WHO/SDE/CMH/04.10

Macroeconomics and Health Nepal

Situational analysis

Maria Paalman[1]

April 2004

World Health Organization

Table of contents

Acronyms

Executive summary

Introduction

Nepal Context

The Health Sector

Poverty and Health

External Development Partners

Macroeconomics and Health

Conclusion and recommendations

Macroeconomics and Health

Assignment

Nepal Context

Physical

Demographic

Administrative

Political

Economical

Social

Religion

Ethnic

Education

Poverty

Security

Government finance

The Health Sector

Ministry of Health

Policies, strategies and plans

National Health Policy 1991

Second Long Term Health Plan 1997-2017

Strategic Analysis to operationalise the SLTHP

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

Medium Term Strategic Plan (MTSP)

Medium Term Expenditure Programme (MTEP)

Medium Term Expenditure Framework for Health (MTEF-H)

Objectives

Health Sector Strategy (HSS)

Tenth 5-year Development Plan

Nepal Health Sector Programme – Implementation Plan 2003-2007 (NHSP-IP)

PRSP and JSA

Conclusion on policies, strategies and plans

Provision of health services

Public health facilities

Utilisation

Human Resources

Devolution of health services

Private sector and NGOs

Implications of Maoist insurgency

Health financing

Public Expenditure Review

Budget for 2003/2004

National Health Accounts

Taxes

User fees

Insurance

Health Management Information System

Health indicators and targets

MDGs (HSS June 2002)

Tenth Plan

MDG Progress Report

Health Sector Strategy

Essential health interventions

Conclusion

Research

Capacity

Relationship poverty – ill health

External Development Partners

Multilateral and bi-lateral donors

International NGOs

National NGOs

Macroeconomics and Health

Commitment

Commitment to poverty reduction

Commitment to Macroeconomics and Health

Commitment of external development partners

Institutional arrangements

CMH calculations for Nepal

Opportunities for scaling up/reaching the poor

Non-financial constraints to scaling up/reaching the poor

Financial constraints to scaling up/reaching the poor

Sources

Expenditures

Recommendations and conclusions

Annexes

Annex 1Policies and Plans

Annex 2Tenth Plan Chapter 24 – Health

Annex 3Nepal Health Sector Programme – Implementation Plan (2003 – 2007)

Annex 4Health and Financing paragraphs in the PRSP

Annex 5People met in Nepal during mission 16/12/03 – 06/01/04

Annex 6Bibliography MEH situational analysis Nepal

Acronyms

AamaaAamaa Milan Kendra (Mother’s Club)

AIDSAcquired Immune Deficiency Syndrome

ALOSAverage Length of Stay

ARIAcute Respiratory Infections

BNMTBritainNepal Medical Trust

BoDBurden of Disease

CBRCrude Birth Rate

CDRCrude Death Rate

CHICommunity Health Insurance

CMHCommission on Macroeconomics and Health

CMRChild Mortality Rate

CPRContraceptive Prevalence Rate

CRSNepal Contraceptive Retail Sales Company

CTCClose-to-Client

DALYDisability Adjusted Life Year

DDDiarrhoeal Disease

DDCDistrict Development Committee

DFIDDepartment of International Development (British Govt)

DHODistrict Health Office

DoHSDepartment of Health Services

DOTSDirectly Observed Treatment, Short-course

EDPExternal Development Partner

EHCSEssential Health Care Services

FPFamily Planning

FPANFamily Planning Association of Nepal

FRFertility Rate

FYFiscal Year

GDPGross Domestic Product

GTZGesellschaft für Technische Zusammenarbeit (German Development Organisation)

HDIHuman Development Index

HEFUHealth Economics and Financing Unit MoH

HIVHuman Immuno-deficiency Virus

HMGHis Majesty’s Government

HMGNHis Majesty’s Government of Nepal

HMISHealth Management Information System

HPHealth Post

HRHuman Resources

HSSHealth Sector Strategy

IECInformation, Education and Communciation

ILOInternational Labour Organisation

IMCIIntegrated Management of Childhood Illness

IMFInternational Monetary Fund

IMRInfant Mortality Rate

INFInternational Nepal Fellowship

INGOInternational Non-Governmental Organisation

JICAJapan International Cooperation Agency

KITRoyal Tropical Institute Amsterdam

LELife Expectancy

LICLow-income country

MCHWMaternal and Child health Worker

MDGsMillenium Development Goals

MEHMacroeconomics and Health

MMRMaternal Mortality Rate

MoFMinistry of Finance

MoHMinistry of Health

MSIMarie Stopes International

MTEFMedium Term Expenditure Framework

MTEF-HMedium Term Expenditure Framework – Health

MTEPMedium Term Expenditure Programme/Plan

NGONon Governmental Organisation

NHANational Health Accounts

NHEICCNational Health Education, Information and Communication Centre

NHRCNational Health Research Council

NHSP-IPNepal Health Sector Programme – Implementation Plan

NLSSNepal Living Standard Survey

NPCNational Planning Commission

NRCSNepal Red Cross Society

OROccupancy Rate

P-1/2/3Priority 1/2/3

PAFPoverty Alleviation Fund

PERPublic Expenditure Review

PHCPrimary Health Care

PP&ICPolicy, Planing and International Cooperation

PPPPurchasing Power Parity

PRSPPoverty Reduction Strategy Paper

RHReproductive Health

SDCSwiss Agency for Development and Cooperation

SHISocial health Insurance

SHPSub Health Post

SLTHPSecond Long Term Health Plan 1997-2017

STDSexually Transmitted Disease

SWApSector-wide Approach

TBTuberculosis

TBATraditional Birth Attendant

UMNUnited Mission Nepal (INGO)

UNUnited Nations

UNDPUnited Nations Development Programme

USAIDUnited States Agency for International Development

VATValue Added Tax

VDCVillage Development Committee

VHWVillage Health Worker

WBWorld Bank

WDRWorld Development Report

WHOWorld Health Organization

Executive summary

Introduction

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 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 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.

The consultant visited Nepal from 16 December 2003 to 6 January 2004 to collect information, discuss 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 and 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 development 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 2002 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 live 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% have 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 government 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 for in 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 countries: 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 Services 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 extent 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 framework 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 and 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 growth. 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 infectious 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 prioritised 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 partner 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 will be changed in such a way that the impact of the health strategy on the 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 rate. 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 Review 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 basically 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 are 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 private 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 relationship 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 Regions, 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.

External Development Partners

In Nepal 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 financial 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.