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How pandemic ate up a huge chunk of budget

Nepal spent over Rs56 billion in health care, social safety and welfare and economic recovery to address the crisis caused by the Covid-19 pandemic between March 2020 and July 2021, a government report says.

Of the Rs90.69 billion allocated for the health sector for the fiscal year 2020-21, the government spent nearly half—Rs42.53 billion—to combat Covid-19 and address its impact on people’s livelihoods and the economy.

In the fiscal year 2019-20, the government spent Rs13.14 billion to control the pandemic and its impact, according to the Third Semi-Annual Progress Report of the Covid-19 Active Response and Expenditure Support (CARES) programme of the Nepal government. The figure does not include the expenditure made for purchasing Covid-19 vaccines, direct funding from the donor agencies and the expenses made by the non-governmental organisations to control the pandemic.

“The figure shows that the government has spent a significant amount to address the Covid-19 challenges, given the total budget allocation for the entire health sector covering several headings,” said former finance secretary Rameshore Khanal.

The massive channelisation of funds to combat Covid-19 shows how poor countries like Nepal get badly affected in the times of a pandemic.

In order to cover the cost of Covid-19, the government was forced to cut budget elsewhere within the health sector, even though the overall health budget soared.

For example, the budget allocated for Kanti Hospital decreased to Rs336.4 million in the current fiscal year 2021-22 from Rs337.9 million in the fiscal year 2019-20 whose second half was marred by Covid-19, according to a detailed breakdown of budgetary allocation included in the Red Book published by the Finance Ministry.

The budget for BP Koirala Memorial Cancer Hospital was reduced to Rs236.7 million in the current fiscal from Rs363.9 million in the fiscal year 2019-20. Likewise, the budget allocated for Manmohan Cardiothoracic Vascular and Transplant Centre was reduced to Rs251.8 million from Rs524 million while funding for Shahid Gangalal National Heart Centre was brought down to Rs482.9 million from Rs571 million.

Even the allocation for Bir Hospital was reduced to Rs1.23 billion in the fiscal year 2021-22 from Rs1.87 billion in the fiscal year 2019-20, while the budget for Paropakar Maternity and Women’s Hospital was decreased to Rs415.7 million from Rs436.5 million. These are key government hospitals catering to the public.

Budget allocations for these hospitals were reduced when the overall health budget surged to Rs122.77 billion in the current fiscal year from Rs68.78 billion two fiscal years prior in 2019-20.

Public health experts say that Covid-19 affected other areas of public health in two ways. First, people failed to access health services due to travel restrictions and, second, the budget allocation for non-Covid health care was reduced compared to the past.

Dr Aruna Uprety, a public health expert, told the Post that the Covid-19 pandemic overshadowed other key issues like tuberculosis, malnutrition, women’s health, maternity and child care.

“People have started talking about these issues only now that the number of Covid-19 cases has declined,” she said.

The Covid-19 scare, however, continues especially in the wake of the emergence of a new iteration of the coronavirus that has put the world on tenterhooks. The Omicron variant, according to the World Health Organisation, has now spread to around 57 countries.

The UN health agency, which has warned of high infection risk around the globe, has said that certain features of Omicron, including its global spread and large number of mutations, suggest it could have a major impact on the course of the pandemic.

“There is also some evidence that Omicron causes milder disease than Delta, but again, it’s still too early to be definitive,” WHO Director General Dr Tedros Adhanom Ghebreyesus said in a statement on December 8. “Any complacency now will cost lives.”

Nepal reported two Omicron cases on December 6, but they have made successful recoveries. Doctors, however, say there is a need to maintain caution and step up surveillance.

While focusing on fighting the coronavirus, authorities must also pay attention to other health issues, according to public health experts.

As the country’s efforts were focussed on controlling Covid-19, at least seven people, including four minors, died due to cholera in Kapilvastu in October.

“This shows a lack of attention to other sectors of public health at the expense of the Covid-19 pandemic,” said Uprety.

She said that reduction in budget in certain areas of the health sector may have a profound impact on procurement of goods and services for other pressing public health issues and diseases.

Officials and experts admit that Nepal faces challenges when it comes to addressing other public health issues but say that the government had no option than to spend heavily to fight the coronavirus that had brought upon an unprecedented crisis.

Covid-19 control was necessary to save lives as well as to save the economy from falling into the brink, they said.

The economy witnessed a negative growth of 2.1 percent in the fiscal year 2019-20 and was expected to grow by just 4 percent in the last fiscal year 2020-21.

“These spendings obviously had a role in improving the Covid-19 situation and recovering the economy. But the only concern is the quality of spending or how transparently the government spent the money,” said Khanal.

Earlier this year, the Office of Auditor General, in its special audit report on Covid-19 management, raised the question about the government’s poor preparations for Covid-19 and the quality of spending, citing a number of scandals.

The report has pointed out, among other things, the government’s delayed preparations for the evolving crisis while mentioning many shortcomings in the management of quarantine and isolation centres, management of people entering the country and anomalies in the procurement of medical goods.

The government’s early efforts to procure medical goods were also mired in controversy after the contract was awarded to Omni Business Corporate Limited.

Procurement without competition, procurement from non-registered entities and excessive differences in prices of medical items procured by different local governments were among the anomalies highlighted by the report.

“The government has showed a huge amount of spending but I am somewhat astonished with the figure, given that the country heavily relied on donated medical equipment particularly during the second wave of the pandemic,” Dr Binjwala Shrestha, assistant professor at the Department of Community Medicine at the Institute of Medicine, Tribhuvan University, told the Post.

The government’s spending in the health sector was on the downward spiral in the recent years before Covid-19 hit the country. In fact, the government’s spending on health and education had grown during the conflict period when there was no proper environment for carrying out infrastructure development.

The government’s priority shifted to infrastructure after the conflict was over and the spending in the health sector was reduced.

A new report of the World Bank, ‘Fiscal Policy for Sustainable Development: Nepal Public Expenditure Review’, has also pointed out this trend before the pandemic hit the country.

Federal spending on the health sector fell to 1.2 percent of gross domestic product (GDP) in the fiscal year 2018-19 from 3.4 percent in the fiscal year 2014-15. Part of the reason behind this drop in health spending by the federal government is the devolution of responsibilities to the provincial and local governments.

But according to the report, the subnational governments—provincial and local—have only partially compensated for the federal reduction in health spending. For example, local governments’ spending in the health sector stood at just 0.5 percent of the GDP in the fiscal year 2018-19 and provinces spent just 0.1 percent of the GDP in the fiscal year 2018-19.

Krishna Prasad Paudel, spokesperson for the Health Ministry, said Covid-19 forced the government to improve the health infrastructure, which was a largely neglected sector.

“When the pandemic hit the country, we had a single lab to test for Covid-19. Now, PCR tests are being conducted in over 100 labs and 60 of them are government owned,” he said. “I consider the spending made in the health infrastructure in the last two years an investment.”

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