018 on Education doubled the education expenditures for the same period in 2015-16 fiscal year. The healthcare expenditures estimated for the six months are fourfold bigger than that of the same period in 2015-16 fiscal year. (If you’re wondering why 2015-16 FY becomes the benchmark, it is the last budget implemented by the USDP administration which transferred the office to NLD in 2016 after the thorough defeat in 2015 general elections.)

The government allocated 8.53% of total government expenditures for education and 5.23% for healthcare. Still it is well below the ASEAN average for education expenditures of 12.96% in 2011 and for healthcare spendings of 8.08% in 2015. A separate parliamentary report by Joint Public Accounts Committee in 2017 admitted there was no significant improvements in public health sector despite significant increases in healthcare spendings year by year.

In an auditor-general reporta to the parliament in 2017, the auditor-general made a key recommendation calling for effective management of the ever-increasing education and health expenditures. As we have been looking heavily into the allocation side, we left one big question unanswered: Did these budget allocations really mean more benefits to the public?

More Spendings, No Progress?

Apart from funding the Ministry of Education and the Ministry of Health and Sports, our tax payment contributed largely to the entire government revenue. They count for more than half of the entire Tax Revenue collected by the central government.

It would be unfair to bluntly discredit these commitments. Yet there are problems needed resolving. To explore these issues more in depth, we asked ourselves a series of some simple questions. Are the education and health ministries spending all the money allocated? The answer is, “NO!”

It’s not just the Education Ministry or the Health Ministry that underspent in previous years. It seems quite a norm. The only ministry that overspent in past two years was the Cooperatives Ministry in 2016. In five years between 2012 and 2016, the underspent budget accounts for 12% of the allocations across all government institutions.

In 2015-16 FY, the Health Ministry surrendered 86,653.8 million MMK which is 11.89% of the original budget estimate and the Education Ministry, 75,857.80 million MMK, which is 5.20% of the allocation. They didn’t make any progress in the next year in 2016-17 FY where the Health Ministry surrendered 129,802.93 million MMK (15.26% of the budget allocation) and the Education Ministry, 113,959.04 million MMK (6.99% of the budget allocation).

More Money to Do More or Left “Underspent”?

If we look into the problem of chronic underspending, there would involve a lot of underlying issues in the system and also in the practices. We would like to bring some known issues to light. An investigation of the Joint Public Accounts Committee found that government agencies hadn’t started 3064 projects out of 7022 budgeted in the government budget for 2017-18 FY until December, 2017, only three months away from the end of a fiscal year. The parliamentary committee concluded that the projects were not designed properly, making them difficult to implement. It also specifically suggested that health and education ministries didn’t coordinate well with the construction ministry in operating healthcare and educational infrastructure projects. There are also problems with procurement and quality control, it said.

In the auditor-general report on 2015-16 FY expenditures, the auditor-general warned heads of government agencies to avoid overestimation of budget. The JPAC agreed with the auditor-general and said in its fiscal analysis of 2016-17 FY and asked the government agencies to scale the projects so that they could actually implement within the given timeframe.

How they underspent budgets are managed?

It is understandable if you have certain concerns where these underspent money goes and how they are managed. One colonial heritage comes into play then.

Burma Budget Manual has set some guidelines on surrenders to keep these money in an account title “General Reserve Fund”. Though the manual didn’t allow any transfer of money out of the account, the Budget Department was allowed to transfer the budget back to government institutions under 1974 General Financial Regulations. The auditor-general said in its report of the parliament in 2017 that the transfer of cash from GRF to government for un-budgeted activities are “undesirable”. The JPAC strongly agreed with the fact and suggested that these activities could end up in implementation of projects outside the budget.

What does that mean to you?

Underspending in social expenditures would surely mean we have few or lower quality services. The rant from parliamentarians asking why we end up with so-so services while we are spending more and more does now make sense. The answer is because we only look into the allocation side, asking more and more allocations. Yet we also need better management of these public finances to have significant impact on public life.