Assessing fiscal space for low-and-middle income countries: A review of the evidence

Assessing fiscal space for low-and-middle income countries: A review of the evidence

Despite the proliferation of the term ‘fiscal space for health’ in recent years, there has been no comprehensive review of how the concept can be applied to assess and support the expansion of resources for the health sector. There is also a certain amount of confusion regarding the conceptual underpinnings and application of fiscal space for health analysis, notably regarding the way in which such analysis can help countries realize potential fiscal space for health expansion.

In this paper, a qualitative review of 35 studies was undertaken in four stages to identify all fiscal space for health studies and to systematically assess their findings and methods. These four stages involved a literature search, crowd-sourcing techniques, data extraction, and comprehensive qualitative analysis.

The study shows that economic growth, budget reprioritization and efficiency improving measures are the main drivers of fiscal space for health expansion. There is scarce evidence regarding the prospective role of earmarked funds, and development assistance for health in expanding fiscal space for the sector. The lack of standardized methods and metrics to systematically assess fiscal space for health results in variations in the analytical approaches used, and limits study relevance and applicability for policy reform.

The paper concludes that a more contextualized approach to fiscal space analysis is required, which focuses on key sources of fiscal space for health expansion and includes efficiency enhancements. Fiscal space analysis should be systematically embedded in domestic budgeting processes and explicitly consider both technical and political feasibility of assessed options. Adopting this approach could offer considerable potential for optimizing government budget and expenditure decisions and more effectively support progress toward UHC.

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