7 PHN 1991 Sector Review and local groups that will be presenting proposals for project funding. In general the contributions are in the form of matching grants, and their significance lies less in their size than in their implications for greater local involvement in project design, implementation, and sustainabDlity.

2.10 On average for FY91, the Bank is financing 46 percent of total project costs in the PHN sector. Average project costs were higher in the socdal development projects than in the "pure" PHN projects--$131 million versus $119 million--though Bank loans were lower on average to social development projects--$46 million versus $61 million--another indication of the additional leverage gained in cofinancing from all sources in the social development projects.

# _4. Project Funds by Expenditure Catezorv_

2.11 As shown in Figure 4, investment costs weie 70 percent of total projea costs, and recurrent costs were 30 percent, including the costs of drugs, contraceptives and therapeutic nutrition. The greatest share (about two-thirds) of investments financed under FY91 projects was **fcr** equipment, furniture, supplies, and civil works. While not calculated in detail by the ASR team, a large proportion of these investment costs are for the rehabilitation of existing facilities and for replacement of equipment which have been allowed to deteriorate. This phenomenon is reflective not only of the need for improved management of maintenance activities but also of the lack of recurrent financing to support such activity. Securing adequate levels of recurrent financing for proper maintenance of buildings, vehides and equipment is surely a more cost effective alternative for providing needed inrastructure for the promotion and delivery of health services. The Bank, both in its policy on recurrent cost financing and in its PHN project designs, should be more supportive in providing needed assistance in this regard.

2.12 Three-quarters of the non-drug recurrent cost component, which represented 24 percent of total project costs, was for salaries and allowances. The "drugs" cost category, which includes drugs, contraceptives and therapeutic nutrition, made up 6 percent of total project costs; it is accounted for separately in this analysis because it has been categorized both as an investment and as a recufrent cost by different projecs within and across regions. While drugs are recurrent In natu:e, in that supplies need to be replenished on an ongoing basis, the purchase of an initial stock of drugs through a project, which will be replenished ultimately through cost recovery and/or other means nationally, is sometimes categorized by task managers as an investment cost.

Figure 4: Breakdown of ibtal Project Costs by Expenditure Category <!-- Start of picture text --> Project Cost Categories<br>Summary Accounts<br>. S<br>402<br>_Dev. j<br>33.1<br>I9C.2a 74074 SI'.<br>............... v<br>117.9 ., 7i7<br>. U9<br>8&6<br>(in US$ millions)<br><!-- End of picture text --> Note: Data derived from 19 of the 28 FY91-ap proved PHN projects for which detailed break down of total project cost was available (18 "pure" PHN projects and the Mali Health and Water project).

## B. **Sector Work**

2.13 Thirty-threc pieces of sector work reached at least the white-oover report stage in FY91, the same level of output as in FY90 (Annex 1, lhble 5). TWelve of these reports were completed in final greyor red-cover form. (Annex 1, bkble 6, provides details.) lWenty-four of the reports were produced by the PHR divisions, the balance by the country divisions, a few other sector divisions and one by the