Report No. 29338-ET Report No. 29338-ET Ethiopia Public Expenditure Review The Emerging Challenge Public Disclosure Authorized (In Two Volumes) Volume I: Public Spending in the Social Sectors 2000-2020 June 2004 Poverty Reduction and Economic Management 2(AFTP2) Country Department for Ethiopia Africa Region Ethiopia Public Expenditur Public Disclosure Authorized e Review I Volume Public Disclosure Authorized Document of the World Bank Public Disclosure Authorized Government Fiscal Year: July-June Ethiopian Year Gregorian (European year Equivalent) 1989 1996197 1990 1997198 1991 1998199 1992 199912000 1993 2000/01 1994 200 1102 1995 2002103 , 1996 2003104 Currency Equivalent Currency unit: Ethiopian Birr (ETB) US$ 1 = 8.66 (2002) ACRONYMS AND ABBREVIATIONS AAU Addis Ababa Universitv JICA Japan International Cooperation Agency AAWSA Addis Ababa Water & Sewerage Authority MDG Millennium Development Goal ~ ARI Acute respiratory Infection MEDAC Ministry of Economic Development & Cooperation ARM Annual Review Mission MEFF Medium Term Expenditure & Fiscal Framework ARV Anti Retro Viral MMR Maternal Mortality Rate CFAA Country Financial Accountability Assessment MoFED Ministry of Finance & Economic Development COMESA The Common market for Eastern & Southern Africa MoH Ministry of Health CPR Contraceptive Prevalence Rate Mt Metric ton CSA Central Statistical Authority MWR Ministry of Water Resources CSR Corporate Social Responsibility NEA National Examinations CYP Couple-yearprotection NGO Non-Govemntal organization DAG Donor Assistance Group NPPE National Population Policy DALY Disability Adjusted Life year OECD Organisation for Economic Cooperation & Development DFID Department for International Development O&M costs Operation & Maintenance Costs DHS Demographic &Health Survey PASS Pharmaceutical Administration & Supply Services DOTS Directly Observed Treatment PEP Public Expenditure Program DPPC Disaster Preparedness & Preparation Commission PER Public Expenditure Review DPT Diphtheria, Polio and Tetanus PIP Public Investment Program EFAA Education for All PSCAP Public Service Delivery Capacity Building Program EFY Ethiopian Fiscal Year PRGF Poverty Reduction & Growth Facility EGS Employment generation Scheme PRSP Poverty Reduction Strategy paper EPI Extended Program of Immunization PTR PupiliTeacber Ratio EPPD Economic Policy & Planning Department RWFP Reproductive Health & Family Planning ESDP Education Sector Development Program SCF (VK) Save the Children Fund (UK) ESRDF Ethiopian Social Rehabilitation & Development Fund SDPRP Sustainable Development & Poverty Reduction Program ETB Ethiopian Birr SNNP Southern Nations Nationalities and Peoples (Region) EU European Union SPS Special Pharmacies EY Ethiopian year SSA Sub-Saharan Africa FFW Food for Work STD Sexually Transmitted Disease FP Family Planning STR Studentrreacher Ratio GAVI Global Alliance for Vaccines & Immunization TB Tuberculosis GDP Gross Domestic Product TFR Total Fertility Rate GER Gross Enrollment Ratio TVET Technical & Vocational Education &Training GoE Government of Ethiopia ucs Unit Cost Study GY Gregorian year USMR Under-Five Mortality Rate HAPCO HIV/AIDS Prevention Control Office UNDP United National Development Program HEP Health Extension Package UNEP United Nations Environment Program HEW Health Extension Worker UNFPA United Nations Fund for Population Activities HPC Heavily Indebted Poor Countries UNICEF United Nations Children’s Fund HIV/AIDS Human ImmunodeficiencyVirus/Acquire Immuno Deficiency Syn. WE Universal Primary Education HMIS Health Management Information System USAID United States Agency for International Development HSDP Health Sector Development Program USHEW United States Department of Health, Education & Welfare ICT Information & Communication Technology World Food Program IDA International development Agency WFP World Health organization IEC Information, Education Communication WHO Welfare Monitoring Survey IMP Interim Master Plan WMS Water Resources Development Fund IMR Infant Mortality Rate WRDF Water Supply & Sanitation IUD Intrauterine Device wss Water Supply & Sanitation Development Plan WSSDP Vice President: Callisto Madavo Country Director: Ishac Diwan Sector Manager: Kathie Krumm 1Task Team Leader: William James Smith TABLE OF CONTENTS ACKNOWLEDGEMENTS ..................................................................................................... i EXECUTIVE SUMMARY ........................................................................................... i Part I: Social Sector Spending - The Emerging Challenge .................................................... i Part 11: Overall Public Expenditure (Volume 11) ............................................................... xxii Part 111: Summary Listing of Recommendations Drawn from the Review ...................... mix INTRODUCTION .................................................................................................................... 1 1. OVERVIEW OF SOCIAL SECTOR SPENDING, FUTURE NEEDS, AND POLICY IMPLICATIONS ...................................................................................................... 4 A . A Brief Overview of Social Sector Spending and Outcomes ..................................... 4 B. Projections of Future Social Sector Spending Needs ................................................ 10 C . Some Policy Implications and Implementation Considerations ............................... 19 D. Locating Social Sector Spending in the Context of Wider Development and Poverty- Reduction Strategy ................................................................................................................ 26 2 . EDUCATION EXPENDITURE IN ETHIOPIA .......................................................... 30 A . Introduction............................................................................................................... 30 B. An Overview of Total Public Spending on Education.............................................. 32 C . Public Expenditure on Primary and Secondary Education ....................................... 35 Trends and Composition ........................................................................................... 35 Issues of Adequacy. Appropriateness. and Effectiveness of Spending .................... 39 What Would It Cost to Achieve Some Fundamental Policy Objectives? ................. 43 D. Capital Expenditure on Education ............................................................................ 44 Trends and Composition ........................................................................................... 44 The Role of Aid - Domestic vs . Extemally-Financed Capital Spending ................. 46 Utilization ofthe Capital Budget .............................................................................. 47 E. Other Expenditure-Related Issues................................................................................. 49 Equity and the Link with Poverty - Who Benefits from Education Spending? ....... 49 Link with Decentralization ....................................................................................... 50 Private Provision of General Education.................................................................... 52 F. Loolung Forward: Projected Expenditure Requirements for Primary and Secondary Education .............................................................................................................................. 57 3. HIGHER EDUCATION................................................................................................. 66 A . Technical & Vocational Education and Training ..................................................... 66 B. University Education ................................................................................................ 72 4 . PUBLIC HEALTH EXPENDITURE AND HEALTH IN ETHIOPIA ..................... 81 A . Introduction............................................................................................................... 81 B. Context ...................................................................................................................... 81 C . Public Health System. Services and Outputs ............................................................ 85 D. Public spending and its Allocation ........................................................................... 87 E. Options and Projections .............................................................................................. 101 F. Financial Sources ........................................................................................................ 109 G. Conclusions ............................................................................................................. 112 5. POPULATION AND FAMILY PLANNING ............................................................. 113 A . Background .The Population Challenge ................................................................ 113 B. Methods and Data ................................................................................................... 115 C. Findings .Projected Requirements and Costs ........................................................ 117 D. Observations on Challenges and Constraints in Achieving the Objective of Providing Adequate Family Planning Services .................................................................. 122 6 . FOOD SECURITY AND SAFETY NETS - PUBLIC SPENDING ON TRANSFERS TO THE POOR....................................................................................................................