Macroeconomics and Health Nepal

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WHO/SDE/CMH/
04.10







Macroeconomics and Health Nepal


Situational analysis




Maria Paalman
1


April 2004













World Health Organization




1

Senior Health Advisor,
Royal Tropical Institute (KIT), Netherlands
;
C
onsultant
,
WHO Geneva

MEH/Nepal/Situational Analysis,
April 2004

2

Table of contents


Acronyms

................................
................................
................................
............................

5

Executive summary

................................
................................
................................
..........

7

Introduction

................................
................................
................................
................................
................................
.

7

Nepal Context
................................
................................
................................
................................
.............................

7

The Health Sector
................................
................................
................................
................................
......................

8

Poverty and Health

................................
................................
................................
................................
....................

9

External Development Partners

................................
................................
................................
............................

10

Macroeconomics and Health

................................
................................
................................
................................
.

10

Conclusion and recommendations

................................
................................
................................
.......................

11

Macroeconomics and Health
................................
................................
..............................

12

Assignment

................................
................................
................................
........................

12

Nepal Context

................................
................................
................................
...................

13

Physical

................................
................................
................................
................................
................................
.....

13

Demographic

................................
................................
................................
................................
............................

13

Administrative

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...........................

13

Political

................................
................................
................................
................................
................................
......

13

Econo
mical

................................
................................
................................
................................
...............................

14

Social

................................
................................
................................
................................
................................
.........

14

Religion
................................
................................
................................
................................
................................
......

15

Ethnic

................................
................................
................................
................................
................................
.........

15

Education

................................
................................
................................
................................
................................
..

15

Poverty

................................
................................
................................
................................
................................
......

15


Security

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................................
................................
................................
................................
....

16

Government finance

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................................
................................
................................
................

16

The Health Sector

................................
................................
................................
............

18

Ministry of Health

................................
................................
................................
...............

18

Polic
ies, strategies and plans

................................
................................
............................

18

National Health Policy 1991

................................
................................
................................
................................
...

19

Second Long Term Health Plan 1997
-
2017

................................
................................
................................
........

19

Strategic Analysis to operationalise the SLTHP

................................
................................
................................
.

20

WB study
-

Nepal: operational issues and prioritization of resources in the health sector

..........................

21

Medium Term Strategic Plan (MTSP)

................................
................................
................................
..................

22

Medium Term Expenditure Programme (MTEP)

................................
................................
................................

22

Medium T
erm Expenditure Framework for Health (MTEF
-
H)

................................
................................
..........

23

Objectives

................................
................................
................................
................................
................................
.

24

Health Sector Strategy (HSS)
................................
................................
................................
................................

24

Tenth 5
-
year Development Plan

................................
................................
................................
...........................

24

Nepal Health Sector Programme


Implementation Plan 2003
-
2007 (NHSP
-
IP)

................................
.........

26

PRSP and JSA

................................
................................
................................
................................
.........................

27

Conclusion on policies, strategies and plans

................................
................................
................................
......

28

Provi sion of health services
................................
................................
...............................

28

Public health facilities
................................
................................
................................
................................
..............

28

Utilisation
................................
................................
................................
................................
................................
...

29

Human Resources

................................
................................
................................
................................
...................

29

Devolution of health services

................................
................................
................................
................................
.

30

Private sector and NGOs
................................
................................
................................
................................
........

31

Implications of Maoist insurgency

................................
................................
................................
.........................

31

MEH/Nepal/Situational Analysis,
April 2004

3

Health financing

................................
................................
................................
.................

31

Public Expenditure Review

................................
................................
................................
................................
....

31

Budget for 2003/2004
................................
................................
................................
................................
..............

33

National Health Accounts

................................
................................
................................
................................
.......

33

Taxes

................................
................................
................................
................................
................................
.........

33

User fees

................................
................................
................................
................................
................................
...

34

Insurance

................................
................................
................................
................................
................................
..

34

Health Management Information System

................................
................................
...........

35

Health indicators and targets

................................
................................
.............................

35

MDGs (HSS June 2002)

................................
................................
................................
................................
.........

36

Tenth Plan
................................
................................
................................
................................
................................
.

36

MDG Progress Report

................................
................................
................................
................................
............

36

Health Sector Strategy
................................
................................
................................
................................
............

36

Essential health interventions
................................
................................
............................

36

Conclusion

................................
................................
................................
................................
................................

38

Research

................................
................................
................................
............................

38

Capacity

................................
................................
................................
.............................

38

Relationship poverty


ill health
................................
................................
..................

40

External Development Partners

................................
................................
..................

42

Multilateral and bi
-
lateral donors

................................
................................
.......................

42

International NGOs

................................
................................
................................
............

42

National NGOs

................................
................................
................................
...................

42

Macroeconomics and Health
................................
................................
........................

45

Commitment

................................
................................
................................
......................

45

Commitment to poverty reduction

................................
................................
................................
.........................

45

Commitment to Macroeconomics and Health

................................
................................
................................
.....

45

Commitment

of external development partners
................................
................................
................................
..

46

Institutional arrangements

................................
................................
................................
.

46

CMH calculations for Nepal
................................
................................
................................

47

Opportunities for scaling up/reaching the poor

................................
................................
.

48

Non
-
financial constraints to scaling up/reaching the poor

................................
................

48

Financial constraints to scaling up/reaching the poor

................................
.......................

49

Sources

................................
................................
................................
................................
................................
.....

49

Expenditures
................................
................................
................................
................................
.............................

50

Recommendations and conclusions

................................
................................
.........

51

Annexes

................................
................................
................................
.............................

53

MEH/Nepal/Situational Analysis,
April 2004

4

Annex 1

Policies and Plans
................................
................................
..........................

54

Annex 2

Tenth Plan Chapter 24


Health

................................
................................
.....

59

Annex 3

Nepal Health Sector Programme


Implementation Plan (2003


2007)

..........

60

Annex 4

Health and Financing paragraphs in the PRSP

................................
..............

61

Annex 5

People met in Nepal during mission 16/12/03


06/01/04

................................

67

Annex 6

Bibliography MEH situational analysi s Nepal

................................
................

68



MEH/Nepal/Situational Analysis,
April 2004

5

Acronyms

Aamaa



Aamaa Milan Kendra (Mother’s Club)

AIDS



Acquired Immune Deficiency Syndrome

ALOS



Average Length of Stay

ARI



Acute Respiratory Infections

BNMT



Britain Nepal Medical Trust

BoD



Burden of Disease

CBR



Crude Birth Rate

CDR



Crude Death Rate

CHI



Community Health Insurance

CMH



Commission on Macroeconomics and Health

CMR



Child Mortality Rate

CPR



Contraceptive Prevalence Rate

CRS



Nepal C
ontraceptive Retail Sales Company

CTC



Close
-
to
-
Client

DALY



Disability Adjusted Life Year

DD



Diarrhoeal Disease

DDC



District Development Committee

DFID



Department of International Development (British Govt)

DHO



District Health Office

DoHS



Dep
artment of Health Services

DOTS



Directly Observed Treatment, Short
-
course

EDP



External Development Partner

EHCS



Essential Health Care Services

FP



Family Planning

FPAN



Family Planning Association of Nepal

FR



Fertility Rate

FY



Fiscal Year

GDP



Gross Domestic Product

GTZ

Gesellschaft für Technische Zusammenarbeit (German Development
Organisation)

HDI



Human Development Index

HEFU



Health Economics and Financing Unit MoH

HIV



Human Immuno
-
deficiency Virus

HMG



His Majesty’s Government

HMGN


His Majesty’s Government of Nepal

HMIS



Health Management Information System

HP



Health Post

HR



Human Resources

HSS



Health Sector Strategy

IEC



Information, Education and Communciation

ILO



International Labour Organisation

IMCI



Integrated Manage
ment of Childhood Illness

IMF



International Monetary Fund

IMR



Infant Mortality Rate

INF



International Nepal Fellowship

INGO



International Non
-
Governmental Organisation

JICA



Japan International Cooperation Agency

KIT



Royal Tropical Institute Ams
terdam

MEH/Nepal/Situational Analysis,
April 2004

6

LE



Life Expectancy

LIC



Low
-
income country

MCHW


Maternal and Child health Worker

MDGs



Millenium Development Goals

MEH



Macroeconomics and Health



MMR



Maternal Mortality Rate

MoF



Ministry of Finance

MoH



Ministry of Health

MSI



Marie St
opes International

MTEF



Medium Term Expenditure Framework

MTEF
-
H


Medium Term Expenditure Framework


Health

MTEP



Medium Term Expenditure Programme/Plan

NGO



Non Governmental Organisation

NHA



National Health Accounts

NHEICC


National Health Educatio
n, Information and Communication Centre

NHRC



National Health Research Council

NHSP
-
IP


Nepal Health Sector Programme


Implementation Plan

NLSS



Nepal Living Standard Survey

NPC



National Planning Commission

NRCS



Nepal Red Cross Society

OR



Occupanc
y Rate

P
-
1/2/3


Priority 1/2/3

PAF



Poverty Alleviation Fund

PER



Public Expenditure Review

PHC



Primary Health Care

PP&IC



Policy, Planing and International Cooperation

PPP



Purchasing Power Parity

PRSP



Poverty Reduction Strategy Paper

RH



Reprod
uctive Health

SDC



Swiss Agency for Development and Cooperation

SHI



Social health Insurance

SHP



Sub Health Post

SLTHP


Second Long Term Health Plan 1997
-
2017

STD



Sexually Transmitted Disease

SWAp



Sector
-
wide Approach

TB



Tuberculosis

TBA



Tradit
ional Birth Attendant

UMN



United Mission Nepal (INGO)

UN



United Nations

UNDP



United Nations Development Programme

USAID


United States Agency for International Development

VAT



Value Added Tax

VDC



Village Development Committee

VHW



Village Health

Worker

WB



World Bank

WDR



World Development Report

WHO



World Health Organization

MEH/Nepal/Situational Analysis,
April 2004

7

Executive summary

Introduction

The Government of Nepal requested WHO to provide technical assistance to take forward the
Macroeconomics and Health (MEH) agenda. The Roy
al Tropical Institute in Amsterdam
(KIT) was selected to provide this support during the preparatory phase (around 6 months).
The support will consist of the production of a situational analysis, facilitation of establishing
the institutional mechanisms fo
r taking the work forward, support for the organisation of a
national meeting and facilitation of a workshop to produce a proposal for the planning phase.


The consultant visited Nepal from 16 December 2003 to 6 January 2004 to collect
information, discus
s options and further work as input for the situational analysis. This report
is the situational analysis.


Nepal Context

Nepal is a relatively small (population 24 million) land
-
locked country, bordered by the two
biggest countries in the world, India an
d China. Its renowned physical beauty makes it very
fragmented and many parts are inaccessible by modern transport and lack of communication
facilities. There are few cities and 86% of the population live in rural areas. The country is
divided into 5 devel
opment regions, 14 zones and 75 districts and almost 4000 Village
Development Committees and 58 municipalities.


Nepal was never colonised, is a constitutional Hindu monarchy and has a multiparty
bicameral parliamentary democracy. However, since October 2
002 the King has taken over
power. Since 1996 an ever increasingly violent Maoist insurgency has thrown the country into
civil war. Road blocks, abductions, forced protection and fighting are increasingly making the
country outside the capital Kathmandu an

insecure place to live and travel.


Underlying the insurgency is (among other things) a pervasive poverty. The country’s GDP
per capita is only $250 and 38% of the population live below the poverty line. There are large
inequalities. The poorest people l
ive in the remote mountainous areas or belong to the lowest
caste, the Dalits, in particular in the Western part of the country. This is also the part where
the Maoists are strongest. While only 15% of households is connected to the electricity grid,
80% h
ave access to safe water. Unemployment is a big problem, and many work abroad,
bringing more money into the economy than toursim, foreign aid and export together.
Illiteracy is very high, with around 40% of men and 75% of women not able to read or write.


Nepal is still a very traditional country, hierarchical, linked to a caste system, strong religious
and family traditions and a feudal structure. Favouritism is institutionalised, corruption rife.
On the positive side civil society is well developed with
numerous NGOs, including human
right organisations, and a diverse and free press. Two braod ethnic groups can be subdivided
into some 60 different groups, with their own culture and language, but there is only one
official language: Nepali.


Total governme
nt expenditure over FY 2002/2003 was $48 per capita, being 19% of GDP.
Two
-
thirds of that is regular budget,one third development budget. 11% of government
expenditure was used for debt repayment. The government budget for 2003/2004 is almost
20% higher.
Around 60% of that comes from domestic revenues, 15% is expected to come in
as foreign aid and 25% will be borrowed. The real percentage of foreign aid to Nepal is much
higher, as a substantial percentage does not go through the MoF and is not accounted fo
r in
MEH/Nepal/Situational Analysis,
April 2004

8

the so
-
called Red Book. In the health sector this percentage is even 90%. Maybe this is the
reason why the expected government expenditure 2003/2004 for the health sector is so low,
both compared to education (3x as much) and as compared to other coun
tries: only 5.1% of
total government budget, being $2,94 per capita and 1.18% of GDP is publicly spent on
health.


The Health Sector

The central section of the MoH is responsible for policy making, and planning, financing,
international cooperation, human

resources, monitoring and evaluation, as well as for the
central and zoanl hospitals. The Division for policy, planning and international cooperation is
rather weak, but the health economcis and financing unit has become strong. The Department
of Health S
ervices is responsible for the provision of all health services at the district level
and below and produces very informative annual reports. Regional Health Directors are
responsible for technical backstopping as well as programme supervision. Their role
seems to
become less clear under the decentralisation process. At the district level and below, District
and Village Development Committees are responsible for the delivery of health services.


Over the years many policies and plans have been produced. It

seems that more or less
simultaneously two sets of documents were developed, one government driven and related to
the 5
-
year development plan cycle, the other EDP driven. It seems that the detailed work done
by the MoH jointly with the EDPs has to some ex
tent informed the development of the
documents for the Tenth 5
-
year Plan. The problem seems to be that the most current,
prevailing documents have somewhat different objectives, strategies and activities. The main
government document in force is the Tenth
Plan, the health chapter and budget of which are
organised by priority programme and/or organisational centre, probably following present
budget lines. The NHSP
-
IP, more donor
-
driven, is organised by objectives, outputs and
activities in a logical framewor
k and does not have a budget yet. The PRSP, supposed to be a
summary of the Tenth Plan, contains elements of both the Tenth Plan’s Health Chapter and
the NHSP
-
IP, but also includes new activities. It is therefore not clear at this point which
document the

MoH is implementing and using to monitor its activities. Officially the MoH is
bound by the Tenth Development Plan and its MTEF. It would be helpful, if a detailed
comparison was made between the IP, the Tenth Plan and the PRSP, after which the MoH,
NPC a
nd MoF could sit together with the EDPs and decide which activities they will
implement together.


From all these plans however it is clear that Nepal is highly committed to poverty reduction
and also sees health as a major driving force for economic grow
th. The MoH has identified
essential health care services and the main objective of the health sector relates to scaling
these up to reach more people. The EHCS package is very similar to the globally agreed
priorities of maternal and child care, RH and in
fectious diseases, consistent with the MDGs
and the package that the CMH advised. However, it is not clear which concrete activities are
included. The NHSP
-
IP has outputs, broad actions, but no detailed activities for each output.
The Tenth Plan includes p
rioritised programmes, but does not include the kind of detail, that
sheds light on which parts of these programmes, or which activities, belong to the
prioritisation. This obviously makes the costing very difficult.


The MoH further has objectives to par
tner with the private and NGO sector, to decentralise
resources and responsibility to village levels and to improve quality of services. Alternative
sources of financing and exemption schemes for user fees will be developed. The health
information system w
ill be changed in such a way that the impact of the health strategy on the
MEH/Nepal/Situational Analysis,
April 2004

9

health status of the poor can be monitored. As in so many countries the implementation is the
problem, utilisation of public health services is low, staff does not want to work in
rural and
remote areas, supplies and drugs are inadequate etc.


The MoH website gives an astonishingly candid and comprehensive summary of the health
status of the population and its determinants: “
The Mortality and morbidity rates especially
among women
and children are alarmingly high. Acute preventable childhood diseases,
complications of child birth, nutritional disorders and endemic diseases such as malaria,
tuberculosis, leprosy, STDs, rabies, and vector borne diseases continue to prevail at a high
r
ate. Determinants of such conditions are associated with pervasive poverty, low literacy
rates, poor mass education, rough terrain and difficult communications, low levels of hygiene
and sanitary facilities, and limited availability of safe drinking water.

These problems are
further exacerbated by under
-
utilization of resources; shortages of adequately trained
personnel; underdeveloped infrastructure; poor public sector management; and weak intra
-

and inter
-
sectoral co
-
ordination”.


Another major problem is

that money does not follow agreed policies. While the MTEF for
the health sector, produced by the MoH in preparation for the Tenth Plan, set aside 57.6% of
the budget for Priority
-
1 programmes and the Tenth Plan itself even 70%, the Public
Expenditure Rev
iew of the health sector showed that actual funding going to Priority
-
1
programmes decreased from 58% to 50% over the last 3 years, while funding for priority
-
3
programmes increased. Also running counter to plans, is the fact that the share of the funding
going to rural areas decreased, the expenditures for RH drastically decreased, and the share of
health expenditures for children under 5 wasonly 4,7%, while they bear around 50% of the
burden of disease.


Provision of public sector health services is basi
cally financed from taxes and user fees. Both
are regressive, as the taxes are mainly indirect (VAT) and the user fees are a fixed amount,
meaning that the poor pay relatively more than the rich, if and when they make use of public
services at all. There a
re virtually no insurance schemes in place. People pay around $10 per
capita out
-
of
-
pocket per annum. A pilot with community health insurance is planned for this
year. Public services are mostly used by the middle income groups, while the rich go to the
pr
ivate sector and the poor don’t go at all. The ongoing Nepal Living Standard Survey will
give more information on utilisation of health services in the rural areas.


Poverty and Health

Data from different sources have been analysed to get a grasp on the r
elationship between
poverty and health and reveal great disparities in both health outcomes and intermediate
indicators. Differences between the richest and poorest income quintiles in attended delivery,
antenatal care, immunization coverage, malnutrition,

total fertility rate and use of modern
contraceptives are 2
-
10 fold. Infant and child mortality rates are much higher in rural areas
and in particular in the mountains, coinciding with income differentials. A relation between
the educational level of the
mother (often in itself income related) and major health indicators
has also been clearly established, as well as a relation between health care seeking behaviour
and poverty. Geographical focus of reaching the poor should be on the Mid
-
and Far
-
West
Region
s, where 22% of the population live, who have the worst health indicators of the
country and where hence great health gains can be made. As these are also the strongholds of
the Maoist groups, this is far from simple.


MEH/Nepal/Situational Analysis,
April 2004

10

External Development Partners

In Nep
al 6% of external aid is spent on health. Donor expenditure in the health sector has
more than tripled over the last 3 years and amount to about 40% of total public expenditures,
translating in $2 per capita per annum. The biggest donors at the moment in
the health sector
are Japan and the UK, together good for half the external aid, with UNICEF, WHO, UNFPA,
Germany, the US and Switzerland making up most of the remainder. The WB recently
reduced its IDA grants to Nepal, but might be coming back soon. The f
inancial inputs by
indigenous and international NGOs are less well documented.


The donors and the MoH have jointly developed the Health Sector Strategy and its
Implementation Plan. Although this plan is a move towards a sector
-
wide approach, most
donors

are not in favour of fundpooling (yet), except DFID and the WB. At present all
support is still organised in the form of projects or programmes and almost all funds go
directly to the MoH or are self
-
executed by partners. The bulk of the donor funds go to

essential health care or system development/strengthening.


Macroeconomics and Health

HMG of Nepal is very committed to poverty reduction, as is evident from all major policy
and planing documents, but less so to health, as is evident from the low budget

made available
for the health sector (which might be related to the large direct flows of funding from the
donors to the MoH). Within the health sector the MoH is on paper equally committed to
reachng the poor with health services, but also hear money doe
s not follow policy and the
transfer of large amounts from Priority
-
3 to Priority
-
1 programmes must be considered
unrealistic in such a short period.


Nepal attended both global consultations on Macroeconomics and Health in Geneva and
established a Sub
-
Co
mmission on Macroeconomics and Health under the National
Commission for Sustainable Development. The Sub
-
Commission met only once and
appointed a working committee of 3 people, headed by the Chief of the Division for Policy,
Planning and International Coop
eration, Dr. B.b. Karki. This working committee made a Plan
of Action for the preparatory phase of Macroeconomics and Health work, which was
submitted to WHO. A revised version has been approved in March 2004. It remains to be seen
whether the Sub
-
Commissi
on will continue to be active, now that Dr. B.B. Karki has left
Nepal for the USA.


On the basis of the calculations by the CMH and the available information in Nepal the
consultant estimated that total health expenditures in Nepal would have to double by
2007.
HMG of Nepal would at least need to double its investment in health before 2007 and the
donors would need to increase their share with $17 per capita, an eigth
-
fold increase from the
present $2. Possibilities to channel the $10 that people now spend
on health care out
-
of
-
pocket into pre
-
paid schemes need to be studied.


Recently (during pre
-
consultative meetings of the Nepal Development Forum in April 2004)
most donors have made restoration of democracy and conflict resolution conditionalities to
futu
re aid. Some donors advocated co
-
operating with the rebels in order for service delivery
to continue. Therefore the present political situation could hamper scaling up efforts, in as far
as both HMG of Nepal and donors do not seem willing and/or able to pu
t more resources into
health in the current situation.


MEH/Nepal/Situational Analysis,
April 2004

11

Conclusion and recommendations

There are many achievements and developments in Nepal that forebode well on the
possibility to scale up essential health interventions and specifically reach the poor.
The
opportunities have been summarised on page 47. However, there are also a considerable
number of non
-
financial and financial constraints, which are summarised on pages 48/49. The
main constraints are of a political nature and lie outside the health sect
or, namely the
insecurity due to the conflict and the instable bureaucracy, resulting in lack of continuity in
governance.


Recommendations include:



aligning the different operational plans,



collecting (income poverty) disaggregated data for key indicat
ors,



adapting District Health Plans on the basis of detailed District Health and Poverty
Profiles,



focusing on interventions that address the burden of disease experienced by the poor
and on actually reaching the poor with these interventions,



studying
options to contract out to NGOs and/or private sector, contract in or link up
with existing services or schemes in other sectors



ensuring that costing of the EHCS includes all system costs related to scaling up and is
based on real local costs



finding out
how the P
-
1 programmes relate to the EHCS and how much of present
expenditure is used to finance EHCS



doubling HMG’s health budget



increasing donor health budget



using the full increase on scaling up EHCS for the poor



including evaluation of community heal
th insurance pilot in the proposal for the
planing phase



establishing research needs on the basis of the inventory made during the preparatory
phase and the information gaps to be agreed during the national meeting and
workshop in June 2004.


Together wit
h the working committee for Macroeconomics and Health and the WHO office
the consultant adapted the Plan of Action and drafted ToR for a number of local consultants to
carry out the desk review of local studies relevant to Macroeconomics and Health, to mak
e
district health and poverty profiles, and to organise a national advocacy meeting and
workshop to draft a proposal for the planing phase. These activities are elaborated in the Plan
of Action, last version dated 3 March 2004.

MEH/Nepal/Situational Analysis,
April 2004

12

Introduction

Macroeconomics

and Health

The Commission for Macroeconomics and Health showed that investing substantially more in
health will result in great economic returns. Disease creates poverty, but effective health care,
especially targetted to the poor, will create economic gr
owth. The health sector no longer only
consumes resources, it can be a productive economic sector with very high returns on
investment, if resources are used for prioritised interventions and targeted to those in greatest
need.


The Macroeconomics and Hea
lth agenda focuses on:

1.

Achieving better health for the poor, thereby reducing poverty and stimulating economic
growth

2.

Eliminating financial constraints by increasing investments in health

3.

Eliminating non
-
financial constraints to providing a package of esse
ntial interventions to
the poor


Assignment

The Government of Nepal requested WHO to provide technical assistance to take forward the
Macroeconomics and Health (MEH) agenda. The Royal Tropical Institute in Amsterdam
(KIT) was selected by WHO Geneva, in con
sultation with the Regional Office, the WHO
country office and the MoH Nepal, to provide this support during the preparatory phase
(around 6 months). The support will consist of the production of a situational analysis,
facilitation of establishing the ins
titutional mechanisms for taking the work forward, support
for the organisation of a national meeting and facilitation of a workshop to produce a proposal
for the planning phase. This report is the situational analysis.


The consultant visited Nepal from
16 December 2003 to 6 January 2004. Initial briefing took
place by the WR, Dr. Klaus Wagner, and the WHO Health Planner, Dr. Lin Aung. The
consultant was introduced to Dr. Benu Behadur Karki, Chief Policy, Planning and
International Cooperation in the MoH.

He was the driving force in Nepal to get the
Macroeconomics and Health agenda implemented and was my main counterpart during the
consultancy. A list of people met is provided as Annex 5 and a list of documents consulted in
Annex 6. The consultant attende
d a meeting of the main donors in the health sector and gave a
brief presentation on Macroeconomics and Health in general and the ToR for the consultancy
in Nepal. A meeting was also organised by WHO and the MoH to meet with the core
members of the Nationa
l Commission for Macroeconomics and Health, with whom the first
findings of the mission and the Plan of Action for the preparatory phase were discussed. At
the end of the misson a debriefing took place at the MoH, where the consultant gave a power
point pr
esentation, which was provided to WHO in Geneva and Nepal for further
dissemination.

MEH/Nepal/Situational Analysis,
April 2004

13

Nepal Context
2

Physical



Nepal is a landlocked country. The Himalaya mountain range in the north is bordering
China (Tibet actually) and a flat jungle belt (terai) in the

south is bordering India, with
hills in the middle. The country is very fragmented by mountains and rivers.



Due to its physical isolation, Nepal only opened to the outside world in 1951.



Even today a large part of the country remains inaccessible by mod
ern transport and
communications.



The environment is very fragile and an increasing population causes deforestation,
erosion and pollution problems. Each year the summer rains cause landslides. Nepal is
also earthquake prone.


Demographic



Nepal has 24.2 m
illion inhabitants (estimate 2003)



1,5 million of which live in the Kathmandu valley (23x12 km)



1.8 million (7.4%) live in the mountains, which make up 35% of the land area



10.8 million (44.6%) live in the hills, which make up 42% of the land area



11.6 mil
lion (48%) live in the terai, which make up 23% of the land area



14 % of the population lives in urban and 86% in rural areas



Population growth is presently 2.27%



TFR is 4.1 (DoHS 2001)


Administrative

5 development regions divided into 14 zones and 75 dis
tricts:

Eastern Region has 16 districts and a population of 5.7 million (23.6%)

Central Region has 19 districts and a population of 8.2 million (33.9%)

Western Region has 16 districts and a population of 4.9 million (20.2%)

Mid
-
Western Region has 15 dist
ricts and a population of 3.2 million (13.2%)

Far Western Region has 9 districts and a population of 2.2 million (9.1%)


Districts are divided into total of 205 electoral constituencies and 3,995 Village Development
Committees (VDC) and 58 municipalities.
Each VDC has 9 wards and each ward comprises
3
-
5 villages.


District Development Committees (DDC) are responsible for the political and economic
development of their respective districts. The Local Self Governance Act 1999, empowers the
DDC to function as

an integrated development institution in line with the national
decentralization policy. Furthermore, this act delegates development authority to the
respective municipalities and villages.



Political



Nepal was never colonised



It is constitutional hindu
monarchy



Nepal has a multiparty bicameral parliamentary democracy since 1990: a Lower
House with 205 members and an Upper House with 60 members. The country is very
politically unstable. In October 2002 the King dismissed parliament and later
government, a
nd appointed a Prime Minister. At present 5 ministers run 20 ministries.



2

Nepal, Landenreeks. KIT Publishers 2002, Annual Report MoH 2001/2002, PER Health Sector MoH
2003

MEH/Nepal/Situational Analysis,
April 2004

14

During the consultants’s stay in December 2003 fierce student protests broke out,
supported by the 6
-
7 major political parties. They demanded the King’s decision be
repealed, democrac
y be restored and dialogue with the Maoist groups, which were
broken off in August 2003, be resumed.



Because of the
aphno manche

system every change of government means replacement
of a large number of government officials, not only at the central level,
but also at
lower levels, causing severe problems with administrative capacity and lack of
continuity in policies and governance in general, resulting in inefficiency.



The country also suffers from a high level of corruption. Payment of
baksheesh

is
stand
ard practice.



An increasingly large percentage of civil servants and politicians are brahmins or
chetris (98% of civil servants). In December 2003 a proposal was filed stipulating that
at least 20% of seats in parliament should be reserved for women, 10%
for dalits (the
lowest caste) and 5% for ethnic groups.


Economical



One of the poorest countries in the world and the poorest on the Eurasian continent
with GDP of around $250 p/c (2003) or PPP $1310 (2001)



The currency is the Nepalese Rupee. In December
2003 US$1 buys around 73
Nepalese Rupees. Inflation has been 8
-
10% per year over recent years
3
.



Almost entirely economically dependent on other countries, mainly India.



80% of population works in agriculture, being the largest economic sector, followed
by

small
-
scale industry.



Unemployment causes many people to find work abroad, sending home 1 billion euro
a year, more than tourism, foreign aid and export together bring into the economy.



Large inequalities: 13% of the population earns 50% of the national

income. Average
income in Kathmandu is 4
-
5 times that in the rural areas.



Only 15% of households is connected to the electricity grid.



80% of the population has access to safe water (UNDP 2001)



Nepal has entered the World Trade Organisation in 2003.


Soc
ial



Human development index 2001: 0.499



Gender Development Index 2001: 0.479



Very patriarchal, hierarchical society, linked to the caste system, strong religious and
family traditions and a feudal structure. The Nepalese caste system is made up of
some 10
0 different castes. People from the same caste/family favour each other
(
aphno manche
) and citizens often show their loyalty to influential persons by visiting
them, in the hope to be rewarded at some point in the future (
chakari
).



Women are supposed to be

and often are subordinate to men, have to work longer
hours, doing heavy physical labour. Abortion was illegal and punished with life
-
long
imprisonment until abortion for medical reasons was legalised in 2002. Most
marriages are still arranged.



The moder
n world has definitely arrived in Kathmandu, but outside the capital many
people still live without running water, electricity, telephone, radio and tv.



The country has one official language: Nepali, the language of the brahmin and chetri
castes, but Nepa
l harbours 20 languages and many more dialects.




3

Oral information MoF Shyam Nidhi Tiwari

MEH/Nepal/Situational Analysis,
April 2004

15



Civil society is well developed. There are many indigenous and international NGOs, a
diverse and free press and human rights organisations, many of them also externally
funded.


Religion



Hindu 60%, Buddhist

30% with animist, muslim and christian making up the
remaining 10%



So far little or no religious unrest.


Ethnic



Two main population groups can be distinguished: Mongol (35%) and Indo
-
Aryan
(65%).



The Mongols live mainly in the north, speak Tibeto
-
Birmese

languages and are mainly
buddhist



The Indo
-
Aryan population live in the middle belt and the south, speak a Sanskrit
language and are hindu.



Both brahmins and chetris belong to the hindu Indo
-
Aryan population groups.



These two broad ethnic groups can be
subdivided into some 60 different ethnic and
caste groups each with their own language, culture and religious rituals. Some
population groups contain different castes and ethnicities.


Education



Adult illiteracy is very high, with almost 40% of men and 75
% of women not able to
read or write (UNDP 2003).



Only 2/3 of children go to primary school, of the dalits only 1/3.



In the budget speech for FY 2003/2004 the Minister of Finance announced that all the
children from Dalit families admitted in primary scho
ols will be provided with
scholarships. An amount of Rs. 81.7 million has been earmarked for this purpose.


Poverty



Poverty is widespread. An estimated 38% of the population live below the poverty line
($1 a day), in rural areas 41.4%, in urban 23.9%, in
the mountains 56%, among dalits
90% (partly UNDP 2001).



This percentage has not changed much during the last 25 years, meaning that the
absolute number of people living in poverty has increased.



The target for the MDGs is 17%.



Income poverty is more co
mmon in rural areas, where 90% of the poor live, in the
mid
-
western and far western development regions, among mountain villagers, women,
certain ethnic groups, called Janajati, and the lowest castes (Dalits). While the poverty
rate for Kathmandu is 4%, it

is as high as 72% in the remote areas of the Mid
-
Western
and Far
-
Western hills and mountain regions. Poverty is most intense/severe among the
mountain populations.



Similar disparities exist for literacy rates, life expectancy, percentage op population
ha
ving access to drinking water and the Human Development Index (HDI) in general.



Breakdowns are generally given by ecological area, urban/rural, and development
region. Whether they are also available by district, needs to be checked.



Factors contributing

to persistent poverty, mentioned in the PRSP, are limited resource
endowment,
ill health
, rugged terrain, isolation, a high
population growth
rate of
2.2% per annum.



Economic growth over the past decennium has largely bypassed the rural poor.

MEH/Nepal/Situational Analysis,
April 2004

16


Security



The country is torn by a conflict between Maoist
groups and the government security forces, which
started in February 1996 and escalated in November
2001, after several months of peace talks broke down.



The Maoist goal is to replace the present polity wit
h a
“people’s republic” and finds its justification in the
deep poverty and social exclusion of large parts of the
population, grievances about poor governance,
corruption, lack of land reform, caste discrimination,
control by economic and political elites

etc.
4




A cease
-
fire was agreed in January 2003, and peace
talks began once more, but were broken off again in
August 2003.



The Maoist groups are in control of most remote hilly
areas, particularly in the western part of the country.
In those areas they h
ave developed parallel or
replacement structures, following government
withdrawal. In Rukum district they have held
elections, established a people’s court and tax offices
5
.



Their methods of gaining influence have become more
violent over time and securi
ty is seriously threatened
in many parts of the country. They impose strikes,
even in schools, organise roadblocks, abduct people
and use methods of forced protection.



Government staff cannot travel in government cars to
numerous districts.



Between Augus
t 2003 and December 2003 alone
around 500 people have been killed in the conflict.




Government finance



In his budget speech on 17 July 2003 the Minister of Finance announced that the
revised estimate of income and expenditure over the
FY 2002/2003
6

show
s a total
expenditure of Rp 84.6 billion, 67% on the regular and 33% on the development
budget. Recurrent costs made up 75% of the expenditures, capital costs 25%. Of total
expenditures Rp 9.5 billion or 11% was used for repayment of principal debts.



The
sources of financing consisted of Rp 55.3 billion from domestic revenues and Rp
8.4 billion from foreign grants. The deficit of Rp 21 billion was borrowed, Rp 9 billion
from multilateral donors and Rp 12 billion from domestic sources. The
total
expenditure

translates into $48 per capita
7
. This is
19% of the estimated GDP per
capita
of $250.




4

Karki, AK (2002) A radical reform agenda for conflict resolution in Nepal, May, 2002. Cited in Collins et al
2003.

5

Philipson, L (2002) Conflict in Nepal: perspectives on the Maoist Movement, May 2002. Cite
d in Collins et al
2003.

6

Nepal’s FY runs from 16 July


15 July.

7

84.6B NR/pop24.2M/exchange rate73=$47.89

Maoists abduct over 60 teachers
in Taplejung


Over 60 teachers from Singam VDC in
Taplejung district were abducted by
armed Maoist rebels on Tuesday to
force them to participate in the
‘peoples’ orient
ed education’ campaign,
reports said.



nepalnews.com Apr 15 2004

Maoists abduct over 2,000,
abduction results in exodus

The Maoist rebels on Monday abducted
over 2,000 people from the south
-
east
part of Kanchanpur district, various
dailies Thursday said
.

According to the Nepal Samacharpatra,
the rebels abducted over 2,000 youths
and students from Tribhuvan Basti,
Parasan, Shripur, Laxmipur,
Raikbarbichuwa, Baisebichuwa,
Shankearpur, Kalika and Beldandi
VDCs in Kanchanpur district. The
rebels took them aw
ay in 28 tractor
-

trailers to unidentified locations.

With the Maoists escalating their
abduction campaign in the district,
5,000 youths from the district have
started fleeing their villages to
neighboring Indian towns, Rajdhani
daily said Thursday.


nepal
news.com April 08 2004


MEH/Nepal/Situational Analysis,
April 2004

17



The estimate of government revenue for
FY 2003/2004

is 62.2 billion on a total
budget of Rp 102.4 billion.



The main sources of domestic revenue are indirect (61%) and
direct taxes (17%).The
main earners from indirect taxes are import duties,VAT and excise duties; the main
earner from direct taxes is corporate income tax. Revenue from excise duty on
cigarettes is Rp 2.3 billion, from alcohol Rp 2.5 billion, together goo
d for 7.7% of
domestic revenue and 4.7% of the total budget. Remuneration tax brings in Rp 1.3
billion only (2.1% of domestic revenue and 1.25 % of total budget). Foreign grants are
expected to increase to Rp 15.5 billion (15.1% of the resource envelop), m
ainly due to
a doubling of grants by bilateral donors. The foreseen deficit of Rp 24.6 billion is
expected to be financed by foreign and domestic loans on a 50/50 basis.



The amount of foreign grants only includes the funds that go through the MoF (the so
-
called Red Book). The real amount of external funds is much higher, as a substantial
percentage of foreign aid goes directly to the other ministries, the districts, or through
NGOs.



Personal income tax is progressive, with the first 80,000 Rupees per year

for a single
and the first 100,000 Rupees for a couple being exempt (0%). The next 75,000 Rupees
are taxed at 15%, any higher income than 175,000 is taxed at 25%. Only people in
formal employment with government, larger companies or organisations pay inco
me
tax.



VAT is 10% for all items that are taxed, but many items are VAT exempt, such as
unprocessed food, lifestock and basic commodities such as oil, water, kerosine, salt
etc.



Domestic revenue is largely used to meet regular, recurrent expenditure (53%
of the
recurrent budget is for salaries), while development expenditure is increasingly
dependent on domestic borrowings and foreign assistance. Of the 41.8 billion
development budget for FY 2003/2004 75% is destined to be spent at the central level
and 25
% will go to the districts. The development budget for the poor Mid
-
and Far
-
Western regions has been increased by 34% to 6.5 billion Rupees.



17.1% of the total budget (24% of the recurrent budget) will be used for domestic and
external debt servicing. Nep
al does not qualify for the Heavily Indebted Poor
Countries (HINPC) scheme, so no savings from debt relief are foreseen.



Compared to the Rp 15.5 billion budget for the education sector, the
2003/2004
budget for the health sector

is small with
Rp 5.2 billio
n, which is 5.1% of the total
government budget, $2,94 per capita or 1,18% of GDP
. Of this amount Rp 3.2
billion is for development expenditure.

MEH/Nepal/Situational Analysis,
April 2004

18

The Health Sector

Ministry of Health

The MoH has a central section and three Departments: Department of Healt
h Services
(DoHS), Department of Ayurveda (traditional medicine), and Department of Drug
Administration. The central MoH is responsible for policy making, planning, financing,
international cooperation, human resources, monitoring and evaluation, as well
as for the
central and zonal hospitals. According to the NHSP
-
IP in practice senior officials spend most
of their time in personnel management and non
-
policy issues. The policy and planning
division of the MoH has 9 staff, who on average have been there 2
years and their capacity is
inadequate. The Health Economics and Financing Unit (HEFU), supported by DFID, is
headed by an economist from the MoF and has (among other staff) two health economists
with a degree from Chulalongkorn. The MoH, like all ministri
es, suffers from the frequent
changes in government, frequent appointment of new leaders and/or transfer of staff.


The DoHS is responsible for the provision of all health services at the district level and below
and produces the Annual Report.


Regional

Health Directors are responsible for technical backstopping as well as programme
supervision. Their role seems to become less clear under the decentralisation process.


At the district level and below, DDCs and VDCs are functionally responsible for the d
elivery
of health services.


Policies, strategies and plans

Over the years a number of policy documents and plans have been produced. It seems that
more or less simultaneously two sets of documents were developed, one government driven
and related to the
5
-
year development plan cycle, the other EDP driven. There are clear
interlinkages between the two sets of documents, although there are also quite some
differences. It seems that the detailed work done by the MoH jointly with the EDPs has to
some extent i
nformed the development of the documents for the Tenth 5
-
year Plan. Officially
the MoH is bound by the Tenth Development Plan and its MTEF.


Below a schematic overview of production of all the main papers is given on a timeline. The
shaded ones relate to
the Tenth Plan. Annex 1 contains a summary of the ones, that appear on
the MoH website (downloaded on 3 January 2004).


Timeline

Document





Main agencies involved


1991


National Health Policy





MoH

<><>

1999


Second Long Term Health Plan 1997
-
2017



MoH/NPC/EDPs/private/NGOs


2000


Strategic Analysis





MoH/EDPs



Operational issues and prioritization of resources


WB



Medium Term Strategic Plan




MoH/EDPs


2001


none


2002


Medium Term Expenditure Programme



MoH/NPC

MEH/Nepal/Situational Analysis,
April 2004

19



Medium Term Expenditure Fra
mework Health


MoH/NPC



Nepal Health Sector Strategy




MoH/EDPs


2003


Tenth Plan






NPC/Sectoral ministries



MTEF







NPC/MoF



Nepal Health Sector Program Implement Plan 2003
-
2007

MoH/EDPs



PRSP







NPC



Public Expenditure Review of the health

sector


MoH (HEFU)



Joint Staff Assessment PRSP




WB/IMF



Below each of these documents is briefly described; in particular those features that have a
specific bearing on the Macroeconomics and Health work are highlighted.


National Health Policy 1991

In 1991 a National Health Policy was adopted. It’s primary objective was to
extend the PHC
system to the rural population
. In order to bring basic preventive, promotive and curative
health services to the whole population the plan states that:



Sub Health P
osts will be established in all Village Development Committees and
mobile teams would provide specialist services to remote areas.



Priority will be given to reduction of infant and child mortality.



Hospital capacity will be based on population and patien
t loads and hospitals will be
integrated into District Health Offices. A referral system will be developed.



Training institutions will be strengthened in order to deliver competent staff for all
health facilities.



Alternative ways to mobilise more resour
ces will be explored, such as insurance, user
charges and revolving drug schemes



Community participation will be sought and activities will be coordinated with NGOs,
private sector and other government sectors



Planning and management will be decentralised
to the district level


Second Long Term Health Plan 1997
-
2017

The SLTHP, published in
August 1999
, is to serve as a resource document for the preparation
of successive five
-
year development plans and annual plans and will be periodically reviewed
on the ba
sis of evaluations. The SLTHP focuses on improving the health status of ‘
those
whose health needs often are not met: the most vulnerable groups, women and children, the
rural population, the poor, the underprivileged and the marginalized

8
. Disparities in
health
status would be addressed, assuring equitable access for the poor and vulnerable groups, with
full community participation and gender sensitivity. Government and EDP funding should
focus on areas of greatest need.


Given resource constraints priori
ties have been set. Based on the demographic and disease
profile (likely from the burden of disease study 1997) a package of Essential Health Care
Services will be delivered at the district level and below before HMG and donor resources are
diverted to pro
vision of tertiary care. The SLTHP specifically mentions that
resources should
be redirected from high
-
cost low
-
impact interventions to the low
-
cost high
-
impact
EHCS

, while also improving effectiveness and efficiency.





8

Depending somewhat on the definitions of some of these terms, these groups combined could easily cover 90%
of the population.

MEH/Nepal/Situational Analysis,
April 2004

20

With regard to health financing, th
e Plan states that a
‘safety net’

will be maintained to
ensure that the needy and underpriviliged populations are not deprived of necessary health
care because of inability to pay. Information on central and district level expenditures will be
made more tr
ansparent and base
-
line
data on public budgets, private expenditures and
cost
-
sharing will be collected at the district level
.


HMG intends to
decentralise
(devolve


MP) responsibility and budget for PHC services to
the District Development Committee, wh
ich will also be allowed to generate and retain local
resources. Capacity for planning, management, supervision, monitoring and evaluation will be
strengthened.


The SLTHP includes targets for major outcome indicators (see page 2 and 3 of Annex 1). As
ou
tput target the Plan wants the EHCS at the District to be available to 90% of the population
living within 30 minutes travel time.


The SLTHP includes key issues and policy options for the following areas: burden of disease,
EHCS at the district, HCS beyo
nd the district, health service delivery system, human
resources for health, health financing, inter
-

and intrasectoral collaboration and
decentralisation, management and organisational constraints, quality assurance, essential
national health research, as

well as the changing trend in communicable and non
-
communicable diseases. It also mentions a number of emerging health issues that have not
been dealt with and need to be addressed in the upcoming Five
-
year development plans.


In September 1999 the Cabin
et approved the EHCS package as part of its approval of the
second SLTHP (see page 5 of Annex 1).


The SLTHP describes many interesting policy options, but only a few of these refer
specifically to improving access to health care services for the poor, alt
hough the overall
objective of the Plan is to improve the health status of the needy. There is for instance no
mention of the need to expand or upgrade the number of facilities in rural and remote areas.
As usual targets are national averages. In the conte
xt of the objectives it would also be more
meaningful to have specific targets and indicators for the vulnerable, women, children, rural
populations and specifically for the poor. To reflect this the health management information
system would need to be ad
apted. It would be helpful to disaggregate information on health
status and utilisation by gender and income quintile for example.


Strategic Analysis to operationalise the SLTHP

In the fall of 1999, immediately after the SLTHP was published, HMG of Nepal

and the EDPs
together made a strategic analysis of the health sector, which was published in
May 2000
. It
replaced individual EDP reviews. Its main purpose was to map out the action needed to
develop capacity in order to improve delivery of health service
s. It would also serve as input
to the 10
th

Five
-
year Development Plan. Four technical working groups reviewed the
institutional context and relationships with EDPs, the capacity to turn policies into plans, the
capacity to deliver the EHCS package, the ca
pacity to regulate the private sector, and the
capacity to meet the needs of the poor.


The commitment to equity and meeting the health needs of the poor regardless of ability to
pay is repeated. The analysis mentions that there is lack of information on
the extent of
inequity in provision and access to services, as well as on the way in which policies and
management systems affect equity. There are no guidelines with respect to exemption of user
MEH/Nepal/Situational Analysis,
April 2004

21

fees for the poor. It is noted that given the expected futur
e level of finance the identified
EHCS will need to be further prioritised and choices will have to be made as to which
population groups will be supported by government to receive these services. It is further
noted that, contrary to agreed policy, more f
unds are flowing towards secondary and tertiary
level hospital services, while the share going to PHC fell from 77% in 91/92 to 57% in 97/98.
Due to lack of staff, drugs, equipment and maintenance, as well as poor supervision, public
facilities have lower
utilisation rates than private and NGO ones. Overall government
spending on health remains low and there is considerable donor dependence.


The Strategic Analysis recommends the following actions that could specifically benefit the
poor:



Encourage the pri
vate sector and NGOs to provide EHCS and consider contracting
out.



Advocate for additional resources from HMG



Develop alternative sources of financing



Increase community participation



Develop guidelines with respect to user fees (exemption rules)



Strengthe
n training institutes and identify future need for health workers



Link (integrated) budgets to priorities, performance and outcomes



Move towards a SWAp in order to use funds more efficiently and decrease transaction
costs, starting with a medium term healt
h strategy and financing framework that all
stakeholders will agree to



Establish a monitoring system that will assess the impact of the health strategy on the
health status of the poor



WB study
-

Nepal: operational issues and prioritization of resources
in the health sector

A month later, in June 2000, the World Bank issues its own, often cited, study on the health
sector. It was based on several studies and workshops done between 1996 and 1999, in
conjunction with the formulation of the SLTHP. The report

analyses the burden of disease in
Nepal, investigates whether allocation of resources corresponds to the main health problems
and what the main problems affecting the health delivery system are. The key findings of the
report, all of which are consistent
with the priorities of Nepal’s Second Long
-
Term Health
Plan, include the following:



Expected population growth of 60% in 20 years will mean that a corresponding
increase in health services will be necessary just to sustain the current level of
inadequate s
ervices.



Regional disparities in health indicators and health care are large (e.g. life expectancy
ranges from 37 to 74 years).



Nepal’s burden of disease will remain dominated by infectious diseases and maternal,
perinatal, and nutrition
-
related disorders
during the next decade. These disorders
represent 69% of the BoD in Nepal. Degenerative and non
-
communicable diseases
account for 23% and injuries and accidents for 9%. Children <5 bear 51% of the BoD.



Targeted interventions should be aimed at disadvanta
ged areas and the poor.



Interventions outside the health sector
-
particularly efforts aimed at improving water,
sanitation, and public hygiene
-
would have a strong influence on the burden of disease,
in particular of the poor.



Current public sector allocatio
ns for the health sector are low and poorly allocated.



Quality
-
enhancing nonsalary recurrent budget allocations are woefully inadequate,
and resources will remain constrained for years to come.

MEH/Nepal/Situational Analysis,
April 2004

22



Institutional weaknesses and ineffective programme manageme
nt are at the root of
poor service delivery. Capacity for strategic planning, policy development, resource
mobilisation and coordination is very limited. Absorption capacity is therefor also low.



The private and NGO sectors are active, unregulated and the

care they provide is often
poor quality.


Recommendations suggest an increased political commitment, focusing on infectious
diseases, maternal, and prenatal ailments, and nutrition deficiencies. In addition, institutional
capacity should be developed, an
d better health care systems ensured through public
-
private
partnerships. Priorities should be established through careful planning, appropriate
management, and financial availability. Detailed recommendations include limiting the role of
the public sector

to basic preventive and essential clinical care, expand public infrastructure in
underserved areas and decentralise facility management.


Medium Term Strategic Plan (MTSP)

The follow
-
up of the strategic analysis was the Medium Term Strategic Plan, a logi
cal
framework that was developed later in 2000 to provide operational support for the SLTHP.
More specifically, the MTSP provided the strategic framework for developing the health
component of the Tenth Five Year Plan (2002
-
2007). The
objectives

for the me
dium term
(still operational) are:




To develop an effective health system for the provision of affordable and accessible
Essential Health Care Services (EHCS)



To promote a public
-
private
-
NGO partnership for the provision of healthcare



To decentralise the h
ealth system and ensure participatory approaches at all levels



To improve the quality of health care provided through the public/private/NGO
partnership by total quality management of human, financial, and physical resources.


For each objective several ou
tputs have been defined, whereby especially the outputs for the
first objective refer to equity and reaching the poor. It mentions improved access to and
utilisation of health services by the poor and vulnerable, as well as a safety net for providing
them
with access to services “beyond the EHCS”.



Medium Term Expenditure Programme (MTEP)

Probably in the first half of 2002 the MoH drafted an MTEP (written by a local consultant) to
operationalise the first three years of the Tenth 5
-
year Plan under developm
ent by the
National Planing Commission (NPC). It clearly draws on the Strategic Analysis and the
Medium Term Strategic Plan and concisely sums up the vision, mission, policies, strategies
and lists the 4 objectives, 8 outputs and identifies a number of act
ivities per output.
Separately17 key quantitative targets are listed. It is not clear how they relate to the outputs
and activities. The document also gives an overview of priority levels for each MoH
programme and organisational units and includes a cost
estimate for 3 years per the same.


Programmes and organisational units listed as Priority 1:

1.

Child Health: regular immnization (excl. Hep B); national immunization day; CDD;
Vit. A and micronutrient supplementation;

2.

Family Planning; Safe Motherhood; RH;

3.

Epidemiology and Disease Control: communicable disease; emergency preparedness
and disaster management;

4.

TB control programme

MEH/Nepal/Situational Analysis,
April 2004

23

5.

Leprosy Control Programme

6.

HIV/AIDS/STD

7.

Hospitals: Teku, Bir, Kanti Children’s, Maternity and Bhaktapur

8.

All district hospitals; PHC
Centers; HCs; District Public Health Offices; Health Posts;
SHPs

9.

Organisation: MIS; NHTC; Medical & Inst. Supplies; Health Laboratory; Community
Drugs; Health Insurance; Institutional Capacity Building in relation to
Decentralisation; Health Poverty Allevi
ation Fund (PAF)


The cost estimate was prepared expecting a 20% reduction in the health budget for 2002/2003
(Rps 3,802 billion as compared with the previous year 4,581), while for the 2 consecutive
years an increment of 10% each is foreseen. This was pro
bably based on advance information
from the MoF about the available resources.



Medium Term Expenditure Framework for Health (MTEF
-
H)

This document was prepared by the MoH (5
th

draft in July 2002) for the first 3 years of the
10
th

Plan as input into the
Tenth Plan. The MTEF
-
H was based on the above MTEP, but used
higher budget estimates (2002/2003 allocation 4,872 billion). The MTEF
-
H reiterates the
goal, vision, mission, policies, strategies and key reforms of earlier documents. The MTEF
-
H
provides somew
hat lower, probably more realistic targets for the 17 key indicators, with the
2002 status as a baseline. It also adjusts the priority levels, based upon burden of disease,
implementation capacity, equity considerations and on whether the programme is dire
cted at
the poor and vulnerable. A number of programmes and all hospitals are prioritised down to
level 2. On the other hand some programmes are included in total, while the MTEP specified
certain components.


The MTEF
-
H lists the following programmes as
Priority 1:

1.

National TB Center and National TB Programme

2.

AIDS and STD Center

3.

Population and Family Health

4.

Family Planing and MCH Programme

5.

National Immunization Programme

6.

CDD and ARI

7.

Nutrition Progamme

8.

Epidemiology; Malaria and kala
-
azar; Natural Disaster
management

9.

Leprosy control

10.

Drug supply

11.

HMIS

12.

NHEICC

13.

Vector Borne Disease Research Training and Control

14.

Community Drug and Health Insurance


A Policy Matrix gives an overview of programmatic activities, indicators and targets for each
of the 13 (rather th
an 8) outputs related to the 4 objectives.


The MTEF gives 3
-
year and 5
-
year budget estimates broken down by regular and
development budget (both further divided into recurrent and capital expenditure) and by
priority level. In the following tables the b
reakdown is shown for the first 3 years.


MEH/Nepal/Situational Analysis,
April 2004

24

Budget breakdown by priority level in percentages of total health sector budget

Priority level

Expenditure 2001/2002

Budget estimate 2002/2005

1
-
highest

48

57.6

2
-
medium


7

27.2

3
-
low

45

15.3


Interestingly t
hese drastic changes in breakdown are not gradual, but foreseen for the first
year 2002/2003 immediately, which seems very unrealistic, as many hospital costs are
included in the 3
rd

priority level, and they are notoriously difficult to downscale. It will
soon
be known in how far the MoH succeeded in this.


The MTEF also gives a budget breakdown by objective and as can be seen below almost ¾ of
the budget is reserved for the provision of the EHCS.


Budget breakdown by objective in percentages of total healt
h sector budget

Objectives

Budget estimate 2002/2005

Provision of EHCS

72.6

Promote PPP


9.2

Decentralisation/participation


9.1

Improve Quality of services


9.1


The revised expenditure for the health sector 2001/2002 as mentioned in the MTEF
-
H w
as
5.195 billion Rupees. The allocation for 2002/2003 is less: 4.872 billion. For the forecast for
2003/2004 and 2004/2005 the regular budget was increased with 3% per annum and the
development budget with 10%. The target in the MTEF for health sector expe
nditure as a
percentage of total HMG budget is 6.5, while in 2003/2004 the real MoF budget for the health
sector was only 5.1% of the total government budget.


As said this MTEF
-
H served as input into the Tenth 5
-
year Plan, which is the operational
docume
nt that the MoH is bound to and includes the final budget. See below.



Health Sector Strategy (HSS)

On the basis of the joint Strategic Analysis of 1999, HMG, NGO and private sectors and
EDPs in the mean time continue to work together in a series of works
hops and consultations
led by the Health Sector Reform Committee. In August 2002 the Health Sector Strategy is
finalised. It (again) provides a concise situational analysis, lists 6 key issues with their
strategic implications and goes on to formulate 3 p
rogramme outputs and 5 Sector
Management outputs, based on the previously agreed 4 objectives. It announces that a costed
sector plan will be drawn up to deliver this strategy, covering the Tenth 5
-
year Plan period
and taking account of its MTEF, which is
being developed at the same time. Although the
latter gives the impression that the costed plan will be based on the available resource
envelop, interestingly it is mentioned that
“it will identify the additional financial and
technical support needed for
its implementation. Negotiations can then take place with EDPs
as to how that support can be made available”
.



Tenth 5
-
year Development Plan

This Plan of over 600 pages covers the years from mid
-
2002
-
mid 2007 and was approved by
the Cabinet in Feb 2003.

It took 2 years to develop. During this process it became clear that