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Ms. Mercedes Garcia-Escribano, Pedro Juarros, and Ms. Tewodaj Mogues
Demands for ramping up health expenditures are at an all-time high. Countries’ needs for additional health resources include responding to the COVID-19 pandemic, closing gaps in achieving the Sustainable Development Goal in health in most emerging and developing countries, and serving an ageing population in advanced economies. Facing limited fiscal space for raising health spending focuses policymakers’ attention on ensuring that resources are used efficiently. How sizable are the potential gains—in terms of freeing up resources and delivering better health outcomes—from improving health spending efficiency? How has efficiency evolved over the past decade? What can policymakers do to boost it? This paper estimates health spending efficiency across countries using bias-corrected data envelopment analysis and finds sizable differences in efficiency across countries, in particular among emerging and developing countries compared to advanced economies. The examination of the evolution of efficiency reveals that important efficiency gains have been made in the majority of countries. The paper also explores some of the key drivers of efficiency and finds that lower income inequality, less corruption, and health interventions oriented at expanding population access to basic health services are associated with greater efficiency.
Ms. Mercedes Garcia-Escribano, Pedro Juarros, and Ms. Tewodaj Mogues

health systems become adequately resourced, policymakers are turning their attention to health spending efficiency—the core topic of this paper. Indeed, as important as spending more resources in health continues to be—discussed for example in Gaspar et al. (2019) , it is also crucial spending those well. Inefficient spending results in poor outcomes or unnecessarily high outlays. Simply increasing public expenditure in the health sector may not yield the expected health outcomes if the efficiency of this spending is low. In fact, the health expenditure estimates to

International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper uses efficiency frontiers for benchmarking of social spending in Honduras. The results reveal significant room to improve public health and education spending efficiency with potentially large fiscal savings. From an input-oriented point of view, Honduras performs poorly in education and health spending efficiency. From an output-oriented point of view, health spending efficiency appears to be in line with regional comparators, while there is room to improve efficiency in secondary education. In health and education spending, the priority is to tackle the disconnection between compensation benefits and labor productivity.
International Monetary Fund. Western Hemisphere Dept.

World Bank; WHO; UNESCO; and Barro-Lee database. D. Implications and Policy Recommendations 11. There is a significant room to improve public health and education spending efficiency with potentially large fiscal savings. From an input-oriented point of view, Honduras performs poorly in education and health spending efficiency. From an output-oriented point of view, health spending efficiency appears to be in line with regional comparators while there is room to improve efficiency in secondary education. 12. In health and education spending, the