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The Lao People’s Democratic Republic

MINISTRY OF HEALTH

National Immunization Program

Financial Sustainability Plan

Photo provided by UNICEF-Lao Country Office

Report to the GAVI Secretariat30 November, 2002

Report prepared by Ministry of Healthwith assistance from WHO

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Table of ContentExecutive Summary ________________________________________ 3Section 1 – Country and Health Sector Context _________________ 5

[A] Country Context_______________________________________________________ 5

[B] Health Sector Review___________________________________________________ 6

Section 2 – Budget Process and Financial Management___________ 8[A] Budgetary Process _____________________________________________________ 9

[B] Financial Management _________________________________________________ 9

[C] National Health Accounts _______________________________________________ 9

[D] Budgetary Process and Financial Management for Immunization_______________ 10

Section 3 – Program Characteristics, Objectives & Strategies ____ 11[A] Program Strategy and Performance ______________________________________ 11

[B] Current Program Objectives and Targets __________________________________ 16

[C] Possible Changes in Program Objectives in Light of Financial Constraints _______ 16

[D] Government and Partners Agency Roles and Financial Support to the NIP _______ 17

Section 4 – Baseline & Current Program Costs and Financing ____ 18[A] Baseline and Current Year Costs_________________________________________ 18

[B] Baseline and Current Year Financing Patterns______________________________ 20

[C] Past Trends in Volume and Reliability of Financing__________________________ 20

Section 5 – Future Resource Requirements & Financing Levels ___ 22[A] Projections of Resource Requirements ____________________________________ 22

[B] Projections Future Financing Levels, Funding Gap and Risk Assessment _________ 23

[C] Summary of Results and Other Notes _____________________________________ 28

[D] Alternative Scenarios for Resource Requirements ___________________________ 29

Section 6 – Sustainable Financing Strategic Plan and Indicators __ 29[A] Strategies to Mobilize Adequate Resources_________________________________ 29

[B] Strategies to Increase the Reliability of Resources ___________________________ 31

[C] Strategies to Increase Efficient Use of Resources ____________________________ 31

[D] Summary of Financial Sustainability Strategic Plan _________________________ 33

Section 7 – Stakeholder Comments ___________________________ 33[A] Persons Consulted for the FSP __________________________________________ 33

[B] ICC Signatures and Comments __________________________________________ 35

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Executive SummaryThe Lao PDR still ranks among the poorest countries in the world. The Asia financial crisis of1997 has done little to improve the situation and many people still live on less than 1$ a day. TheUNDP human development index ranks the Lao PDR 140th out of 174 countries and accordingto the World Bank, the per capita annual income is approximately 330$. In 2001 it had apopulation of 5.4 million with over 40% of the population living in villages more than 6 km froma main road, many of which are impassable during the rainy season.

Since the early 1980s, the Lao Government has placed the National Immunization Program (NIP)as one of the highest priority programs of the country. It recognized that the rationale forinvesting in immunization was very compelling– the program is low-risk with a proven trackrecord of decreasing the burden of disease, is largely a public good, is highly cost-effective, hassignificant potential for economies of scale that lead to lowering unit costs, has low marginalcosts for expanding and improving the program, and can be financially sustained.

However, performance of the NIP in the past years has been inadequate. Routine immunizationcoverage remain low and among the lowest in the region. Since 1996 routine coverage has beendropping and in 2001, national DPT-3 coverage dipped below 50%. Results of the NationalHealth Survey that same year reported that only 32% of children between the ages of 12-23months are fully immunized. Despite substantial donor support, the operational budget to runimmunization services remains insufficient and the current outreach strategy is not providing theright incentives for health personnel to reach the under-served areas and visit remote villages forvaccination sessions. And because routine services cannot rely on mothers bringing their childrento the nearest health facility that conduct vaccinations, a revised strategy will be the only way torestore coverage levels to an acceptable level. Given that 80% of the population in Lao PDR canonly be vaccinated through mobile outreach to villages, this will require considerable financialresources.

Analysis of the baseline and current year spending show that the NIP has been seriouslyunderfunded. Routine immunization specific spending was about $1.2 million in 1999 and 2001while total NIP expenditure (including supplemental immunization activities) was estimated at$1.4 million in 1999 and $1.6 million in 2001. Of this amount, JICA and UNICEF were thelargest donors, accounting for 85% of total financing in 1999 and 57% in 2001. Support fromGAVI-VF represented 21% of overall financing in 2001. Government support for immunizationspecific spending ranged between 4% to 5% for both years.

Although 2001 spending on the routine program was marginally higher than in 1999, whenGAVI-VF support for new vaccines is excluded, we note that expenditure dropped to $887,000in 2001 – some $280,000 less than in 1999. This is quite considerable given the overall lowspending on the program. The underlying reason behind this drop is the combined result of theinability of certain provinces to return their expenditure reports back in a timely fashion, and theinability of certain donors (UNICEF) to release new funds for outreach. Although funds werephysically available in 2001 and 2002, only half of the money could be released andconsequently, only 2 out of the 4 annual rounds of outreach were conducted each year.

Such funding instability is problematic for a country like the Lao PDR that relies heavily ondonor support for routine immunization services. Any short-term, crisis-management approachto financing leads to budget shortfalls, interruptions in service delivery especially for outreach,supply stock-outs, and uneven geographic coverage.

Analysis of past trends reveals a similar picture for funding and spending instability. Between1990-1997 some $14.4 million were spend on the NIP (including spending on polio eradicationprogram), or an equivalent yearly average of $1.8 million. In other words, the average amount

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being spent on the Lao NIP in the past decade has remained unchanged (even dropping in recentyears) regardless of factors such as population growth, falling routine coverage and hyper-inflation. Likewise, the funding pattern has changed very little in the past 10 years. UNICEF andJICA were the main provider of funds during 1990 to 1997 and contributions from the Laogovernment averaged 7% of the total.

Annual projections of resource requirements were based on current NIP objectives: nationalintroduction of DPT-HepB vaccines, commitment to strengthen outreach services and increaseroutine coverage to 80%, accelerated disease control with neo-natal tetanus elimination (MNTE)and measles control, safe injection and waste management, surveillance, and population growth,wastage and vaccine prices. Detailed projections for future resource requirements were made forthe Vaccine Fund period (2003-2007) and post Vaccine Fund period (2008-2010). The resourcerequirements needed for the remaining period of Vaccine Fund support was estimated at $17.8million and $11.8 million for the 3 years following Vaccine Fund support. In summary, theaverage annual resource requirements over the next 8 years is approximately $3.7 million in orderfor the Lao PDR to reach all the objectives of the NIP. This is in sharp contrast to baseline andcurrent year spending on the NIP - three times less.

Given the high level of uncertainty surrounding future funding levels and commitments, threedifferent scenarios for projecting funding level were made according to different levels of riskassociated with its source.- In the “secure” funding scenario a total funding gap of $6.7 million was estimated for theremaining VF period - an annual average of about $1.3 million. The funding shortfall for the postVF Period is approximately $10.9 million.- In the “possible” funding scenario a total funding gap of $4.0 million was estimated over theVF period - an annual average of about $800,000. The funding shortfall for the post VF Periodis approximately $6.5 million.- In the “probable” funding scenario a total funding gap of $3.9 million was estimated over theVF period - an annual average of about $650,000. The funding shortfall for the post VF Periodis approximately $4.3 million.

The financial sustainability strategic plan identifies a number of action steps that can be taken bythe Ministry of Health (MoH) and international donor agencies in order to make progress in thekey dimensions of financial sustainability.- To mobilize adequate resources, action steps will be based on around advocating towards theMoH and Ministry of Finance about the possibility of including a line item in the national budgetfor the purchase of routine vaccines; ensuring that the Multi-Bilateral agreement between theJapanese Government (JICA) and UNICEF continues after 2003 by advocating for the pastbenefits of this scheme; ensuring that GAVI “ISS” funding is used in the most cost-efficient andcost-effective way in order to reach coverage targets and benefit from reward funding after 2004;and using GAVI and the FS Planning process as an opportunity to advocate for immunization inthe Lao NPEP (PRSP).- To increase the reliability of resources, action steps will be based upon simplifying proceduresfor approval of the EPI workplans and activities that cause delays in implementation and funding; and improving reporting requirements and timely disbursement of UNICEF funds for outreachthrough the use of Ministry of Health approved provincial accounts for UNICEF funds.- To increase the efficient use of resources, action steps will be based on continued efforts todevelop strategies for reducing vaccines wastage; continued efforts to develop the district strategyand to find the most cost-efficient and cost effective ways of using limited available resourcesfor outreach activities; and to improve information systems for better planning and budgeting.

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Section 1 – Country and Health Sector Context

Objective: This section of the Lao FS Plan provides information on the country context and theorganization of the health sector and any health sector reforms that will affect the nationalimmunization program.

[A] Country ContextSituated along the Mekong River, the Lao PDR it is a mountainous and landlocked countrybordered by China to the north, Vietnam to the east, Cambodia to the south, Thailand to the westand Myanmar to the north-west. Administratively there are 18 Provinces and 142 districts and13,234 villages.

In 2001 it had a population of 5.4 million and is considerably smaller than it’s neighbours. Thecapital Vientiane is the only large town with about 530,000 inhabitants. Elsewhere the countryis extremely sparsely populated with an estimated average of 21 people per square km (comparedto 214 in Vietnam). Over 80% of the population live in rural areas and over 40% of thepopulation live in villages more than 6 km from a main road, many of which are impassableduring the rainy season.

Given the current population rate of 2.4% a year, the Lao population is expected to double in 25years as persons under 20 years of age (who currently comprise about 54% of the population)enter their reproductive years. Although fertility is declining as families adopt family planning,fertility rates are high with each woman bearing 4.9 children. Despite considerable improvementsin the quality of life, the health status in Lao remains low. The health situation is characterizedby low life expectancy (53 years), high infant mortality (82 deaths per 1000 live births), highunder-five mortality (107 death per 1000 live births) and high maternal mortality (530 deaths per1000 live births).

Despite GDP growth rates averaging approximately 7% per annum since 1993, and the raisinghopes that the country might graduate from the ranks of the least developed countries by the year2020, the Asia financial crisis of 1997 has done little to improve the situation and many peoplelive on less than 1$ a day.

Figure 1.1: Macroeconomic Trends

The Lao PDR still ranks among the poorest countries in the world - UNDP human developmentindex ranks the Lao PDR 140th out of 174 countries and the World Bank estimate that the average

$-

$50

$100

$150

$200

$250

$300

$350

$400

$450

1995 1996 1997 1998 1999 2000

GDP

per

Cap

ita

0

200

400

600

800

1,000

1,200

1,400

Infla

tion

Inflation (GDP deflator)GDP per Capita (current US$)

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annual income in 2000 was 331$ per capita, with an estimated 22% of the population living underthe define food poverty line.

Table 1.1: Macroeconomic Data

[B] Health Sector ReviewThe health policy of Lao PDR has been guided and declared by the Political Party and theNational Assembly. The main political statement of the Lao Government on health is ‘Diseasesprevention is the principle and curative is important’. The government policies in the latest 5-year plan are (a) to reduce mortality and morbidity from vaccine preventable and othercommunicable diseases by developing an official network of basic health care services,accessible to all, and (b) to enhance the resource base for public health actions. Since 1980s, theLao Government has placed the National Immunization Program (NIP) as one of the highestpriority programs of the country.

(1) Health Sector OrganizationThe central Ministry of Health (MoH) is responsible for health sector planning, policydevelopment, coordination, external financing and evaluation. As a result of a reorganisation in1999, the MoH has now seven departments: Cabinet; Hygiene and Prevention Department;Curative Department; Inspections Department; Planning and Budgeting Department; Food andDrug Department and Human Resources Department. A new Steering Committee was also setup to coordinate and supervise foreign assistance projects. There are at least 12 vertical programsmanaged centrally by technical Centres and Departments. The Centre for Mother and ChildHealth (CMCH) is responsible for Immunization under the department of Hygiene andPrevention.

(2) Health Sector ReformSince 2000, the Government has introduced a policy of decentralization. The central level is nowresponsible for policy and guidelines, while the provincial and district levels are responsible forstrategy, planning, budgeting and implementation. Decentralization is intended to help buildcommunity participation and self reliance and ensure that services are demand driven. At thistime, the central MoH has less influence on implementation and less ability to even monitor atlower levels as financial and programmatic decision making has devolved to lower levels.Information flow, particularly of financial type, needs to be improved so that the centre canmonitor the health system at lower levels. The central government also needs information so thatit can organize an equalisation program between the more advantaged and disadvantagedprovinces.

Another major reform initiative is the development and adjustment of national health goals andtargets by focusing greater emphasis on strengthening the Primary Health Care networkthroughout the country. An effort is being made to develop an improved, simplified, and unifiednational health information system. Efforts are being made to strengthen and coordinate healthresearch activities to support and to strengthen health sector reform and development and toimprove and adjustment to health organizations, health management and health care financingsystems. The goal of the health sector reform is to improve health outcomes, improve equity of

Lao PDR 1995 1996 1997 1998 1999 2000GDP (current Billion US$) 1.76$ 1.87$ 1.75$ 1.29$ 1.45$ 1.71$ GDP growth (annual %) 7.03% 6.76% 7.04% 3.97% 7.30% 5.70%GDP per Capita (current US$) 385$ 399$ 364$ 261$ 288$ 331$ GDP per Capita (Asia & Pacific; current US$) 1,020$ 1,129$ 1,115$ 923$ 1,029$ 1,110$

Population 4,581,258 4,691,208 4,803,797 4,919,088 5,037,146 5,158,038Official exchange rate (LCU per US$, period average) 805 921 1,260 3,298 7,102 7,888Inflation (GDP deflator) 170 193 230 427 967 1,197

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access, increase health service utilization, and to improve the quality of health care, thusenhancing the effectiveness of limited resources.

However, the health sector reform in the Lao PDR is still in the early phase of the reformingprocess. Although decentralization is clearly the government policy, methods of integratingvertical, centrally controlled programs within a horizontal, peripherally managed health systemremains somewhat unsettled. District officials have to become familiar with planning, budgeting,monitoring and reporting as well as gain the necessary management skills to oversee the differentprograms including immunization. This lack of capacity at the district level and the high turnoverof staff at lower levels has resulted in delays in implementation and reporting which in turnweakens the timely flow of funds for activities. This has been particularly acute for theimmunization program.

(3) Health Sector FinancingThe health sector has been seriously underfunded, contributing to poor health status of themajority of Lao people for several decades. Moreover, most government budget and externalfunding is allocated to the curative services in urban areas despite prevention being the toppriority of the government. Most rural populations do not have access to health care delivery,especially preventive care at the primary level.

Health care financing from all sources in the Lao PDR, including government, donor assistance,social security and household payments was estimated to be at about 11$ per capita in 2000. Thisis low by comparison to other countries in the region. Since the Asia Financial crisis Lao’s healthcare financing status worsened falling further behind many of its neighbouring countries.

Household expenditures are the largest gross contributor to the sector, at about 60%, whereasgovernment financing remains at about 9%.

Figure 1.2: Health Sector Financing

The Lao economy remains overwhelmingly dependant on Official Development Assistance(ODA), which accounts for some 18% of GDP and around 80% of public spending in the formof grants and soft loans. Although only 7% of foreign funds are allocated to health, those fundsmake up over 34% of total public expenditure in that sector. Efficient management of theseresources is therefore crucial. However, failure to maximize the potential of these available funds

Pharmacies23.30%

User Fees 20.40%

Private Services 13.40%

Households57.10%

MoH Central2.90%

MoH Provinces5.50%

Social Security0.30%

Bilateral Assistance13.60%

Bilateral Assistance15.70%

NGOs4.80%

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has resulted in loss of resources and in donor fatigue in recent years. This is particularly the casefor immunization.

(4) Health ExpenditureThe MoH and Ministry of Finance (MoF) have traditionally been the main bodies to manage andcontrol expenditures. This has changed with decentralization and as much as 70% will belong toprovinces and districts. However, in actuality, international donors are a very crucial source ofexpenditure and this leaves vertical programs like immunization at high risk if there is anychange in donor priorities and donor fatigue. The high donor dependence also makes it even moreimportant that the government makes a large effort to increase the effectiveness of donorcontributions. Despite nominal increases in government spending on health in the last 5 years,in real terms (i.e. after adjustments for inflation) it fell quite substantially following the AsiaFinancial crisis. A recent analysis by the ADB found that in 5 provinces, total planned healthexpenditure in 1999-2000 was one third the level of 1998-1999 in real terms.

Whereas recurrent expenditures has normally accounted for about 60% of total governmentexpenditure for the health sector, in recent years it’s share has fallen to about 40% or less.Salaries account for approximately 50% of total recurrent expenditure and 20% for administrationexpenses. The remainder is divided between support/promotion of core health programs (12%),social welfare (12%) and social security (4%). Hyperinflation following the Asia financial crisiscut real wages in the health sector by more than half. Whereas average monthly salaries wereabout 35$ a month, by 1999-2000 they had fallen to about 16$. Extreme fiscal austerity and thefailure to adjust salaries to inflation accounts for the collapse of public health expenditure. Thegovernment provided a 40% boost in salaries for public servants in late 2000, including for allpersonnel in the health sector. Although under decentralization, local governments areresponsible for salaries, the income revenue of some local governments was not adequate causingdelays in paying the salary of local government staff for several months. This has resulted in afall of staff morale and motivation. Many workers find it necessary to moonlight in order tosupport their families and for this reason health workers sometimes attend their public duties foronly part of the day.

With a large portion of the government budget allocated to capital investments, especially newbuildings, very few resources are available for operating and maintaining existing or newfacilities, which rapidly decay and hinder the quality of services and increasing the cost ofinefficiencies and waste.

Only recently has the Government begun to reverse the trend and has indicated it will increasespending on social sectors and more on recurrent expenditures. More specifically it has indicatedthat the share of budget for health will increase between 2002 and 2003 to 8.8% of GDP (in Kip).In the short-term, this increase is likely to be sufficient to cover continued inflationaryadjustments to salaries without any significant improvements in real allocations.

Unfortunately, health expenditure accounting is not conducted on a functional or target basis,hence it is not possible to determine the division between health spending for preventive andpromotive services and curative health care.

Section 2 – Budget Process and Financial Management

Objective: This section of the Lao FS Plan identifies some of the main shortcomings in thebudgeting process and the management of financial resources that reduce the financialsustainability of the immunization program.

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[A] Budgetary ProcessPrior to the policy of decentralization, all activities in the province and districts were planned andauthorized by the central government. The budgeting system was performed in line items andthere were great differences in health care delivery due to the inequality between the wealthy andthe poor provinces.

Under decentralization, the budgetary process in Lao PDR was also decentralized and thebudgeting system was the change from ‘line items’ to ‘program based’ and given more priorityto health promotion. The central government sets policy guidelines for provinces to follow. Theprovinces draw up a detailed budget proposal and submit to the Ministry of Finance (MoF).Before the approval by the Parliament, there is a mechanism that vertical ministries negotiatewith the MoF to give additional budget for underprivileged provinces. Since provinces are givenauthorities to raise revenues , the level of income of each province will determine the amount ofbudget to be spent. The central policy will provide macro-economic prediction as to how muchthe economic will grow next year. The provinces are allowed to spend within their income, andany surplus will be sent to the central government to be used by deficit provinces.

The broad central policy guidelines for drafting the budget have been less straightforward. It isadvised by the MoF that the budget should be based on an incremental planning rather thanradical planning due to lack of government income (and lack of information). Top priorities havebeen given to spending on salary (which is rather fixed) and on capital investment (which isdriven by donors). So only a little money is left for actually running program and it is expectedthat each province must guarantee 25% of the total budget be spent on social services.

[B] Financial ManagementFinancial management, especially at the regional, district and facility levels, is generally weak.The ongoing process of budget decentralization is not clear and procedures seem to varysignificantly depending on the capacity of each province or district to manage the process.Financial reports from most provinces and district health facilities do not follow any standard andare difficult to interpret. Improvements are needed in the financial information system. Theindividual vertical programs of the MoH require separate reporting forms that individually mayseem straightforward, but when taken cumulatively become lengthy, complicated and difficultto complete. The different vertical reporting systems have resulted in duplication of data andconflicting results. Given the evidence of overestimated/underestimated information, qualitychecks are also needed. The capacity of data utilization in planning and monitoring/evaluationis limited and does not allow the use of information for immediate planning. Some districts arenot adequately prepared for undertaking planning activities that have now become theirresponsibility under decentralization.

[C] National Health AccountsHealth expenditure accounting is not conducted on a functional or target basis, hence it is notpossible to accurately track the flow of funds and the division between health spending for eachprogram is difficult to measure. There is a strong need for a national health accounting systemand the ADB is assisting the MoH in improving its financial accounting procedures, consistentwith those of the MoF. The new operational double-entry accounting system has facilitatedimproved budget management and project financial management. However, the system has yetto be an effective mechanism for the central MoH to monitor health expenditure in provinces anddistricts, making it very difficult to see if spending and implementation targets are being met inall health services including immunization. This is quite significant since the MoH Planning andFinance Division estimate that about 70% of recurrent expenditure on health are at the provincialand district levels. As the provinces have not been reporting their expenditures except on a line

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item basis, according to the budget nomenclature, it is not possible to track trends in levels ofsupport.

[D] Budgetary Process and Financial Management for ImmunizationAt the end of each year the Centre for Mother and Child Health (CMCH) at the Ministry ofHealth holds a week long EPI review meeting involving staff from national and provincial levels,representatives of other government sectors and local NGOs, and major partners represented inthe ICC. The review meeting assesses progress with respect to the annual work plan for theprevious year, and the five-year plan as a whole, and drafts a work plan for the coming year,including resource requirements and contributions by source. This plan is discussed furtherduring an ICC meeting for approval. The finalized annual EPI workplan, including ICC approvedbudget allocations is then sent for approval by the Minister of Health.

The time needed to process documents by the Ministry of Health is one of the biggest constraintsin program implementation. Delays in the approval of the annual EPI workplan from the Minister(linked to excessive layers of bureaucracy and paper work) have caused delays in theimplementation of activities and hinder the timely disbursements of funding to carry them outefficiently - up to 2 month delays in approval of the annual EPI workplan have been reported. Tocomplicate matters, once the annual workplan is approved, each separate activity must go throughthe same process of getting Ministry approval before they can be implemented. Individualactivities have been known to be delayed by a week or two because of same bureaucraticprocedures and redundant paper work needed to get approval for the EPI annual workplan.

Once the workplan is approved, the processing of documents for requesting the funds needed takes time to trickle through the system. For instance, a cheque from UNICEF takes a minimumof one months to reach the provincial level and about the same time to reach the district level.The same runs true for liquidation of funds which have to go through the whole process inreverse. This is a serious problem for the NIP given that many activities, such as outreach needto be conducted at specific times of the year - during the dry season. If the annual EPI workplanis prepared at the end of the year1, the combination of these delays often compromise the efficientand timely running of outreach activities before the rainy season starting in April, and afterwhich, many villages cannot be reached by vaccinators until October.

Given the late arrival of funds and thus the delays in implementation, it very difficult forprovinces to report back on time on the use of funds. This problem has been particularly acutein the past two years where UNICEF funds have not been released in a timely fashion in orderto conduct the needed rounds of outreach2. The reasons behind the delay in disbursements is thecombined result of the inability of certain provinces to return their expenditure reports back toUNICEF in a timely fashion, and UNICEF’s inability to release new funds for outreach until allprovincial reports have been received. Under the UNICEF regulation, when cash advances to thegovernment (CAG) have been unjustified for over 6 months, new funds cannot be released. Thismeans that if one province cannot not report on time, all provinces are penalised for additionalfunding. In 2001 and 2002, half of the funds available from UNICEF to support outreach couldnot be released. As a result, only 2 of the 4 scheduled rounds of outreach were conducted in bothyears.

Financial management for immunization is weak at all levels. Although expenditure accountingis conducted at the central level upon receipt of expenditure statements from provincial levels,there is no financial management system set up to be able to use this information to strengthenplanning and budgeting for the program. The accounting is done simply to report back to donors

1 The final annual EPI workplan is usually sent to the Minister in December.2 UNICEF provides all the funds for outreach activities (per-diems, transport allowance and ice)

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on use of funds. Hence it is extremely difficult to accurately track the flow of funds forimmunization and trends in the level of support.

Section 3 – Program Characteristics, Objectives & Strategies

Objective: This section of the Lao FS Plan provides basic information about the scale, scope,management and future plans of the National Immunization Program (NIP), highlighting thespecific types of improvements that are to be achieved over the next planning horizon. Thesesprogram characteristics and objectives form the basis for understanding what needs to befinanced and used as the basis for projections of resource requirements. In addition, certainprogram characteristics, including the role of international financing partners, can haveimportant implications for future financing.

[A] Program Strategy and Performance

(1) The District StrategyThe expanded program for immunization (EPI) began in 1982 when the Government of Lao PDRadopted a strategy to immunize children against the six EPI target diseases. However, becausethe operational budget to run health services had been inadequate, health personnel had noincentive to reach the under-served areas and visit remote villages for immunization sessions.And because the routine immunization services could not rely on mothers bringing their childrento the nearest health facility that conducted vaccinations, by 1990 national DPT-3 coverageremained below 20%. Outreach services was the only way to restore coverage levels to anacceptable level and this required external support.

In 1991 the strategy for immunization delivery was revised and a district strategy was developedand still implemented today. Under this strategy the district became the operational unitresponsible for planning and managing the delivery of services through fixed health facilities andmobile outreach activities to villages. Villages in the catchment area of a district health centrewere classified into 4 zones:

Zone 0 are villages within 3 km of a fixed immunization centre. They represent 14 % ofall villages and about 27 % of the population.Zone 1 are villages where an outreach team can conduct a vaccination session within aday using non-motorised transportation - either by walking, riding a bicycle, or rowinga canoe to the village and return to the district health centre in the same day. Zone 1villages represent 16 % of all villages and about 20 % of the population.Zone 2 are villages where an outreach team can conduct a vaccination session within aday using motorised transportation - either by motorbike, motor boat or using publictransport. Zone 2 villages represent 15 % of all villages and about 15 % of thepopulation.Zone 3 are villages where an outreach team requires one or more overnights to reach thevillage and conduct a vaccination session. They represent 53 % of all villages and about38% of the population.

Under the district strategy, a team of 2 vaccinators and 1 volunteer are responsible for about 15to 20 villages. Initially, each village would be visited 3 times3 a year in scheduled rounds ofoutreach during the dry season. However, in the past years, the scheduled number of rounds hasincreased to 4.

3 For the 3 required doses of OPV and DPT in the schedule.

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The district strategy has relied (and still relies) on external funding to be made available toprovide per-diems to vaccinators and a travel allowance to cover for the cost of transportation toremote villages. Traditionally, these operational costs have been supported by UNICEF. The perdiem rates have been calculated on a village and team basis.

Zone No. Villages Per diem per Village Note0 1,853 $0.7 For 2 vaccinators1 2,117 $1.1 For 2 vaccinators2 2,250 $1.4 For 2 vaccinators3 7,014 $2.8 For 2 vaccinators

(2) Trend in Performance

CoverageThe effects of the adoption of the district strategy and with the provision of adequate externalfinancial support resulted in a rapid increase in routine coverage up until the mid 1990s. Since1996 however, the gains made in routine coverage could not be sustained4.

Currently coverage for the different antigens varies from 50%-60%, and clearly coverage is notadequate to achieve good control of vaccine preventable diseases in the long term. In 2001,reported DPT-3 coverage dipped below 50% and many districts continue to have very lowcoverage (see district coverage in Annex).

Figure 2.1: National Reported Coverage by Antigen (< 1 population)

4 The large gains in routine coverage prior to 1997 were the result of intensified Polio Eradication program where forlarge scale Polio NIDs were actually planned as large rounds of outreach were all antigens were provided.

40%

50%

60%

70%

80%

1995 1996 1997 1998 1999 2000 2001

DPT-3MeaslesPolio

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Note that the coverage estimates reported above are different from those provided in the WHO-UNICEF Joint Reporting Form and likewise in other GAVI documents. Getting a good grasp onpopulation and coverage has been a constant challenge and recent adjustment have been madein light of new population estimates5.

Table 2.1: National Reported Coverage by Antigen (< 1 population)

According to the Lao immunization schedule, a child should receive a BCG vaccination toprotect against tuberculosis, three dose of DPT to protect against diphtheria, pertussis and tetanus,three doses of polio vaccine and one dose of measles by the age of 12 months. Results of the lastNational Health Survey in 2001 reported that 32% of children aged 12-23 months had receivedthe eight recommended vaccinations (were fully immunized).

WastageVaccine wastage is known to be high given that 75% of the population can only be services byoutreach and that currently, the multi-dose vial policy (MVPD) is only suitable for fixed healthcentre delivery and only applied to certain antigens. During outreach, the current National EPIpolicy is to discard any opened vials at the end of the day.

Getting a good handle on wastage is another constant challenge in Lao PDR. Different estimatesfrom various source are provided below. All are consistently higher than target levels.

Table 2.2: Estimated Wastage by AntigenWastage JRF* GAVI 1st AR** UNICEF***DTP 26% 50% 35%Measles 25% 50% 50%BCG 50% 50% 50%TT 50% 35%OPV 25% 25% 25%DPT-HepB 35% 35%* WHO-UNICEF Joint Reporting Form** First Annual Report to GAVI*** UNICEF estimates for vaccine forecasting

Given the heavy reliance on outreach services, GAVI allowed a maximum wastage of 33 %(normal limit is 25 % reducing to 15 % after 3 years) for the introduction of DPT-Hepatitis Bvaccine. However, documented research by WHO has shown that during outreach activities,wastage on DPT can exceed 50% in districts.

A good correlation can be seen between high DPT vaccine wastage rates and districts with a highproportion of the population living in remote Zone 3 villages.

5 Please refer to the first GAVI annual report submitted on September 2002 in Annex.

1995 1996 1997 1998 1999 2000 2001BCG 59% 62% 58% 54% 59% 58% 56%DPT-3 54% 58% 60% 53% 52% 52% 47%Measles 68% 73% 67% 67% 65% 60% 50%Polio 65% 69% 69% 64% 61% 57% 52%TT2+ 35% 32% 32% 32% 36% 37% 33%National reported data as of 12 June 2002

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Figure 2.2: DPT Wastage during Outreach – Khammouane Province 2001

It should be noted that Khammouane is one of the better performing provinces in the country andhas the fewest zone 3 villages. Therefore the introduction of DPT-Hepatitis B vaccine intooutreach activities will require careful monitoring to document wastage rates and the extent towhich they can be minimized.

SurveillanceThere has been significant improvement in surveillance in the past three years, but incompletedisease reporting continues to limit the reliability of reported incidence of most vaccinepreventable diseases. There is still significant under-reporting of these and measles and neonataltetanus are known to be significant childhood disease problems. The burden of other vaccinepreventable diseases such as pertussis is still largely unknown.

(3) Planned Improvements

Zone 0 Social Mobilization StrategyIn 1998 the Zone 0 “Social Mobilization” strategy was developed to increase demand forimmunization services in villages that are within 3 kilometres from the nearest health facility6.Under the revised strategy, mothers living in zone 0 villages are now expected to visit fixedhealth facilities in order to get their children immunized. This strategy involves increasing thedemand for immunization services through active social mobilization and where the Lao WomenUnion (LWU) and the Ministry of Education are playing a key role. To date, the zone 0 strategyis only partially implemented in what are know as “active” zone 0 villages. Inactive zone 0villages are still serviced by outreach teams. It is expected that by 2003, no more outreach willbe performed in zone 0 villages.

Revised District (Zone) StrategyThe Ministry of Health is currently developing a plan to revise the district strategy based onevidence from the WHO/Abt-Associates costing study conducted in February of 2001. The

6 Under the initial strategy, outreach was conducted in zone 0 villages.

0%

10%

20%

30%

40%

50%

60%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%Proportion of district population living in zone 3 villages

DPT

vac

cine

was

tage

15

findings showed that the current per diem structure provided the wrong incentives for vaccinatorsto conduct outreach and this could be an underlying reason for low performance.� Firstly, given that per-diems were given on a “per village basis”, the incentive over the years

has been for districts to slowly reclassify villages as zone 3 even when these could easily beaccessed within a day (technically reclassifying zone 1 and zone 2 villages as zone 3).However, over the years, zone 3 villages would range from those that can be found close toa main road to those that required a 12 hour walk. There was very little incentive to serve themost remote villages and the difference between zone 1 and a zone 2 villages was becomingless and less clear.

� Secondly, providing a per-diem on a “per village” basis meant that the motivation for thevaccinators was to maximize the number of villages visited during a round of outreach, withno incentive to spend time in the village to vaccinate children.

� Lastly, because the per-diems had not been adjusted for inflation since 1999, they are nolonger in line with the current cost of goods and services. Since the per-diem was sharedamong the team of vaccinators, the $2.8 would not be sufficient to entice health workers toprovide outreach to remote villages – many would end up out of pocket if they did.

In light of these issues, the Ministry of Health is considering a proposal to reclassify villages intobroader zones that better reflect the difficulty of access of certain villages. In addition a newperformance based per-diem structure is being proposed. The plan is to merge the old zone 1 andzone 2 villages into one zone (new zone 1) and to partition the old zone 3 villages into zone 2,3, 4 and 5.

The per-diem rates will be increased and will be given for each vaccinator – no longer to beshared among the team. Although the proposed per-diem structure is still on a “per village” basis,the conditions for payment are as follows: 50% of the allowance for each village will be givento the vaccinator upfront, and the remaining half will be given after verification from thesupervisors that the vaccinators are performing high coverage in their zone. How this will bedone is still under discussion.

Zone Per diem per Village Overnights Note0 $0.0 0 Zone 0 Strategy1 $2.0 0 Per vaccinators2 $3.0 0 Per vaccinators3 $4.0 1 Per vaccinators4 $8.0 2 Per vaccinators5 $10.0 3 Per vaccinators

Once the new model for outreach is finalized, it will be pilot tested in selected provinces in orderensure that the incentive structure for outreach can work. The Ministry of Health intends to usethe $1.4 million GAVI Immunization Services Strengthening (ISS) support to cover for theadditional per-diems needed under this new plan. These funds will be additive to existing fundsprovided for outreach by UNICEF.

Coverage by ZoneAt present, the system of immunization coverage reporting is not integrated with the system ofservice delivery. The zone classification system has primarily been used as a method to distributedifferent rates of per diem allowances to vaccination teams for outreach activities. In order toassess and monitor performance in each zone, especially with the revised classification ofvillages, it is envisaged that coverage will also be reported by zone.

Reporting of coverage rates in this fashion was assessed by WHO using data from the three pilotdistricts for DPT-Hepatitis B vaccine introduction. Results have been positive and reporting in

16

this format does not require the collection of additional information, just the presentation ofcurrent coverage data in a more useful way – in line with the delivery strategy.

[B] Current Program Objectives and TargetsThe main objectives of the Multi-year plan of the Lao National Immunization Program (NIP) arethe following:1. To raise immunization coverage for all antigens to 80% by 2003. At current levels of

coverage, this target is overly ambitious and 80% coverage is unlikely before 2007.2. To introduce DPT-hepatitis B vaccine into the NIP in 2001, and to achieve national coverage

comparable with other vaccines. As of May 2002, DPT-Hepatitis B vaccine with ADsyringes and safety boxes had been introduced to approximately 6 % of the national targetpopulation (based on a total target of 188,195 children <1 year of age). A phasedintroduction during 2003 and 2004 is planned.

3. By the end of 2004 all immunization injections in Lao PDR will be given using auto-disableequipment. The target is to have 100% of immunization injections given with AD syringesthat are properly disposed of in safety boxes and effectively incinerated by 2005.

4. To maintain polio-free status until global certification of poliomyelitis eradication. 5. To reduce the incidence of neonatal tetanus (NNT) and measles by 2005 through accelerated

disease control.6. To promote the integration of EPI and other health services under EPI plus concept.

General Strategies for the NIP are listed as follows:1. Focus on the development of sustainable systems for planning and delivery of immunization

services at all levels, particularly in low-performing areas.2. Develop and strengthen disease surveillance by building on the existing AFP surveillance

system, incorporating other vaccine preventable diseases, so that detection, reporting,investigation, and response can be properly managed.

3. Carry out large scale disease control activities where necessary to rapidly reduce diseaseburden, respond to outbreaks, or eliminate vaccine preventable diseases.

4. Maintain the NIP as a flexible and innovative program by seeking to incorporate appropriatenew vaccines and interventions and by integrating the delivery of other health services.

5. Maintain close partnership with all partner agencies supporting immunization, both local andinternational, particularly through the mechanism of the Interagency CoordinatingCommittee (ICC) for Immunization.

[C] Possible Changes in Program Objectives in Light of Financial ConstraintsIn light of financial constraints, modifications to current program objectives would be possibleso as to reduce the resources needed to match the financing available. The following changeswould be considered:1. Reducing vaccines wastage by:

-Strengthening the zone 0 strategy for increasing demand for vaccinations in villages nearfixed health centre. This strategy has the potential to reduced wastage, reduced drop-out ratesand save per-diems currently being spend for outreach in this zone.-Continue promoting the use of Multi Dose Vial Policy (MDVP) at fixed health centres toreduce vaccine wastage. In addition reduce, on a case by case basis, the number of days thatunder-utilized fixed health facilities are open for immunization services.

2. Continue efforts to develop the district strategy and develop a cost-efficient and cost effectiveways of using limited available resources for outreach activities.

3. Focus efforts and resources on reaching high coverage in the easier to reach villages first.4. Continue efforts to improve information systems for more efficient planning and budgeting.

This would require developing skills at the national level and information systems (financialand programmatic).

17

It should be noted that in Lao PDR it would be politically difficult to change broad programobjectives given the decree from the National Centre for Mother and Child Health to placeimmunization as a priority program for the country.

[D] Government and Partners Agency Roles and Financial Support to the NIPThe National Immunization Program in the Lao PDR has been highly dependent on partneragency support since its beginning, largely from the Japanese Government (JICA), UNICEF andWHO. While recently the funding committed by the Ministry of Public Health has increased, itscontribution largely consists of salaries paid to full-time immunization staff at the central andprovincial levels, and health care workers who spend a portion of their time performingimmunizations at the health facility level. A small amount of funding is provided to cover for fueland some overhead costs (electricity…).

In Lao PDR, there is a non-negligible community participation. During outreach activities, thecommunity provide in-kind supports by offering food, transport and sometimes accommodationto vaccinators. During campaigns, local businessmen, as well as entrepreneurs are asked toparticipate. They contribute either in cash or in kind. In addition, owners of all kinds of transportare asked to provide free services to the vaccination teams and mothers wishing to go to healthcentre posts.

A number of NGOs are also present in Lao PDR and their direct support and involvement for theimmunization program is not made explicit although it is suspected that at the grass-roots leveltheir presence indirectly strengthen the program. Between 1990 and 1995, Rotary Internationalprovided annual support to the Polio Eradication program (between $50,000 and $75,000 onaverage).

As early as 1989, the Japanese Government started to supply BCG vaccine through a multi-bilateral scheme between the Japanese International Cooperation Agency (JICA) and UNICEF.This scheme allows procuring vaccines and equipment (injection supplies, vehicles and coldchain equipment) through UNICEF Supplies Division. Since 1993, all vaccines for routine andsupplementary immunization have been provided under this scheme. During the past five years,substantial support from the Japanese was provided through the JICA – PIDP (PaediatricInfectious Disease Project) project. Which ended in late 2001. Although a new JICA healthproject has begun since, support to immunization has not been made explicit.

Historically, UNICEF has contributed substantial support for immunization in the Lao PDR,amounting to about $500,000 annually. These funds provide for general operating costs ofoutreach (per diems, travel allowance and ice), fuel for transportation, cold chain spare parts,training and social mobilization. Support for routine immunization by UNICEF has beendecreasing and is expected to level off in the future - estimated at about $400,000 annually.

Contributions from WHO have traditionally (and primarily) been for technical assistance forimmunization, along with some material support. From its regular budget, the allocation forimmunization has increased in the past years to about $150,000 annually. Much of the recentincrease in funding has helped to strengthen the national surveillance system, provided technicalassistance to help introduce DPT-Hep B vaccine and install incinerators across the country forthe safe and effective disposal of AD syringes and safety boxes. The Government of Australia(AusAid) has also contributed funds through WHO in previous years. In 2001, AusAid providedfunding to cover for all the operational costs of the mass measles campaign in 16 provinces.AusAid is currently rethinking its strategy for future support to the health sector in Lao PDR.Changes in the strategy are expected but how this will effect the NIP is not known yet.

18

Between 1993 and 1999, the Government of Luxembourg provided support for cold chainequipment (Electrolux refrigerators and freezers). About $75,000 was provided annually and onit’s last year of support, $660,000 worth of equipment was provided.

Finally, Lao PDR was one of the first round countries to be approved for support by GAVI andthe Vaccine Fund (VF). Support will include multi-year commitments for the supply of DPT-Hepatitis B combination vaccine, AD syringes and safety boxes and support for strengtheningimmunization services and injection safety.

Section 4 – Baseline & Current Program Costs and Financing

Objective: This section of the Lao FS Plan provides basic quantitative information about howmuch was spent on the National Immunization Program – and by whom – before GAVI andVaccine Fund resources were available (baseline costing and financing), and how much is beingspent – and by whom – during the current year (current year costing and financing), includingGAVI and Vaccine Fund resources. This information provides the starting point for theassessment of how much resources will be needed in the future in order to meet programobjectives, and what the likely sources of financing might be. This will be examined in the nextsection.

[A] Baseline and Current Year CostsThe complete costing and financing information for the baseline year (taken as the year 1999)and the current year (taken as the year2001) are presented in tables 1.1 and 1.2 available inAnnex. Also in Annex are the details of the methodologies used. The summary results for bothyears costing are presented in the table below.

Table 4.1 – Summary Costing Results

Costing (Routine Immunization Specific) 1999 (%) 2001 (%)Operational Costs 956,856$ 82% 1,020,932$ 86%

Vaccines 322,920$ 28% 571,771$ 48%Vaccines (traditional 6 antigens) 322,920$ 276,971$ Vaccines (new and underused vaccines) -$ 294,800$

Injection supplies 21,565$ 2% 43,817$ 4%Personnel 170,493$ 15% 119,600$ 10%

Central Level 10,022$ 11,307$ Provincial Level 34,481$ 40,722$ District Level * 95,331$ 109,768$ Outreach (per diems) 125,990$ 11% 67,571$ 6%NID (per diems) -$ -$

Transportation 154,211$ 13% 86,557$ 7%Cold chain maintenance and overhead 30,976$ 3% 19,058$ 2%Short-term training 64,581$ 6% 34,636$ 3%IEC/social mobilization 41,904$ 4% 18,975$ 2%Monitoring and surveillance 88,134$ 8% 91,001$ 8%Other 62,073$ 5% 35,517$ 3%

Community participation to NID or outreach* 53,103$ 28,480$

Supplemental Immunization Activities 196,927$ 386,539$

Capital Costs 211,292$ 18% 160,696$ 14%Vehicles 130,482$ 11% 110,679$ 9%Cold Chain Equipment 65,735$ 6% 42,452$ 4%Injection Equipment 15,075$ 1% 7,565$ 1%

Total Routine 1,168,148$ 85.6% 1,181,627$ 75.4%Excl. GAVI-VF support for new vaccines 1,168,148$ 85.6% 886,827$ 56.6%

Total SIA 196,927$ 14.4% 386,539$ 24.6%Total NIP 1,365,075$ 100.0% 1,568,166$ 100.0%* Not included in total immunization specific

19

Results of the costing analysis show that routine immunization specific spending totalled $1.17million in 1999 and $1.18 million in 2001. Although the cost in 2001 is marginally higher thanin 1999, when GAVI-VF support for DPT-Hep B vaccine is excluded, we note that expenditureon dropped to $886,827 in 2001 – some $280,000 less than in 1999. This is quite substantialgiven the overall low spending on the program in Lao PDR.

The underlying reason behind this drop is the combined result of the inability of certain provincesto return their expenditure reports back to UNICEF in a timely fashion, and UNICEF inabilityto release new funds for outreach until all provincial reports have been received (see Section 2for more details). Although UNICEF funds for outreach were physically available in 2001, halfof the money could not be released and only 2 out of the 4 scheduled rounds of outreach wereconducted during that year. This explains in part the decline in coverage rates and why the costof personnel, transportation and other operational costs are the main cost categories that wereaffected as can be seen in the graph below.

Figure 4.1: Cost Profile of the Lao PDR Routine Immunization Program

The graphs above reveal a number of interesting points:� First, about 28% of the total cost of routine immunization were to cover for vaccines in 1999.

With the introduction of DPT-HepB, the share of vaccines in the total increases to 48%7.� Secondly, salaries only accounted for 15% of the total cost in 1999 and 10% in 2001

(including shared personnel). Given the fact that more than 80% of Lao’s villages requireoutreach services, per diem payments for outreach represent a significant portion of the totalcost of personnel. These accounted for 11% of overall costs in 1999. These drop to 6% in2001 given the problem of fund disbursements describe above.When most people in the Lao PDR earn less than a dollar a day for their principalemployment, the salary component could hardly represent a large share of the total cost –central level government salaries range from 20 US$ to 50 US$ a month. Although basicwages have risen nominally over the past years, real wages have dropped significantly giventhe high inflation in the country since the Asia financial crisis in 1997.

� Thirdly, the annualized value of capital items represent over 18% of the total routine programcost in 1999 and 14% in 2001. The higher amount in 1999 accounts for large purchasing ofvehicles from JICA and a large grant from the Government of Luxembourg to purchase cold

7 Note that this is based on the value of combination vaccines received in Laos for 2001 to illustrate the impact ofGAVI-VF support on overall costs. However, in 2001, introduction was implement in one pilot province only(Khammouane).

Capital Costs18.1%

Other Operational26.5%

Transport13.2%

Personnel14.6%

Vaccines27.6%

Capital Costs13.6%

Other Operationa

l20.6%

Transport7.3%

Personnel10.1%

Vaccines48.4%

Baseline 1999 Current Year 2001

20

chain equipment (mainly Electrolux fridges and refrigerators). Generally speaking, the statusof the cold chain in Lao PDR is good and it is believed that the central warehouse has enoughunits to last for the next 4 to 5 years.

When supplemental immunization activities are included, the cost of the Lao NIP was estimatedat $1.4 million in 1999 to $1.6 million in 2001. In 2001, supplemental activities included bothPolio SNID and a mass measles campaign in 16 provinces.

[B] Baseline and Current Year Financing PatternsIn 1999, the annual expenditure for the NIP the Lao PDR, was estimated at $1.4 million. Of thisamount, JICA and UNICEF are the largest sources of funding, accounting for 85% of totalexpenditures. In 2001, the annual expenditure for the NIP in the Lao PDR, was estimated at $1.6million. Of this amount, the largest source of financing comes from JICA (34%) followed byUNICEF (23%). Of the total current year spending, support from GAVI-VF represented 21% ofoverall financing.

Between, 1999 and 2001 financial support from WHO almost doubles from 8% to 14% of overallfinancing. This rising support accounts for increasing regular budget funds to support theimmunization program as well as the AusAid support in 2001 for conducting a mass measlescampaign.

The funding committed to immunization by the Ministry of Health ranged between 4% to 5% ofoverall immunization specific spending in both years.

Figure 4.3 – Financing Pattern of the Lao PDR National Immunization Program

[C] Past Trends in Volume and Reliability of FinancingWith a few exception, most funding for the immunization program (whether it be from internalgovernment sources or international sources) is committed on an annual basis only. In the past,total program funding in Lao PDR has been uncertain from year to year. Recently, funding tosustain immunization services has been uncertain from quarter to quarter compromising thecontinuity of outreach services in the past two years. Many of these recent funding instabilitiesare related to financial management problems.

Figure 4.4 below give a sense of the trend in expenditure between 1990 and 1997, including thepolio eradication program. Looking at the trend in expenditure we notice a gradual increase

Government5.5%

UNICEF42.1%

WHO / AusAid7.7%

JICA43.0%

Other1.8% Goverment

4.9%

UNICEF23.3%

WHO / Ausaid13.8%

JICA34.4%

GAVI-VF21.0%

Other2.6%

Baseline 1999 Current Year 2001

21

between 1990 and 1995 with 2 noticeable peaks in 1992 and 1995 due to large inflows for thepolio eradication program. However, in the years leading up to the Asia Financial crisis there wasa marked drop in expenditure.

During that 8 year period some $14.4 million were spend on the NIP, or an equivalent yearlyaverage of $1.8 million. In other words, the amount being spent on the Lao NIP has changed verylittle in the past, decade regardless of factors such as population growth, stagnating routinecoverage and inflation. Likewise, the funding pattern has changed very little in the past 10 years.UNICEF and JICA were the main provider of funds and respectively averaged 37% and 38% oftotal contributions between 1990 and 1997. The Lao government contributed on average 7% oftotal funding8 while WHO contributions averaged 10% of all funding over the same period.

Figure 4.4 – Past Trends in Volume and Reliability of Financing9

Such funding instability is problematic for a country like the Lao PDR that relies heavily ondonor support for routine immunization services. Any short-term, crisis-management approachto financing leads to budget shortfalls, interruptions in service delivery especially for outreach,supply stock-outs, and uneven geographic coverage10.

8 The depreciation of the Kip, the economic slowdown and high inflation that followed the Asian financial crisis in1997 has resulted in reduced government funding for immunization (and the health sector in general). The governmenthas recently committed to increase budgetary allocation to health.9 The expenditure data provided was divided into the direct costs (purchasing vaccines, supplies, cold chain, petrolfor transport, stationary, per diems for vaccinators and capital costs such as the purchase of motorcycles and cars) andindirect costs which were mainly the salary cost of related personnel involved in routine immunization services andduring campaigns. Data made available from Chanpen Choprapawon, Health System Research Institute, Ministry ofPublic Health, Nonthaburi, Thailand 11000 and Supasit Pannarunothai, Faculty of Medicine, Naresuan University,Phitsanulok, Thailand.10 Richer provinces are able to draw upon other resources to cover temporary shortfalls in order to ensure continutyof immunization service delivery.

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

1990

1991

1992

1993

1994

1995

1996

1997

Other6.0%

Rotary2.9%

JICA36.8%

UNICEF37.4%

WHO10.2%

MoH - Lao PDR

6.7%

* Includes funds for the Polio Eradication Programme. Adjusted values in US$ using IMF-IFS exchange ratesSource: Based on Chanpen Choprapawon and Supasit Pannarunothai: Study of the Impact of Polio Eradication on Health Systems: The Lao PDR Case ,1999.

(A) Expenditure* (US$ Million) (B) Financing Source (avg 1990-97 %)

Total 1990-97 : US$ 14,4 Million

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Section 5 – Future Resource Requirements & Financing Levels

Objective: This section of the Lao FS Plan estimates the gap between future resourcerequirements – linked to the program objectives – and available financing for the remainingperiod of Vaccine Fund support (VF Period) and for the period after the current Vaccine Fundsupport is completed (Post-VF Period). The resource requirements and future financing levelsare presented in tables 2.1 and 2.2 available in Annex. The main results are summarized below.

[A] Projections of Resource RequirementsDetailed projections of future resource requirements were made for both the VF period (2003-2007) and post VF period (2008-2010). Annual projections were based on current NIP objectives:national introduction of DPT-HepB vaccines, commitment to strengthen outreach services andincrease routine coverage to 80%, accelerated disease control with neo-natal tetanus elimination(MNTE) and measles control, safe injection and waste management, surveillance, and populationgrowth, wastage and vaccine prices. The methodologies and assumptions made for theseprojections are detailed in Annex and the main results are presented in the table and graph below.

In order for Lao PDR to meet its objectives, total resource requirements needed for the remainingperiod of VF support total $17.8 million and $11.8 million for the 3 years following VF support.

Table 5.1 – Summary Projections of Resource Requirements

Figure 5.1 – Projections of Resource Requirement 2003-2010

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

Baseline1999

CurrentYear2001

2003 2004 2005 2006 2007 2008 2009 2010

Vaccines

Injection Supplies

Personnel

Transport

Other Operational

Capital

Operational Costs 2003 2004 2005 2006 2007 VF Period 2008 2009 2010 Post-VFVaccines 1,002,811 934,700 1,480,789 1,190,135 1,222,745 5,831,180 1,187,315 1,222,555 1,336,782 3,746,653

Traditional vaccines 414,683 300,932 531,602 228,849 242,888 1,718,953 246,150 253,984 340,006 840,141New Vaccines 588,128 633,768 949,187 961,286 979,857 4,112,226 941,165 968,571 996,776 2,906,512

Injection supplies 161,629 342,124 432,064 240,422 254,591 1,430,831 258,223 264,530 270,994 793,747Personnel 675,815 788,064 908,088 763,460 809,267 3,944,694 857,823 909,293 963,850 2,730,966Transportation 365,138 422,628 583,607 454,559 481,513 2,307,444 509,650 539,673 572,855 1,622,178Other 540,862 742,623 499,607 493,381 522,984 2,799,457 554,363 587,624 622,224 1,764,212

Subtotal 2,746,255 3,230,139 3,904,155 3,141,957 3,291,101 16,313,606 3,367,374 3,523,675 3,766,706 10,657,755Capital Costs

Vehicles 225,400 238,924 253,259 268,455 284,562 1,270,601 301,636 319,734 338,918 960,289Cold Chain Equipment 127,377 135,019 143,121 151,708 160,810 718,035 170,459 180,686 191,528 542,673Other 58,430 0 10,089 31,421 35,910 135,849 0 10,089 31,421 41,510

Subtotal 411,206 373,943 406,469 451,584 481,282 2,124,485 472,095 510,510 561,867 1,544,471Total Requirements 3,157,462 3,604,082 4,310,624 3,593,540 3,772,383 18,438,091 3,839,469 4,034,185 4,328,573 12,202,226

23

The peaking resource requirements for the period 2003 to 2005 includes intensified supplementalimmunization activities - a Polio SNID in 2003, targeted annual campaigns for neo-natal tetanusuntil 2005 and a mass measles campaign in 2005 for under 12 years. It is expected that neonataltetanus elimination will no be achieved by 2005 in the Lao PDR. However, at the present time,it is not possible to determine whether additional campaigns will be required beyond 2005 andthese do not figure in the projections.

In summary, the average annual resource requirements over the next 8 years is approximately$3.7 million in order for the Lao PDR to reach all the objectives of the NIP11. This is in sharpcontrast to baseline and current year spending on the NIP - three times less.

[B] Projections Future Financing Levels, Funding Gap and Risk AssessmentGiven the high level of uncertainty surrounding future funding levels and commitments,especially over a period of so many years, a number of assumptions were needed when projectingfuture financing levels and estimating funding gaps in the Lao PDR. Three different scenariosfor projecting funding level were made according to different levels of risk associated with itssource. The three scenarios were defined as follows:

� Secure Funding ScenarioIncludes only funding that has very high chance of being made available.

� Probable Funding ScenarioIncludes secure funding as defined above and additional financing that is likely to beavailable but not guaranteed in any way.

� Possible Funding ScenarioIncludes secure and possible funding as defined above and additional financing that may beavailable, but not particularly likely. This includes potential strategies to mobilize moreresources.

Using the results of the resource projection, funding gaps are estimated according to each of thethree different funding scenarios. It is important to note that the “possible” and “probable”scenarios for funding are illustrative of strategies for Lao PDR to mobilize more resources in theshort, medium and long term in order to move towards financial sustainability. It does not implyany commitments at this time, either from the Lao Government nor international partner agenciessupporting immunization.

Equally important is the fact these scenarios and projections are not static. They reflect currentNIP policies and implementation strategies. Any future changes in strategies will have financialimplications and the potential financial impact of these types of policy changes have not beenincorporated into these projections.

(1) Scenario 1 – Secure FundingUnder the “secure” funding scenario, the following assumptions have been made based onconsultations and discussions with various Ministries (MoH and MoF) and main partner agencies.

Assumptions1. In the short and medium term, the Ministry of Health is unable to leverage more funding,

other than current levels of support to cover for personnel costs (excluding per-diems for

11 Note that the estimates reported here are slightly different, yet consistent, with the WHO-Abt Associates costing andfinancing study conducted in February 2001. The costing study reported higher resource needs given the moreambitious coverage targets repoted in the GAVI Applications (80% coverage by 2003). In addition, projections werebased on average estimates of fully immunized child costs that included all shared costs (including buildings…).

24

outreach and campaigns but including share personnel costs). A rising salary level wasassumed given adjustments needed to keep up with ever present inflation.

2. JICA will continue funding the procurement of routine vaccines (traditional EPI 6vaccines)until 2003, including vaccines for supplemental immunization activities. Under this scenario,the Multi-Bilateral scheme with UNICEF is discontinued after 2003. Note that in the fundingprojections, JICA support continues until 2006. This support includes the substantial amountof equipment that was supplied at the end of the JICA – PIDP project. This equipment isavailable at the central warehouse and is likely to be used over the next 4 to 5 years. In orderto account for the availability of this equipment (even though it has already been funded andnot yet used) these were included as secured financing.

3. UNICEF will continue funding between $350,000 and $400,000 a year for the next 5 yearsbeginning 2002 – approximately $300,000 for outreach, and between $50,000 and $100,000for IEC and social mobilization. In addition, UNICEF will be supporting MNTE and measlessupplemental activities until 2005.

4. WHO will continue supporting routine immunization (about $70,000 annually) andstrengthening surveillance (between $30,000 and $50,000 annually) until 2006. In 2005,WHO will provide $450,000 for a mass measles campaign12. Secured funding from WHOalso includes funding for waste management through the purchasing and installation ofvarious incinerators across the country.

5. GAVI and the Vaccine Fund will provide approximately $4.2 million worth of DPT-Hep Bvaccines and $1 million worth of injection supplies (AD syringes and safety boxes) over the5 year of support. Given the phased introduction of new vaccines, this support will extenduntil 2007. In addition, the Lao PDR will be receiving about $1.4 million worth of “ISS”13funding between 2002 and 2004; about $180,000 for injection safety between 2002 and2003; and has received $100,000 cash support for new vaccine introduction in 2002 that willbe carried over in 2003. In light of the slow absorptive capacity of GAVI-VF support, relatedto the phased introduction of new vaccines and the desire to analyse how to maximize theefficient use of ISS money, the cash support is assumed to extend until 2005.

6. Other funding consists of existing cold chain equipment still available at the centralwarehouse and was provided by the $660,000 grant from the Luxembourg Government in1999 (about 890 units of refrigerators/freezers in stock). Despite the fact that this fundingwas provided in 1999, this equipment has not been used until now. In order to account forthe availability of this equipment (even though it has already been funded) these wereincluded as secured financing14.

7. Needed procurement of vehicles required for 2003 onward have not been secured by anypartner.

ResultsThe summary of the “secure” funding projections is provided in the table below.

Table 5.2 – Summary Projections of Resource Requirements

12 Based on tentative, WHO workplan and budget 2003-2006.13 Immunization Services Strenghtening account.14 The assumption here is that available stocks of cold chain equipment are in working condition and is the rightequipment needed.

Secure Funding 2003 2004 2005 2006 2007 VF Period 2008 2009 2010 Post-VFGovernment 210,520 222,998 246,905 251,810 267,656 1,199,888 283,808 300,957 320,358 905,122GAVI-VF 961,978 1,230,184 1,498,607 1,287,530 1,230,427 6,208,726 0 0 0 0UNICEF 390,083 395,167 400,250 371,137 0 1,556,637 0 0 0 0JICA 492,212 67,510 71,560 75,854 0 707,135 0 0 0 0WHO 231,393 236,274 562,589 177,921 0 1,208,177 0 0 0 0Other 63,688 67,510 71,560 75,854 0 278,612 0 0 0 0Total Funding 2,349,874 2,219,642 2,851,471 2,240,106 1,498,083 11,159,176 283,808 300,957 320,358 905,122Total Gap 724,988 1,274,307 1,342,411 1,229,689 2,143,129 6,714,523 3,416,620 3,585,845 3,851,989 10,854,454

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In the “secure” funding scenario, a total funding gap of $6.7 million over the VF period isestimated - an annual average of about $1.3 million. The funding shortfall for the post VF Periodis approximately $10.9 million. Figure 5.2 compares the future resource requirements with thefunding levels under the “secure” funding scenario.

Figure 5.2 – Secure Funding Scenario and Funding Gap

Even using the above assumptions, the decline in the secured and possible funding beyond 2007and the increasing resource needs to meet program objectives contribute to a significant andincreasing financing gap in future years. The main financing gaps are noticeable for vaccines andinjection supplies given the uncertainty of future funding from the Japanese Government underthe Multi-Bi agreement with UNICEF after 2003, and the financing of DPT-HepB vaccine postVaccine Fund support.

Other important gaps are linked to the resources needed for outreach and for cost categories thatwere previously under-funded such as monitoring, supervision, surveillance, vehicles, fuel andmaintenance for vehicles. The GAVI “ISS” funding will supplement existing UNICEF funds foroutreach per-diems and transport up until 2005 with no guarantee of additional resources beingmade available onwards.

(2) Scenario 2 – Possible FundingThe “possible” funding scenario is an extension of the secure funding scenario to which areadded the following assumptions. Note that this is a possible scenario for funding in order tomove towards financial sustainability. It does not imply any commitments at this time, eitherfrom the Lao Government nor international partner agencies supporting immunization. Theassumptions have been based on discussions with various Ministries (MoH and MoF) and mainpartner agencies.

Assumptions1. The Multi-Bilateral scheme between the Japanese Government and UNICEF is continued

after 2003. JICA will continue funding the procurement of routine vaccines (traditionalvaccines) and some equipment for the next periods (VF and post VF period).

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

2003 2004 2005 2006 2007 2008 2009 2010

Funding GapGAVIExternal Donors Government

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2. In 2003, the Ministry of Public Health agrees to include a line item in the National Budgetfor the purchase of routine vaccines. The idea is that the Lao PDR could begin efforts tomove towards self-sufficiency in vaccine financing. By 2004 a phased purchasing schemefor routine vaccines could begin with an initial 5% government commitment in 2004 (about15,000 US$) and reaching 60% by 2010 (about 200,000 US$).

Under such a scheme, JICA resource can be freed from vaccine purchasing and used to buyother needed equipment such as vehicles. This scenario is not unreasonable given thewillingness of the Ministry of Finance to fund the purchase of vaccines. Given the currentstate of donor fatigue in the Lao PDR, such a strong commitment from the governmentwould likely result in renewed international support for immunization in Laos.

3. The financing available from UNICEF for routine activities is assumed to be maintained at2002-2003 levels for both VF and post VF periods.

4. The financing available from WHO for routine activities is assumed to be maintained at samelevels beyond 2006 for both VF and post VF periods.

5. Conditional on reaching coverage targets, it is assumed under this scenario that GAVI “ISS”funding will continue beyond 2004-2005 for 3 more years. These funds are stretched overa period of 5 years in light of the slow absorptive capacity explained above. It was assumedthat an equal amount of funds would be provided (1.4 million US$ spread out over the period2005-2010).

ResultsIn the “possible” funding scenario, and based on the above assumptions, we find a total fundinggap of $4.0 million over the VF period is estimated - an annual average of about $800,000. Thefunding shortfall for the post VF Period is approximately $6.5 million.

Even using the above assumptions, the decline in the secured and possible funding beyond 2007and the increasing resource needs to meet program objectives contribute to a significant andincreasing financing gap in future years. Figure 5.3 compares the future resource requirementswith the funding levels under the “possible” funding scenario.

Figure 5.3 – Possible Funding Scenario and Funding Gap

2003 2004 2005 2006 2007 2008 2009 2010JICA Multi-Bi Aggrement - Routine 224,103$ 263,493$ 217,542$ 228,849$ 242,888$ 246,150$ 253,984$ 340,006$ Phase in Gov Support for Vaccines 0% 5% 10% 20% 30% 40% 50% 60%Govermnment Funding for Vaccines -$ 13,175$ 21,754$ 45,770$ 72,866$ 98,460$ 126,992$ 204,004$ Freed up JICA resources for equipment -$ 13,175$ 21,754$ 45,770$ 72,866$ 98,460$ 126,992$ 204,004$

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

2003 2004 2005 2006 2007 2008 2009 2010

Funding GapGAVIExternal Donors Government

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(3) Scenario 3 – Probable FundingThe “probable” funding scenario is an extension of the “secure” and “possible” funding scenariosonto which are added the following assumptions. Note that this is a probable scenario for fundingin order to move towards financial sustainability. As it is defined, probable funding is fundingthat may be available, but at this point, not particularly likely.

Assumptions1. Lao PDR is a Highly Indebted Poor Country (HIPC) and can benefit from substantial debt

relief funding from the World Bank to reduce poverty under the HIPC II Initiative. How theLao PDR chooses to tackle poverty reduction must be outlined in its Poverty ReductionStrategy Paper (PRSP). Lao PDR’s Interim Poverty Reduction Paper (I-PRSP) was approvedby the Government on March 20, 2001 and endorsed by the IMF and IDA Boards on April23 and 24, 2001, respectively. Although the I-PRSP envisaged the completion of the fullPRSP by August 2002, the authorities have requested additional time for completing the fullPRSP. The government intends to submit the National Poverty Eradication Program (NPEP)based on the five-year Socio-Economic Development Plan (NSEDP, 2001-05) for theconsideration of the World Bank and the IMF Boards as their PRSP. IMF and IDA staffsconsider that noticeable progress has been made in preparing the NPEP and that the revisedaction plan and accompanying timetable for completion of the NPEP by December 2002 areachievable. The NPEP is expected to be approved in early 2003 by the Council of Ministers,thus becoming the core policy reference document for the eighth Roundtable Meetingscheduled for the first half of 200315.Provided that the Lao PDR can meets the requirements to benefit from HIPC debt relief andthat it was able to successfully advocate for immunization in its PRSP as a key healthintervention to reduce poverty (including having immunization coverage as an indicator tomeasure poverty reduction and including the information from the GAVI FinancialSustainability Plan), more funds for immunization are likely to be available. Under thisscenario it was assumed that by 2008 (after GAVI and VF support), any available HIPCfunds for immunization would cover for the cost of new vaccines post VF support.

2. The possibilities of an EPI + strategy in the Lao PDR are not out of reach. It was assumedthat by 2006, a more integrated approach to immunization could be envisaged were fundsfrom other programs (Malaria, Family Planning…) could be pooled for the commonobjective of reaching the unreachable populations. Pooled funding could strengthenimmunization outreach activities and it was assumed under this scenario that by 2006, anadditional 200,000 US$ annually could be mobilized from other programs in a EPI+ strategy.The possibilities of integrating other health programs to strengthen outreach could potentiallyfree up “possible” UNICEF and GAVI “ISS” funding needed to cover the shortfall for otheroperational costs.

ResultsIn the “probable” funding scenario, and based on the above assumptions, we find a total fundinggap of $3.9 million over the VF period is estimated - an annual average of about $650,000. Thefunding shortfall for the post VF Period is approximately $4.3 million. Figure 5.4 compares thefuture resource requirements with the funding levels under the “probable” funding scenario.

15 Lao PDR, Interim Poverty Reduction Strategy Paper - A Government paper prepared for the Executive Boards ofthe International Monetary Fund and the World Bank - March 20, 2001 and IMF and IDA, Joint Staff Assessment ofthe Lao PDR PRSP Preparation Status Report July 12, 2002.

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Figure 5.4: Probable Funding Scenario and Funding Gap

[C] Summary of Results and Other Notes

The table below presents the summary results of projected resource needs, funding and shortfallsfor both the VF and post VF-Period.

Table 5.3 – Summary Results

In the above analyses, the risk assessment was done by classifying each source of financing assecure, possible and probable according to the level of risk associated. However, a few otherrelevant point are worth mentioning and would have bearing on how the Lao PDR wouldprogress towards Financial Sustainability.1. In light of more optimistic economic prospects (GDP growth to return to pre-Asia Financial

Crisis level and inflation control) and changing priorities, the Government of Lao PDR isconsidering in the next 5 to 10 year plan to increase its budgetary allocation to the healthsector. Although the exact level of increase is not yet know, nor how it will be shared acrossthe different programs, it is likely that some additional government funds may be availablein the future to support the NIP. The impact of this could not be included in the aboveanalysis.

2. There is considerable donor fatigue in the Lao PDR and funding levels from key partners aredwindling (at least showing signs of tapering off). Unless the Government can showincreased commitment to the immunization program, then new external resources to supportthe program and reduce the funding gap are unlikely. One the other hand, suggestions havebeen made that if stronger government commitment could be demonstrated (such a

$-

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

2003 2004 2005 2006 2007 2008 2009 2010

Funding Gap

GAVI

External Donors

Debt-Relief (Gov.)

Government

Million US$ Projected Needs

Secured Financing Gap Probable

Funding Gap Possible Financing Gap

VF Period (2003-2007)Total 18.4$ 11.2$ 7.2$ 13.8$ 4.6$ 13.9$ 4.5$ Annual Average 3.7$ 2.2$ 1.4$ 2.8$ 0.9$ 2.8$ 0.9$

Post VF Period (2008-2010)Total 12.2$ 0.9$ 11.3$ 5.2$ 7.0$ 7.5$ 4.7$ Annual Average 4.1$ 0.3$ 3.8$ 1.7$ 2.3$ 2.5$ 1.6$

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purchasing some routine vaccines or covering small operational costs) then more donorresources could be made available to reduce the existing gap. Such a knock in effect couldnot be factored into the calculations.

3. The projected resource requirements are based on certain assumption with respect toefficiency of the program. Resources requirements could drop in the future (and hence thefunding gap) if wastage rates could be reduced. If an average wastage rate of 25% could beachieved for all antigens in Lao PDR, an annual savings of $80,000 could be achieved fromcurrent vaccine needs projections.

[D] Alternative Scenarios for Resource RequirementsIn light of financial constraints, alternative scenarios for resource requirements are possible.These would require modifications to program objectives so as to reduce the resources neededto match the financing available. These alternative scenarios are detailed in Section 3 of the plan.However, the impact of these changes on resource requirements could not be quantified at thisstage. It should be noted that in the Lao PDR it would be politically difficult to change programobjectives given the decree from the National Centre for Mother and Child Health to placeimmunization as a priority program for the country.

Section 6 – Sustainable Financing Strategic Plan and Indicators

Objective: This section of the Lao FSP presents a strategic plan for moving towards financialsustainability, based on the analyses from sections 3 to 5. It will outline possible strategies andkey action steps from the Government and partner agencies for mobilizing more resources andto increase the reliability and efficiency of current NIP resources (the three dimensions ofFinancial Sustainability). This section will also include indicators the measure progress towardsfinancial sustainability as a required element of the FS Plan.

[A] Strategies to Mobilize Adequate ResourcesIn Lao PDR there are several strategies that can be explored in order to mobilize more resourcesfor immunization in the short and medium term, and identify new sources of financing for thelonger term. Most of these strategies make up the assumption made under the projections of“possible” and “probable” future financing in the previous section.

Possible StrategiesIn the short-term, actions steps to mobilize additional existing resources for the NIP should bebased around:1. Ensuring that the Multi-Bilateral agreement between the Japanese Government and UNICEF

continues after 2003 by advocating for the past benefits of this scheme for the Lao NIP. Thecontinuation of the Multi-Bilateral agreement will guarantee the funding for routine vaccines,injections supplies and some equipment over the next few years. UNICEF has already writtena number of papers documenting the benefits of this scheme.In October of 2002 a JICA team will visit Lao PDR to assess whether the scheme willcontinue in the future. This is an opportune time for the MoH to advocate for continuationof this scheme.

2. Advocating towards the Ministry of Health and Ministry of Finance about the possibility ofincluding a line item in the national budget for the purchase of routine vaccines. On average,the cost of routine vaccines (excluding DPT-HepB vaccine) is approximately $300,000 ayear. It would be possible for Lao PDR to begin efforts to move towards self-sufficiency invaccine financing. A gradual phasing-in of vaccine purchasing could beginning with a 5%government commitment for funding vaccines in 2004 (equivalent to about $15,000) withan increasing share each year (5% to 10% incremental increases).Such a commitment from the Government would have two positive spill-over effects.

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- The first is that any funding for vaccines from the national budget would free-up JapaneseGovernment resources for vaccine purchasing. These could be used instead to buy otherneeded equipment such as vehicles (cars, motorcycles..).- The second is that, given the current state of donor fatigue in Lao PDR, such a commitmentfrom the government would likely result in renewed international support for immunization.Donors agencies would be more inclined to provide more funds to support the NIP if thegovernment could show a stronger funding commitment to such a high priority healthintervention in the country.

3. Ensuring that GAVI “ISS” funding is used in the most cost-efficient and cost-effective wayin order to reach coverage targets and benefit from reward funding after 2004. Reachingcoverage targets is possible in the Lao PDR provided a working model for outreach can bedeveloped, pilot-tested and implemented successfully. Details on planned changes to theoutreach and zone strategy to increase coverage are detailed in Section 3.

In the medium and longer term actions steps to mobilize additional resources for the NIP shouldbe based around:1. Using GAVI and the FS Planning process as an opportunity to advocate for immunization

in the Lao PRSP (NPEP) process. Provided that the Ministry of Health can:- Successfully advocate for immunization as a key health intervention in the NPEP (includinghaving immunization coverage as an indicator to measure poverty reduction);- Incorporate relevant qualitative and all quantitative elements of the FS Plan into the NPEP;More funds for immunization are likely to be available if debt relief funding is grantedthroughout the HIPC and PRSP process.

2. The possibilities of an EPI + strategy in the Lao PDR are not out of reach. A more integratedapproach to immunization could be envisaged were funds from other vertical programs (suchas malaria, reproductive health and family planning…) could be pooled to provide additionalincentives for outreach and meeting the common objective of reaching the unreachablepopulations. Vaccination teams conducting outreach could provide a range a basic servicesincluding immunization. Pooled funding from other programs could strengthen immunizationoutreach activities and help narrow the funding requirements needed to increase coverage inremote areas. The possibilities of using pooled funding could potentially free up existing NIPfunding for outreach that could be used to cover shortfalls for other operational and capitalcosts.The prospects of an EPI+ strategy is a long term approach and a better understanding of howthe vaccination outreach strategy can perform for immunization is a necessary conditionbefore thinking about expanding the strategy to EPI+.

Possible IndicatorsPossible indicators to measure advancements towards self-sufficiency and adequate resourcemobilization were chosen as:

Move towards self sufficiency and mobilizing adequate resourcesLine item in the Lao national budget for vaccines purchase? Yes/NoGovernment funding of vaccines? %Immunization specific spending financed using government funds? %Total immunization spending as a % of total FSP projected resource requirements %Annual EPI workplan and budget agreed by ICC Yes/NoAnnual EPI workplan budget as a % of total funding commitments agreed by ICC %

These FS indicators can quite easily be collected annually - many of these are already reportedin the WHO-UNICEF Joint Reporting Form.

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[B] Strategies to Increase the Reliability of ResourcesThe lack of timely disbursements of both domestic and external funds represents a significantobstacle to good program financing in the Lao PDR. Strategies to improve the reliability offinancing can be a key part of long-term sustainability.

Possible StrategiesIn the short and medium term actions steps to increase the reliability of existing resources wouldrequire various changes at the central level. Such action would be based on:1. Simplifying procedures at the central level MoH that cause delays in implementation and

funding. It has been suggested that once the Minister approves of annual EPI workplan, thereshould be no need afterwards, to get additional approval for each individual activity in theworkplan. This however, may requires institutional changes across all ministries.

2. Improving the mechanisms for UNICEF reporting requirements that have affected the timelydisbursement of resource. In 2001 UNICEF commissioned a study16 to help assess ways toimprove the cash flow situation and is currently taking actions to soften their reportingrequirements and penalising only provinces that do not report on time. This requires openingup Ministry of Health approved Provincial accounts where UNICEF funds could be sentdirectly. This would have the added advantage of bypassing any potential delays in the flowof funds from central level. UNICEF will take actions to monitor the performance ofprovincial accounts on the timely disbursement of funds to the provincial level. It is expectedthat this will give more time for province to implement the funds and report back regularly.In addition, UNICEF is setting up a system to provide advance warning when CAG arenearing the critical date when they need to be liquidated in order to send that remindersbefore it is too late.

In the longer-term actions steps to increase the reliability of existing resources would requirestrengthening the capabilities of districts to better plan, budget and implement underdecentralization. This, however, falls beyond the scope of the Lao NIP and any internationaldonor agency.

Possible IndicatorsPossible indicators to measure advancements towards increasing the reliability of resources couldbe:

Increasing Reliability of ResourcesDelays in processing of document by MoH for requests for funds for EPI Yes/NoAnnual EPI workplan approval time DaysNeed for each activities to be approved once annual workplan has been approved? Yes/NoOutstanding UNICEF CAG (over 6 months) during current year Yes/NoNumber of. Provinces with outstanding funds and reports to UNICEF No.

These FS indicators can quite easily be collected annually.

[C] Strategies to Increase Efficient Use of ResourcesWhile often, not as important as mobilizing additional resources, gains toward closing thefinancing gap can be made by increasing the efficiency of existing resources.

16 UNICEF and Unity School of Management and Education (2001). Report on Problems Associated with Flow ofFunds from UNICEF to Provinces and Districts to Support Immunization Outreach Activities.

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Possible StrategiesIn the short and medium term action steps to increase the efficient use of existing resourceswould be based on:1. Continued efforts to develop strategies for reducing vaccines wastage by:

- Strengthening the zone 0 strategy for increasing demand for vaccinations in villages nearfixed health centre. Currently, not all districts are active in terms of the zone 0 socialmobilization strategy, and outreach is still conducted form health centres to villages livingless than 3 kilometres away. The money used to pay vaccinators to conduct outreach in zone0 should be used to strengthen the zone 0 strategy instead17. Based on the WHO-Abt costingstudy, relatively high gains in coverage can be achieved at relatively low cost in zone 0. Thisstrategy has the potential to reduced wastage, reduced drop-out rates and increase coverageand would constitute an efficient use of limited resources.- Continue promoting the use of Multi Dose Vial Policy (MDVP) at fixed health centres toreduce vaccine wastage. In addition reduce on a case by case basis the number of days thatcertain fixed health facilities are open for immunization services. Currently, many fixedhealth centres are open daily for vaccination even though they may see no more than one ortwo children a day. In some districts, especially those where the zone 0 social mobilizationis not active, many health centres are under-utilized and wastage is high even with MDVP.- Continue supporting more analytical work to understand how wastage may be reducedduring outreach where the MDVP is not suitable. Documented research by WHO has alreadyshown that during outreach activities wastage on DPT-HepB can exceed 40% and theNational EPI policy is to discard any opened vials at the end of the day.- With the introduction of AD syringes and safety boxes using GAVI-VF resources, there isa pressing need to adopt a transport and bundling policy for vaccines and injection suppliesto ensure that there are enough syringes and safety boxes at the district level. Some districtshave complained not having enough injection supplies whereas other end up with more thanneeded. In both cases this leads to wastage given that AD syringes have a shelf life of 2 yearsand anecdotal evidence has revealed that some health centres have reconstituted vaccineusing AD syringes because not enough reconstitution syringes had been supplied.

2. Continue efforts to develop the Zone strategy and to find the most cost-efficient and costeffective ways of using limited available resources for outreach activities. In addition, it isimportant to continue efforts to report coverage by Zone. Proposed changes to the Zonestrategy are discussed in more detail under Section 3.

3. The capacity of data utilization in planning and monitoring/evaluation is limited and does notallow the use of information for immediate planning. Continue efforts are needed to improveinformation systems for more efficient planning and budgeting. This would requiredeveloping skills at the national level and developing financial management systems andother information systems (for programmatic data).

Possible IndicatorsPossible indicators to measure increasing efficiency of available resources could be:

Increasing Efficiency of ResourcesTrends in vaccine wastage %Number of districts with stock-outs of AD syringes and safety boxes No.DPT-3 coverage by Zone classification %Number of districts with improved coverage by Zone classification No.

17 The role and involvement of the Lao Women’s Union (LWU) is crucial in any strategy developed to increaseawareness and to make services available to all children in Lao PDR. Undeniably, the control of any disease needssupport from the community through which the LWU is key.

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These FS indicators can quite easily be collected annually and useful for other programmaticmeasures.

[D] Summary of Financial Sustainability Strategic PlanThere are several significant action steps that can be taken by the Ministry of Health andinternational donor agencies in order to make progress in the key dimensions of financialsustainability: mobilizing adequate resources, and increase reliability and efficiency ofexisting resources. These are summarized in the table below.

Table 6.1 – Sustainable Financing Strategic PlanDimension of FS Action Steps ResponsibleMobilizingAdequate Resources

Advocating towards the MoH and MoF about the possibilityof including a line item in the national budget for thepurchase of routine vaccines.

Deputy Director CMCH andNational EPI Manager

MobilizingAdequate Resources

Ensuring that the Multi-Bilateral agreement between theJapanese Government (JICA) and UNICEF continues after2003 by advocating for the past benefits of this scheme forthe Lao NIP.

Deputy Director CMCH andNational EPI Manager

MobilizingAdequate Resources

Ensuring that GAVI “ISS” funding is used in the most cost-efficient and cost-effective way in order to reach coveragetargets and benefit from reward funding after 2004.

Deputy Director CMCH andNational EPI Manager

MobilizingAdequate Resources

Incorporate relevant elements of the FSP into the finalversion of the Lao NPEP (National Poverty EradicationProgram) under the World Bank HIPC II Initiative (HighlyIndebted Poor Country).

Deputy Director CMCH andNational EPI Manager

Reliability ofResources

Simplifying procedures for approval of EPI annualworkplans and activities that cause delays in implementationand funding.

Ministry of Health

Reliability ofResources

Improving the mechanisms for UNICEF reportingrequirements and use of Provincial accounts for UNICEFfunds.

UNICEF

Efficient Use ofResources

Continued efforts to develop strategies for reducing vaccineswastage and developing a system for bundling injectionsupplies.

Deputy Director CMCH andNational EPI Manager

Efficient Use ofResources

Continue efforts to develop the district strategy and to findthe most cost-efficient and cost effective ways of usinglimited available resources for outreach activities.

Deputy Director CMCH andNational EPI Manager

Efficient Use ofResources

Continue to improve information systems for better planningand budgeting. This would require developing skills at thenational level and developing financial management systemsand other information systems (for programmatic data).

Deputy Director CMCH andNational EPI Manager

Section 7 – Stakeholder CommentsObjective: This section of the Lao FS Plan provides information about who has participated inthe development of and/or reviewed the FS Plan. It also provides an opportunity for all programpartners to voice an opinion (or provide additional factual information) relevant to the FS Plan.

[A] Persons Consulted for the FSPThe table below presents the list of all the people that were consulted in the preparation of theLao FS Plan.

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Ministry of HeathDr. Ponmek Dalaloy Minister of HealthDr. Nao Boutta Deputy Director of CabinetDr. Bounlay Phommasack Deputy Director, Department of Hygiene and PreventionDr. Khampheth Manivong Committee on PRSP and Deputy Director of Planning and Finance

DepartmentDr. Sisamone Keola Director, Project Coordination Unit, Health System Reform and

Malaria Control Project (World Bank)Dr. Bounpheng Philavong Deputy Director, Project Coordination Unit, Health System Reform

and Malaria Control Project (World Bank)Dr. Phengta Vongphrachang Deputy Director and National Surveillance UnitMs. Bouaphanh Khampapongpane Chief, Surveillance UnitMinistry of FinanceMs. Kham Phet Deputy Director of Budget and Finance DepartmentMr. Hanlotxomphou Chief of Budget DepartmentMr. Anouphap Tounalom Deputy Director, Budget DepartmentMinistry of PlanningDr. Manivong Mongkhonvilay Deputy Director Public Investment Program Department, State

Planning CommitteeDr. Ouneheuane Chittaphong Chief of Social Sector, Department of Public Investment ProgramNational Center for Mother and Child (EPI)Dr. Somthana Douangmala Deputy Director and National EPI ManagerDr. Samphanh Khamsingsavath Chief, Finance and Planning, Training and Supervision and Deputy

EPI ManagerDr. Thipsavanh Deputy Chief, Finance and Planning, Training and SupervisionMr. Douangphachanh Finance and Planning, Training and SupervisionDr. Khamla Finance and Planning, Training and SupervisionDr. Sisavanh Chief, Administration and Deputy EPI ManagerDr. Thongkham Chief, AdministrationMr. Chanthavong Chief, Cold Chain and LogisticsDr. Khongxay Deputy Chief, Cold Chain and LogisticsDr. Sanya Deputy Chief, EPI Information and DataMr. Hongkham Deputy Chief, EPI Information and DataDr. Chamsay Chief, Zone 0 Social Mobilization and IECDr. Amlian Deputy Chief, Zone 0 Social Mobilization and IECDr. Anousone Deputy Chief, Zone 0 Social Mobilization and IECJICADr. Yukiko Okada Assistant Resident RepresentativeDr. Chiaki Miyoshi Assistant Director, 2nd Expert Services Health DivisionWHODr. Giovanni Deodato WHO Country RepresentativeMr. David Bassett, Technical Officer for EPIDr. Dean Shuey Program Management Officer, Health SystemsMs. Myriam Begdeli Technical Officer, Health SystemsMr. Patrick Lydon Technical Officer, Immunization FinancingUNICEFDr. Dominique Robez-Masson Project Officer, Head of Health and Nutrition SectionMr. Kamhoung Keovilay Assistant Project Officer, EPIAusAidMs. Michele Horne Program Officer, Development Cooperation SectionMs. Jane Davies Program Officer, Development Cooperation SectionWorld Bank

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Mr. Enrique Crousillat Country Manager, World Bank Lao PDR Field Office (EACLF)

[B] ICC Signatures and Comments

Ministry of Heath Signatures and CommentsDr. Bounlay PhommasackDeputy Director, Department ofHygiene and Prevention

National Center for Mother and Child (EPI)Dr. Somthana DouangmalaDeputy Director and National EPIManager

JICADr. Yukiko OkadaAssistant Resident Representative

Dr. Chiaki MiyoshiAssistant Director, 2nd ExpertServices Health Division

WHODr. Giovanni DeodatoWHO Country Representative

Mr. David BassettTechnical Officer for EPI

UNICEFDr. Dominique Robez-MassonProject Officer, Head of Healthand Nutrition Section

AusAidMs. Jane DaviesProgram Officer, DevelopmentCooperation Section