external controls (e.g. payroll audits). The flipside is not uncommon, where physicians and nurses on the payroll do not receive their wages, or receive them with great delay.

Multiple reasons account for the discrepancy between the number of physicians and nurses on employee records and listed on payroll. Lists of physicians and nurses employed are sometimes kept by multiple agencies (e.g. the Ministry of Health, the Ministry of Finance, and health facilities themselves) and are only updated infrequently. Where physicians or nurses have left, died, or retired, and those separations are not recorded there is often a disconnect between official records and actual physician and nurse numbers. Such problems, generally the result of administrative failures, suggest the need for efforts to strengthen both personnel and budget records and management capacity. PEFA indicators (see Table 4) may be useful in flagging this type of problem since a low score implies possible problems on payroll.

Public Expenditure Reviews (PERs) address governance problems, explicitly or implicitly, and contain indicators of, and potential solutions for identified governance failures. For example, the 2001 PER for Honduras provided detailed information and analysis of ghost workers in the health sector: the share of workers identified as ghosts ranged from close to 1 percent for auxiliary nurses to over 8 percent GPs. The main underlying problem identified was the weak personnel information system, which failed to accurately record and regularly update health staff deployment.

Ghost workers on payroll are unlikely to be a one-sided operation by health workers (they may not be involved at all) rather, administrative staff in charge of maintaining payroll records have greater opportunity to manipulate records to siphon off wage payments (Lindelöw 2006). This is more likely to be the case when there are no or weak incentives to maintain information systems, and administrators in charge of maintaining information cannot be held accountable when discrepancies, intentional, e.g. to cover up irregularities, or not, e.g. mistakes in data entry, are revealed.

In addition, where budgets or provider revenues are linked to outputs, error and fraud in recording of outputs can lead to leakages. In Uganda, ghost patients were estimated to account for, on average, 26.5 percent of all patients with a range of 0-80 percent (McPake et al. 1999).

# **Leakages of drugs and medical supplies**

Public health systems face serious challenges in the procurement, warehousing, distribution, and management of in-kind drugs and medical supplies and equipment. Leakages of drugs and medical supplies and equipment along the supply-chain result in drug stock-outs, broken equipment not being fixed or replaced, and lack of supplies with subsequent adverse impacts on service delivery since such complementary inputs are key to health workers’ productivity and effectiveness.

For instance, in Indonesia in 2002, the average health clinic (Puskemas) had 75-80 percent of the essential drugs meant to be in stock (World Bank 2007b). In Nigeria many primary health facilities do not have the equipment and drugs necessary to provide basic services (World Bank 2008). In four surveyed states Bauchi, Cross River, Kaduna, and Lagos, essential drugs and medical equipment were severely lacking in most health facilities (Figure 4). For example, the share of facilities that had 20