Expenditure arrears, a form of deficit financing that often goes unnoticed, significantly disrupt health financing and service delivery in many countries. Arrears are overdue payments for established claims, contractual commitments, or continuing service arrangements, and their accumulation reflects inadequate budgeting and fiscal planning. This issue is particularly prevalent in the health sector, where delayed payments lead to severe consequences such as degraded quality of care, personnel absenteeism, and disruptions in service provision.
A recent blog on the Montreux Collaborative’s online platform, pfm4health, highlights the widespread and damaging effects of arrears on health services. It underscores the need for better monitoring and management to prevent service disruptions and financial inefficiencies. For instance, salary arrears have led to strikes and absenteeism among health workers in Liberia and Nigeria, while procurement-related arrears have caused drug shortages and increased prices in countries like Tunisia and Zambia. Delayed payments to service providers in Ghana and Sierra Leone have forced patients to seek care from private providers, undermining public health policies.
Addressing this issue requires recognising the interconnected structural and cyclical factors that contribute to arrears, including macroeconomic shocks, poor budget formulation, and ineffective cash management. The health financing community must prioritise cashflow management and incorporate it into health financing policies and frameworks. Governments need to adopt good practices for arrears management, such as clarifying payment terms and improving expenditure reporting, to ensure the sustainability of health financing and the effective delivery of health services.
