By Eugenia Madhidha,
Last week, medical doctors in this country resumed a second leg of their strike almost a month after ending a three week strike that paralyzed service delivery in most public hospitals across the country. The doctors are pressing the President to fire the Minister for Health Dr Haji Mponda and his deputy Dr Lucy Nkya.
Though the doctors’ strike was plunged into confusion as there were visible signs of division within the medical practitioners as some of them were working while others had downed tool, many people with relatives in some major hospitals had already pressed panic buttons and could be seen withdrawing their sick relatives, regardless of their conditions.
Sikika, a non governmental organisation dealing with health matters, saw the devastating effects of the first strike and decided coming up with an analysis with the title ‘A Fiscal & Institutional Analysis of the Ongoing Dispute Between the Doctor’s Association and the Government of Tanzania’.
According to the analysis, the failure of the Doctors’ Association and the Government of Tanzania to come to terms on the doctors’ basic salaries, the allowances that they are entitled to, and a number of other issues have led to a situation that was fast becoming a national crisis in Tanzania.
“The disagreement has led to difficulties in terms of communications between the Doctors’ Association and the Tanzanian government, as well as a strike by the doctors that has led to a severe disruption in the provision of healthcare services to Tanzanian citizens, particularly in public hospitals.“
“Since then the two sides had agreed to negotiate on terms to settle this issue permanently, with the deadline being the 3rd of March. In terms of negotiations between the Doctors’ Association and the Government, fulfilling the demands of the doctors seems to have had quite serious implications and brings up interesting questions that would need to be answered in order for an amicable resolution to arise. It is important to know what both sides of the story are in terms of the doctors’ financial views as well as from the side of the government.”
Financial implication of the doctors’ demands
The report points out that one of the main demands from the doctors is an increase in basic salary from Tsh 940,000 to Tsh 3.5 million. Fulfilling these demands would increase basic salaries by 272 percent. The doctors have also demanded increasing allowances as indicated below.
• Risk allowances equivalent to 30 percent of the basic salary
• On-call allowances equivalent to 10 percent of the basic salary
Currently, on-call allowances amount to Tsh 10,000 per day however; the standing orders require paying half of a per-diem rate.
• Housing allowances equivalent to 30 percent of the basic salary
The standing orders entitle government officers to be provided with houses. Doctors demand to be paid a housing allowances whenever such houses are not provided.
• Hardship allowances equivalent to 40 percent of the basic salary
• Transport allowances equivalent to 10 percent of the basic salary or the offer vehicle loans
The various demands for the aforementioned allowances add up to 120 percent of the doctors’ basic salary.
The analysis also looks at Tanzania’s budget estimates for June 2011/12 in terms of revenues and expenditures. The report recalls “according to the budget speech given in June 2011, the government’s planned total expenditures for the financial year 2011/12 was to be Tsh 13,526 billion. Recurrent and development expenditures were estimated to be Tsh 8,600 billion and Tsh 4,924 billion, respectively. The recurrent expenditures were composed of ‘Consolidated and Financial Services’ (Tsh 1,919 billion), ‘Wages and Salaries’ (Tsh 3,270.3 billion) and ‘Other Charges’ (Tsh 3,419 billion).”
On the revenue side, Sikika points out “to finance those expenditures, the government estimated that they would receive tax and non-tax revenues amounting to Tsh 6,776 billion, and revenues from LGAs were projected at Tsh 350 billion. It estimated contributions from development partners in the form of grants and concessional loans amounting to Tsh 3,923 billion. To finance the remaining deficit, the government planned to borrow Tsh 1,271 billion from foreign capital markets (non-concessional loans) and Tsh 1,204 billion from domestic capital markets.”
Fiscal imbalance
According to Sikika’s analysis, “the fundamental structural problem of the government’s budget is that it cannot finance its recurrent expenditures with its domestic revenues (excluding borrowing). For the financial year 2011/12, recurrent expenditures amounted to 120.7 percent of recurrent revenues. This means that the government has to borrow large amounts of money or use donor funds to run and maintain public services.”
Fiscal options to accommodate doctors’ salary increases
Sikika mentions four options how the government can accommodate the doctors’ additional salary demands: borrowing from capital markets, cutting down development expenditures or reoccurring ‘Other Charges’ and to strengthen tax collection.
- Firstly, the government can opt to increase domestic or foreign lending (which accounts for 18.3 percent of all revenues). At the beginning of the financial year 2011/12, it has estimated to borrow a total of Tsh 1,204.3 billion from the domestic market to cover the revenue shortfalls and the rollover of debt. The report indicates that high budget deficits are generally considered to cause macroeconomic problems as they, drive inflation, worsen current account deficits, incur future interest payments, and crowd out private investment.
Moreover, the ultimate costs of non-concessional foreign borrowing are deemed to be hard to predict because these loans are subject to changing interest rates and exchange rates. It is said that, the government has decided to reduce the budget deficit and to refrain from financing extra budgetary requirements through additional debt to safeguard the nation’s image.
- The government can also chose cutting down development expenditures (which account for 36 percent of all expenditures). Tanzania receives substantive amounts of foreign development assistance that is earmarked for development expenditures. In 2011/12, the government finances Tsh 1001 billion of all development expenditures, that means only 20.3 percent. Thus, the report states that if the government does not want to leave all decisions about which development projects are to be prioritized to the development partners, it would need to refrain from further economizing those expenditures.
- A further option is cutting down ‘other charges’ (which account for 40 percent of all recurrent expenditures). Sikika suggests that if the government considers this option, it should focus on unnecessary expenditures including the procurement of furniture and vehicles, travel allowances, training allowance, extra duty, and discretionary and non-discretionary allowances to avoid harming the provision of public goods.
- Another possibility is to increase tax collections. Sikika argues that the government should have a clear strategy to ensure domestic revenue growth. This strategy should aim at the strengthening of the tax collection authority’s research and tax collection capacities, the expansion of the tax base to have more sources of revenues, and to review tax exemptions such as tax holidays for new investors which give room to tax evasion.
Sikika’s Recommendations
The organization points out that “public servants’ salaries have been debated repeatedly without resulting in any improvements of their wellbeing. The doctors’ requests are genuine and understandable; however, prudent and wise decisions have to be made. In the current state of the economy, it is important to maintain fiscal stability restructure recurrent expenditures without harming the economy.“
Sikika, therefore, recommends the Government to focus on cutting down unnecessary expenditures to increases the public servants’ salary without harming the overall development process.
Sikika also had a word for the doctors as the advised them to “be aware of the bigger picture.”
“[…] the Doctor’s association should also be aware of the financial strain that the Government has been subjected to because of their demands. They must also be aware of the consequences of striking without having essential services in place in order for those patients most in need to be able to continue to gain access to healthcare, since Tanzanians suffer greatly from the aftermath of these actions. The doctors must be aware that there is no magic cure to this issue, and it may take a significant amount of time before a compromise is reached that is acceptable for both sides. Both sides must be willing to give ground in order for a suitable solution to this situation to be reached.”
