This paper advances the concept of budgetary space for health, which explores resources available for health that are generated through higher public expenditure, better budget allocations, and through improved public financial management (PFM). The budget decomposition approach presented in the paper provides insight into the extent to which each factor drives expansion in budgetary space for health. The approach is applied to 133 low- and middle-income countries (LMICs) between 2000–2017 and finds that around 70% of budgetary space for health is driven by changes in overall public expenditure, while about 30% is directly attributable to the share of the budget allocated to health. Further, PFM improvements can maximize or even enlarge budgetary space for health. A key implication of the analysis is that health policymakers should systematically link PFM reforms to budgetary space for health by supporting comprehensive country assessments and by enhancing the effectiveness of budget dialogue between finance and health authorities.
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