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Document of The World Bank

Report No: ICR00001500

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IDA 3980-NEP and IDA H125-NEP and IDA H368-NEP)

ON A

GRANT

IN THE AMOUNT OF SDR 27.3 MILLION (US$40.0 MILLION EQUIVALENT)

AND A

CREDIT

IN THE AMOUNT OF SDR 6.9 MILLION (US$10.0 MILLION EQUIVALENT)

AND A

GRANT (ADDITIONAL FINANCING)

IN THE AMOUNT OF SDR 31.3 MILLION

(US$50 MILLION EQUIVALENT)

TO

NEPAL

FOR A

HEALTH SECTOR PROGRAM PROJECT

January 11, 2011

Human Development Sector Unit Nepal Country Management Unit South Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective Date = January 1, 2011)

Currency Unit = Nepalese Rupees NRs 71.44 = US$1 US$ 0.01 = NRs 1

FISCAL YEAR July 16 – July 15

ABBREVIATIONS AND ACRONYMS

AAA Analytical Advisory Activity IPR Implementation Progress Report AIDS Acquired Immunodeficiency Syndrome JANS Joint Assessment of National Strategy AF Additional Financing JAR Joint Annual Review AusAID Australia Agency for International Development JFA Joint Financing Agreement AWPB Annual Work Plan and Budget MDG Millennium Development Goal CAS Country Assistance Strategy MOF Ministry of Finance DALY Disability Adjusted Life Year MOHP Ministry of Health and Population DfID Department for International Development M&E Monitoring and Evaluation DoHS Department of Health Services NGO Non-Governmental Organization EDP External Development Partner NHSP I 1st Nepal Health Sector Program FMIAP Financial Management Improvement Action Plan NHSP II 2nd Nepal Health Sector Program FMIS Financial Management Information System ODA Official Development Assistance FMR Financial Monitoring Report PDO Project Development Objective FY Fiscal Year QER Quality Enhancement Review GAAP Governance and Accountability Action Plan SWAp Sector Wide Approach HMIS Health Management Information System TA Technical Assistance HCWM Health Care Waste Management TTL Task Team Leader IDA International Development Association

Vice President: Isabel M. Guerrero

Country Director: Susan G. Goldmark

Sector Manager: Julie McLaughlin

Project Team Leader: Albertus Voetberg

ICR Team Leader: Albertus Voetberg

ICR Primary Author: Toomas Palu

NEPAL

HEALTH SECTOR PROGRAM PROJECT

CONTENTS

Datasheet 1. Project Context, Development Objectives and Design .......................................................... 12. Key Factors Affecting Implementation and Outcomes .......................................................... 43. Assessment of Outcomes .................................................................................................. 134. Assessment of Risk to Development Outcome ................................................................... 165. Assessment of Bank and Borrower Performance ................................................................ 176. Lessons Learned .............................................................................................................. 207. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ......................... 22Annex 1. Project Costs and Financing ................................................................................... 24Annex 2. Outputs by Component .......................................................................................... 25Annex 3. Economic and Financial Analysis ........................................................................... 33Annex 4. Bank Lending and Implementation Support/Supervision Processes ........................... 37Annex 5. Implementation Arrangements for Sector Wide Approach ........................................ 39Annex 6. Summary of Borrower's ICR and/or Comments on Draft ICR .................................. 41Annex 7. Comments of Cofinanciers and Other Partners/Stakeholders .................................... 56Annex 8. List of Supporting Documents ................................................................................ 57MAP Table 1. Project PDO indicators ................................................................................................... 14 Table 2. Project Cost by Component (in USD Million equivalent) .............................................. 24 Table 3. Project and Program Financing by Source ..................................................................... 24 Table 4. Project Intermediate Outputs .......................................................................................... 25 Table 5. Performance along IDA core indicators ......................................................................... 32 Table 6. Share of health in national budget (NRs million), health expenditure in GDP (%) ....... 33 Table 7. Share of EHCS from total budgetary expenditure (NRP million) .................................. 33 Table 8. Capital and recurrent share of health budget (%) ........................................................... 34 Table 9. Share of non-salary recurrent expenditure in health (NRS million, %) ......................... 34 Table 10. Expenditure of allocated health budget (NRs million) ................................................ 34 Table 11. Share of actual health sector expenditure by trimester ................................................. 35 Table 12. Select Nepal macro-economic indicators ..................................................................... 36

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A. Basic Information

Country: Nepal Project Name: Nepal Health Sector Program Project

Project ID: P040613 L/C/TF Number(s): IDA-39800,IDA-H1250,IDA-H3680

ICR Date: 01/14/2011 ICR Type: Core ICR

Lending Instrument: SIM Borrower: NEPAL

Original Total Commitment:

XDR 34.2M Disbursed Amount: XDR 64.9M

Revised Amount: XDR 64.9M

Environmental Category: B

Implementing Agencies: Ministry of Health and Population Cofinanciers and Other External Partners: Gesellschaft fuer Technische Zusammenarbeit (GTZ) JICA Swiss Development Cooperation UNICEF World Health Organization (WHO) USAID DfID Australian Agency for International Development (AusAID) UNFPA UNAIDS kfW/GDC GFATM GAVI B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 04/04/2003 Effectiveness: 02/25/2005 02/25/2005

Appraisal: 05/27/2004 Restructuring(s):

Approval: 09/09/2004 Mid-term Review: 02/01/2008 12/03/2007

Closing: 01/15/2010 07/15/2010 C. Ratings Summary C.1 Performance Rating by ICR

Outcomes: Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Satisfactory

Borrower Performance: Satisfactory

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C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings

Quality at Entry: Satisfactory Government: Satisfactory

Quality of Supervision: Moderately SatisfactoryImplementing Agency/Agencies:

Moderately Satisfactory

Overall Bank Performance:

Moderately SatisfactoryOverall Borrower Performance:

Satisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation Performance

Indicators QAG Assessments

(if any) Rating

Potential Problem Project at any time (Yes/No):

Yes Quality at Entry (QEA):

None

Problem Project at any time (Yes/No):

Yes Quality of Supervision (QSA):

None

DO rating before Closing/Inactive status:

Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

Central government administration 12 12

Compulsory health finance 1 1

Health 86 86

Sub-national government administration 1 1

Theme Code (as % of total Bank financing)

Administrative and civil service reform 16 16

Child health 17 17

Health system performance 33 33

Other communicable diseases 17 17

Population and reproductive health 17 17 E. Bank Staff

Positions At ICR At Approval

Vice President: Isabel M. Guerrero Praful C. Patel

Country Director: Susan G. Goldmark Kenichi Ohashi

Sector Manager: Julie McLaughlin Anabela Abreu

Project Team Leader: Albertus Voetberg Jagmohan S. Kang

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ICR Team Leader: Albertus Voetberg

ICR Primary Author: Toomas Palu F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) The development objective is to expand access to, and increase the use of, essential health care services, especially by underserved populations. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Contraceptive prevalence rate

Value quantitative or Qualitative)

35.4%(any method) 23.8% for low income

47% overall

48% (modern methods) 35% for low income

46.6%(modern methods) 40.6% for low income

Date achieved 12/04/2001 01/15/2010 07/15/2010 12/01/2009

Comments (incl. % achievement)

Targets for low-income groups added at the time of AF. Original target was for all methods & was achieved earlier than anticipated, revised target is for modern methods only Percentages achievement against targets: 97% modern methods & 116% low income

Indicator 2 : Proportion of normal deliveries conducted with skilled attendance Value quantitative or Qualitative)

12.9% overall 3.6 % for low income

35% overall 35% overall 10% for low income

32.6% overall 8.5% for low income

Date achieved 12/04/2001 01/15/2010 07/15/2010 12/01/2009 Comments (incl. % achievement)

Targets for low-income groups added at the time of Additional Financing Percentages achievement against targets: 93% (overall) and 85% (low income)

Indicator 3 : Proportion of children immunized against measles, diptheria, pertussis and tetanus (DPT3)


71% overall 62% for low income

85% overall

88-90% overall 80% for low income

89.8-90% overall 83% for low income

Date achieved 12/04/2001 01/15/2010 07/15/2010 12/01/2009 Comments Targets for low-income groups added at the time of Additional Financing

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(incl. % achievement)

Percentages achievement against targets: 102% (overall) and 103% (low income)

Indicator 4 : Proportion of women and men who can correctly identify one method of preventing HIV infection


F: 37.6% M: 50.8%

F: 75% M: 85%

F: 88.1% M: 81% 2009 (F) 2006(M)

Date achieved 12/04/2001 01/15/2010 12/01/2009 Comments (incl. % achievement)

Updates will only become available from the 2011 DHS data Percentages achievement against taregst: 117% for women (based on 2009 data) and 95% for men (based on 2006 data).

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target Values (from

approval documents)

Formally Revised

Target Values

Actual Value Achieved at

Completion or Target Years

Indicator 1 : Percent of public sector health facilities at the district level and below, providing a complete package of ECHS as per national standards

Value (quantitative or Qualitative)

na 75 79


Updates will be available from 2011 NLSS and DHS. Percentage achievement against target: 105%

Indicator 2 : Number of Sub Health Posts (SHPs) with decentralized management (by the Village Development Committees /Local Health Management Committees)


1114 SHPs 3129 health facilities

1433 SHPs, 34 HP, 25 PHCC in 27 districts


As per MTR recommendation this indicator was not tracked after 2007 due to absence of elected local government.

Indicator 3 : Number of districts with their own five year health plans Value (quantitative or Qualitative)

0 0 5 5

Date achieved 12/01/2004 01/15/2010 07/15/2010 07/15/2010


Added at the time of Additional Financing. MOHP provided formula-based block grants to 5 District Health Offices with 5-year plans to supplement grants to DDCs from MOLD to address local health needs as a pilot Percentage achievement against target: 100%

Indicator 4 : Number of district/zonal hospitals with autonomous management boards, and the number of district/zonal hospitals whose management will have been contracted out to the private sector and/or NGOs

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1(1) 10(5) 17(5) 29(5)

Date achieved 12/01/2004 01/15/2010 07/15/2010 12/01/2009


Autonomous management board includes both district & zonal hospitals. Number in brackets reflects no. of district hospitals contracted out to NGO management. Percentages achievement against targets: 170% (autonomous boards) & 100% (NGO or PS contracted)

Indicator 5 : Institutional capacity Assessment completed and appropriate management actions initiated as per recommendations of capacity assessment after discussions among all stakeholders


0 1 0


Indicator dropped at mid-term. The Mid-Term Review concluded that initial policy benchmarks for monitoring were not useful for monitoring actual sector management improvement.

Indicator 6 : The percentage of MOH budget allocated to EHCS Value (quantitative or Qualitative)

61 70 75.1 FY 2009/10


Percentage achievement against target: 107%

Indicator 7 : The percentage of the recurrent allocations going to non-salary costs Value (quantitative or Qualitative)

31 35 55


Percentage achievement against target: 157%

Indicator 8 : The percentage of budget allocated to MOHP that is utilized Value (quantitative or Qualitative)

69 80 85 84.9

Date achieved 12/01/2004 01/15/2010 07/15/2010 12/01/2009 Comments (incl. % achievement)

Target was revised in 2008 as original end-of-project target (80%) was achieved in 2007 at 81%. Percentage achievement against target: 99.8%

Indicator 9 : The percentage of public health facilities having no drug stock outs for more than one month in a year


0 100% Less than 25% stock outs of 10 tracer drugs

20%

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in any PHF Date achieved 12/01/2004 01/15/2010 07/15/2010 12/01/2009 Comments (incl. % achievement)

The original indicator was dropped after 2008 following announcement of free drug scheme and was replaced with tracking stock-outs of 10 tracer drugs. Percentage achievement against target: 100%

Indicator 10 : The percentage of Public Health Facilities having a full complement of staff in the assigned post


70 90 84


Sub health posts and health posts comprising paramedics and midwives from facility survey. Percentage achievement against target: 93%

G. Ratings of Project Performance in ISRs

No. Date ISR Archived

DO IP Actual

Disbursements (USD millions)

1 10/22/2004 Satisfactory Satisfactory 0.00 2 04/29/2005 Satisfactory Satisfactory 0.00 3 10/31/2005 Moderately Satisfactory Unsatisfactory 5.60

4 04/23/2006 Moderately SatisfactoryModerately

Unsatisfactory 16.76

5 08/21/2006 Moderately Satisfactory Moderately Satisfactory 16.76 6 02/27/2007 Moderately Satisfactory Moderately Satisfactory 17.66 7 08/22/2007 Moderately Satisfactory Moderately Satisfactory 33.83 8 01/09/2008 Satisfactory Satisfactory 33.83 9 07/31/2008 Satisfactory Moderately Satisfactory 46.92

10 01/18/2009 Satisfactory Moderately Satisfactory 46.92 11 07/29/2009 Satisfactory Moderately Satisfactory 64.66 12 02/24/2010 Satisfactory Satisfactory 65.39

H. Restructuring (if any) Not Applicable

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I. Disbursement Profile

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1. Project Context, Development Objectives and Design 1.1 Context at Appraisal At the time of Project design (2003/2004), Nepal was a low income country with a per capita Gross Domestic Product (GDP) of US$ 230. Half of the 23 million multi-racial, multi-religious, and divided (along cast-, tribe- and other social attributes) population was living under the poverty line. The political environment was unstable at the time because of the Maoist insurgency and suppression of democratic governance by the monarchy. Health and population indicators had been improving during the 1990s but still remained poor, aggregate improvements masking significant inequities across regions, ethnic and socio-economic groups. The Government’s fiscal space was tight; priority of health among government expenditures was low by international comparisons accounting for a mere 5% of total government expenditures, or 0.8% of GDP – of which 42% was externally financed. More than 70% of total health expenditure was private out-of-pocket with the poor often foregoing health care when in need (50% of cases). In 2002, the Government issued a Poverty Reduction Strategy Paper (PRSP) that sought to improve the delivery of social services, in particular for socially excluded groups and regions. As a related policy measure, the transfer of primary health care facilities (sub-health posts) to local management committees was initiated (consistent with the 1999 Local Governance Act) and contracting out the management of some hospitals was also begun. The 2004 Nepal Development Forum had highlighted the need for donor harmonization, and the World Bank Country Assistance Strategy 2004-2007 sought to facilitate Nepal-led reforms, improving governance through bringing resources closer to beneficiaries and strengthening aid effectiveness. In the health sector, this was translated as improving basic health services, especially for the poor through the Government-led Sector Wide Approach (SWAp). It built on the experiences under the IDA-supported Population and Family Health Project, implemented in 1994-2000, and the Poverty Reduction Support Operation of 2003. The Government had adopted its “Health Sector Strategy: An Agenda for Reform” and its implementation plan – the Nepal Health Sector Program 2005-2009 (NHSP I), later extended for one Fiscal Year until July 2010, that was endorsed by all development partners as the framework for development assistance in the health sector. At the time of designing and processing Additional Financing (AF) to the Program in 2008, significant changes had taken place in the governance of Nepal – the monarchy was abolished, a Comprehensive Peace Accord with Maoists had been signed, an interim constitution for a “New Nepal” was adopted, and a broad based Interim Government had been put in office. The interim constitution recognized access to health care as a fundamental right, and health was identified as one of the three priorities of the three-year Interim Plan (2007-2009). The World Bank 2007 Interim Strategy Note (ISN) sought to protect the development reforms and outcomes already implemented during the post-conflict period and emphasized state building through strengthening of the public sector, the facilitation of genuine partnerships between public and private sectors and communities, and the achievement of rapid impact through improved public services.

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In the context of this report, the “Project” refers to the bundle of IDA grants and credits that supported the Nepal Health Sector Program (referred to as “Program”) through a Sector Wide Approach by pooling with the Government budget financing of the Program. Thus, the implementation and results of the IDA financed Project are indistinguishable from the implementation and results of the Program. DFID and, from 2009 onwards, AusAID were the other External Development Partners (EDPs) supporting the Program under the same pooled funding arrangements with their respective projects. Significant earmarked support to the government’s Program was also provided by a range of agencies such as USAID, UNICEF, WHO, UNFPA, KfW, GTZ, JICA, UNAIDS, GAVI, GFATM, and SDC. 1.2 Original Project Development Objectives (PDO) and Key Indicators The PDO was to expand access to, and increase the use of, essential health care services, especially by underserved populations. The key indicators to measure improved access comprised: (i) contraceptive prevalence rate; (ii) proportion of normal deliveries conducted with skilled attendance; (iii) proportion of children immunized against measles, diphtheria, pertussis and tetanus (DPT3); (iv) proportion of women and men who can correctly identify one method of preventing HIV infection. 1.3 Revised PDO (as approved by original approving authority) and Key Indicators, and reasons/justification The PDO remained valid and unchanged throughout the implementation of the Project (including the period covered by the AF). A number of the PDO and Intermediate Outcome monitoring indicators changed with some upward adjustment of targets where progress had already been strong at the time of processing the AF. Other indicators were dropped after the Mid-Term Review and some changed in definition during Project implementation. 1.4 Main Beneficiaries As the Project financed a slice of the Government Program budget, the intended beneficiaries were similar to the beneficiaries of overall sector Program. As the Program was prioritized towards essential health care services (70% of Program budget), largely delivered through the basic district level primary health care services and disproportionally utilized by poorer segments of population, and as the roll-out of the components of essential health services program started with low human development index districts there was the expectation that the benefits of the Program would disproportionally accrue to the poor and disadvantaged. However, the monitoring of disaggregated data per income level and social groups was only introduced later during Project implementation. These data seem to confirm that the poor and excluded made progress in bridging the gap in health outcomes – but insufficiently and not with regards to all outcome indicators.

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1.5 Original Components The Project design drew from the structure of the NHSP I. It consolidated the eight NHSP I output areas into two main components: Component 1: Strengthened Service Delivery sought to expand and/or strengthen 11 priority cost-effective Essential Health Care Services (Output 1) by: (i) developing and implementing technical standards to improve service quality; (ii) providing in-service training; (iii) ensuring drug availability; (iv) using behavior change communication to strengthen demand for essential health care, promote health behaviors and promote client focused, gender-sensitive attitude among providers; (v) improving out-reach services; (vii) conducting Service Delivery Surveys. This component also included NHSP I outputs of advancing the decentralization of health posts and sub-health posts to local authority management and increasing the autonomy of district/zonal hospitals (Output 2) as well as promoting Private Public Partnerships (PPP) in delivering essential health services in selected districts (Output 3). Component 2: Institutional Capacity and Management Development sought to strengthen (i) Sector Management (Output 4) under SWAp context, including the distribution of labor of key actors in the sector, strengthening key management tasks of planning, programming, budgeting and monitoring; sustainable financing (Output 5) that sought to provide greater transparency on resource allocation in the sector through Public Expenditure Reviews (PER) and Medium Term Expenditure Frameworks (MTEF); improve equity of health financing through need-based budget resource allocation formula, review experiences and update policies on user fees, community insurance and community drug programs; (ii) Drugs, supplies and equipment (Output 6) management through strengthened decentralized procurement of drugs and medical supplies, strengthened Logistics Management Division of Department of Health, and strengthened Health Care Waste Management Plan; (iii) Human Resource Development (Output 7) through review of staffing norms and practices, skills gaps, deployment and training of staff to decentralized facilities and offices; (iv) Monitoring & Evaluation (M&E) through improvements in the collection, reporting, analysis of data and utilization of information. 1.6 Revised Components Overall, the 8 Output areas of the NHSP I and the respective components of the Project remained the same throughout the Project implementation, including the period covered under the AF. However, the AF sought to support enhanced activities under selected Outputs of NHSP I. In Essential Health Care Services (Output 1), the Government sought to scale up interventions that had been implemented in selected districts, including community based management of childhood illnesses, obstetric care and the prevention and treatment of uterine prolapse. A new neonatal program was introduced in 10 districts (including 7 with a low Human Development Index-HDI) as well as pilots to address malnutrition. Government also expanded the control program for Japanese Encephalitis and Leishmaniasis. Following the Nepal’s 2006 Interim Constitution and Government policies to remove barriers to the disadvantaged to use essential health care, the NHSP I

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adapted to ensure free health care at sub-Health Post, Health Post and Primary Health Care Centre levels and for selected services up to district hospital level and also introduced cash incentives to mothers and health professionals for skilled birth attendance and facility based deliveries. These policies also led to updates in other relevant NHSP I Output areas, including emphasis on human resources for maternal health (Output 7), opening up publicly funded access for maternity care in the non-state sector (Output 3), increased need for availability of essential drugs (Output 6), and the need for additional M&E arrangements under Output 8. Under the SWAp arrangement Project implementation was dynamic, responding to adjustments made in policies and planned activities agreed upon during Joint Annual Reviews (JAR). 1.7 Other significant changes As a response to some Project implementation issues and reflecting on accumulating experience in addressing governance constraints under World Bank supported projects, the AF introduced an agreed Governance and Accountability Action Plan (GAAP) addressing procurement, NGO contracting, financial management and monitoring and evaluation issues. Nepal also became one of the seven first-wave countries to benefit from the International Health Partnership (IHP+). This partnership served to further consolidate harmonization in accordance with the Paris Declaration on Aid Effectiveness and further strengthen the SWAp over the life of the project, and continues to do so under the health sector program 2010-2015. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry The Project was well prepared, in particular considering the fragile country context. The high ambition of sector wide project scope and country systems based implementation arrangements, related risks and mitigation measures were explicitly researched and discussed during Project preparation. The key ingredients for successful implementation of the Project had come together at the time of Project preparation. A good foundation was provided by stock taking of operational issues and prioritization of resources in the health sector by the World Bank (2000), stock taking of sector policies and performance of the Second Long Term Health Plan by the Government of Nepal (1999), and lessons learned from the IDA funded Population and Family Health Project. The overall World Bank country development assistance strategy for 2004-2007 had just been formulated1 and the fiduciary context had been laid out by Nepal Country Financial Accountability Assessment and Nepal Country Procurement Assessment (2002). The World Bank had produced and commissioned an impressive set of health sector studies and reports (19 included in the Project files that were complemented by another extensive set of reports commissioned/produced by other development partners (15 in the Project files). These

1 The 2009 IEG Country Assistance Evaluation concluded that only human development components of the strategy – including health and education had performed satisfactorily under this CAS.

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inputs evidently contributed to the development of underlying NHSP I and its implementation plan that were jointly and endorsed by development partners in 2004. Safeguard policy issues had received due attention in the Social and Environmental Assessments providing inputs to the respective Vulnerable Communities Development Plan and Hospital Waste Management Plan. The run-up and results of the Nepal Aid Effectiveness Forum in 2004 helped to facilitate and instill confidence into a more aligned and harmonized sector support under Sector Wide Approach. Both the original Project and AF underwent Quality Enhancement Reviews (QER) that provided useful insights to fine tune Project design features and manage the risks. The QER of the additional financing discussed and provided recommendations for ongoing policy dialogue in decentralization, free health care, governance and accountability, health financing and human resources. In retrospect, more recognition of political economy risk management aspects in a fragile country setting could have been considered during the preparation period, in particular with regard to the ambition of selected institutional and policy reforms supported by the NHSP I. Fragility should also have been considered a risk for achieving and delivering service delivery outcomes. As it turned out, significant political changes occurred during project implementation and at times the Government did not control large parts of the country and these events did impact the NHSP I implementation in selected institutional and policy reform areas. However, by design the SWAp arrangement in itself proved to be a risk management tool providing flexibility to adjust institutional and policy reforms and for helping to maintain the commitment and ensure resources for essential health service delivery. 2.2 Sector Wide Approach The Project was designed and implemented under a SWAp. The key building blocks of SWAps and their application in the Project are described in Annex 5. Most key building blocks were in place and operational. The MTEF was used for the Government commitments to increase the health share in the budget and minimum expenditure threshold for prioritized essential health care services. The twice-a-year Joint Annual Review and consultation process (eleven JARs were conducted during Project implementation) on the past year’s sector performance and the next year’s programming was an evolving process. It moved from extensive discussion on inputs towards more emphasis on sector outputs and outcomes, and from a facilitated discussion towards a more effective policy discussion platform. The JAR process could be further strengthened through applying a more structured approach, including the preparation of sector performance reports of agreed format prior to JARs. From the Program implementation experience, it also appeared that the 2nd JAR in an annual cycle to review the next year’s budget and work plan did not serve as effective consultation platform. The follow-up NHSP II proposed to replace this one time formal event with a series of less formal consultations among the Government and EDPs. As the number of pooling partners under the NHSP I was limited (WB and DFID, later joined by AusAID), the working and collaboration arrangements among pooling partners were informal and

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appear to have worked out well. As it is expected that under the NHSP II there will be more EDPs joining the Joint Financing Arrangement (JFA) as pooling and non-pooling partners, the stakeholders could consider agreeing more formally on collaboration arrangements, including one-point communication channel with the government, division of labor among EDPs in consultation and review processes of parts of Government health sector program. A particular feature worth mentioning in Nepal NHSP I SWAp was its management of technical assistance. DFID, a pooling partner, provided parallel financing for retaining a firm essentially under call-down contract arrangements, to provide analytical, advisory and advocacy services to support Project and NHSP I implementation. The firm maintained representation in the MOHP premises which facilitated cooperation and coordination. This pragmatic approach proved to be feasible in Nepal context and provided significant contribution to NHSP I monitoring and adjustments during JARs. 2.3 Implementation The broadest parameter characterizing the successful implementation of the Project was the disbursement rate – faster than originally envisaged prompting the need for additional financing. The combination of a fast disbursement rate and early achievement of results is indicative of the rapid scale up of successful interventions such as micro-nutrient programs, the employment of Female Community Health Volunteers and the safe motherhood program. This was due to smart design of implementation arrangements; strong capacity building support; and, responsive implementation support, good management of partnerships and oversight by the IDA team. By the time of account closure the Project had disbursed over 99% of IDA resources. An appropriate design was reflected in: (i) the SWAp modality, rooted in the Government health strategy and at the same time providing flexibility to adjust to changing circumstances; (ii) taking calculated risks of using Government systems of financial management, procurement and M&E; (iii) pooling IDA funds with Government budget, reliance on trimesterly FMRs for disbursements, and agreeing to audit arrangements that timeline wise were longer than usual IDA practices (9 months rather than 6 months) but better fit Government realities. This exemplified strong trust in the Government counterpart and joint processes that was reciprocated and delivered results. The considerable capacity building efforts in financial management and the assistance provided for the government to meet the financial management requirements in particular delivered clear returns in consistently improving Government budget execution (with similar impact on Bank funds disbursement). This was also reflected in financial management ratings that over the life of the Project improved from MS to S. A number of procurement issues arose during Project implementation, prompting an IDA Integrity Department investigation. But to the credit to joint action by the IDA team and the Government counterpart, these issues were dealt with swiftly and mitigating measures implemented quickly, so they did not result in significant implementation slowdown. The Project and Program implementation also benefitted from good informal relations

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among the key stakeholders allowing any challenges to be addressed swiftly. The mid-term review was well prepared with an independent background study providing constructive recommendations for adjustments that were relatively easy to introduce. The processing of the Additional Financing was appropriate to help scale-up a well performing sector-wide program and enhance its impact, and allowing the synchronization its second phase with the country's next Five-Year Plan which commenced in July 2010.

2.4 Monitoring and Evaluation (M&E) Design, Implementation and Utilization Overall, M&E design was complex and relied at times too heavily on DHS data, resulting in some baseline data dating back as far as 2001, and resulting in some data not being available at the time of the finalization of this ICR. The M&E framework comprised a set of results’ indicators and sector policy reform outcomes derived from the NHSP I. The rationale for selecting PDO level indicators was clear: (i) they were intermediate service delivery and KAP indicators amenable to the Program’s prioritized support to Essential Health Care Services; (ii) they were a sub-set with most need of improvement; and, (iii) with clear contribution linkage to higher level MDG outcomes. A possible alternative to a limited set of PDO indicators, in particular with broad PDO statements and in SWAp context, could have been some composite indicator aggregating progress in multiple dimensions but such indicators invariably will face significant methodological challenges. Given that the rest of M&E framework enabled progress tracking in various other dimensions of NHSP I implementation, the preparation team’s choice was justified. The monitoring framework for intermediate results followed the eight outputs: (i) Essential Service Delivery; (ii) decentralization; (iii) Private Public Partnerships; (iv) human resource management; (v) health financing and resource allocation; (vi) physical assets and procurement management; (vii) human resource policy and management; (viii) integrated management information systems. Although the eight outputs stayed relevant throughout the Project and additional financing, underlying activities and indicators underwent significant changes. Out of 10 original indicators, the latest ISR reported on 2 with modified definitions among newly added indicators. The changes reflected changing policy and strategy context (e.g. a stay on decentralization reform due to lack of elected authority at local level, introduction of free health services). Overall, the Project team dynamically responded to the changing policy context, mid-term review outcomes and the JAR process by adjusting ongoing intermediate results monitoring as appropriate while maintaining consistent focus on PDO outcomes. The monitoring framework included both quantifiable indicators as well as more qualitative sector policy reform benchmarks. This may have posed some complexities in concise reporting on results but given the SWAp arrangement, it was helpful and feasible in shaping the policy dialogue on sector performance during JARs and for making adjustments if prompted by changes in development context.

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It should be noted, though, that whereas the PDO emphasized improved access to essential health care by underserved population groups, initially the M&E did not disaggregate the performance across income and ethnic population strata. However, at the time of mid-term review in 2007 and following the Government decision of introducing free health care, a number of special studies were commissioned under the overall program framework to analyze and track the progress in improving health outcomes for marginalized groups in society. Additional targets for the lowest socio-economic population quintile were included in the enhanced results framework under the AF and they continue to be part of results framework for the follow-up project supporting NHSP II. The Project relied on two main data sources for tracking program progress: (i) the routine HMIS; (ii) special purpose studies and surveys. Earlier studies (DHS2) had confirmed the reliability of HMIS data that provided a constant stream of routine data. The special purpose surveys were designed to provide deeper understanding on select aspects of health program performance. They were supported by a consulting firm retained under parallel financing from DFID and co-located in the Ministry of Health as well as by other development partners supporting the Program. Altogether the DFID funded technical assistance produced 48 study reports during the implementation of the Project, most of them during the second half of Project implementation. The two other important survey instruments were regular Health Facility Surveys and the Nepal Family Health Program mid-term review survey financed through USAID. M&E results were utilized during JAR process and in Implementation Supervision Reports to the IDA management. According to informants and participants of the JAR process, the initial focus on inputs and processes gradually shifted more towards outcomes and results over the life of Program implementation. As per IDA policy, the Project monitoring and reporting framework also included the core indicators as from 2009. It needs to be noted that this institutional requirement was imposed on the Project during the last year of Project implementation even though this Project relied on Government systems. The unilateral way in which IDA Core Indicators and targets were introduced may make the data for these indicators less reliable than for others that were part of the original Results Framework design (see Annex 2). 2.5 Safeguard and Fiduciary Compliance Overall the Project was implemented in high fiduciary risk environment. The country level fiduciary assessments had been conducted in 2002 and for the health sector in 2003. During implementation, further detailed health sector fiduciary assessments (procurement and financial management) were carried out by IDA and DFID. All reviews concluded that the overall risk in the health sector was “high,” mainly attributable to the absence of internal control system, the perception of corruption risk as well as to the lack of

2 DHS – Demographic and Health Survey

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enforcement capacity of otherwise adequate regulatory framework. Over the life of Project implementation, the overall fiduciary country environment did not improve (the Country Policy and Institution Assessment –CPIA- rating has declined to 3.3 compared to highest of 3.5 in 2007). However, while many of the risk factors were beyond the control of the sector, a number of initiatives were undertaken at the sector level to mitigate the high risk environment. On behalf of the pooled development partners, IDA provided the lead role in Financial Management and Procurement. A Financial Management Improvement Action Plan (FMIAP) was agreed upon with the Government which was closely monitored by EDPs during joint reviews. The FMIAP outlined six areas where results were expected: (i) developing performance based planning and budgeting system; (ii) improving the fund flow system; (iii) timely submission of Implementation Progress Reports (IPR), including the Financial Monitoring Report (FMR); (iv) strengthening of the financial information, monitoring and feedback system; (v) improving the quality of assets management; and (vi) preparing a capacity development plan for financial management. The Mid-term review observed limited progress in these areas, and the FMIAP time-line was revised. Given the high importance of the issue to the EDPs, the Ministry of Health and Population (MOHP) subsequently gave the issue high priority. Technical Assistance (TA) was put in place through DFID TA Program and progress was made in several key areas. The follow-up fiduciary assessment by DFID in close collaboration with IDA in 2009 recognized progress as follows: (i) strengthened financial management arrangements for the new healthcare financing program; (ii) streamlined budget heads from 50 to 35; (iii) introduction of an Electronic Annual Work Planning and Budgeting (e-AWPB 1.0) system in English and Nepali to facilitate the planning and budgeting; (iv) electronic connection between MOHP and the Financial Comptroller General Office (FCGO) to access data; (v) established logistics management information system; and, (vi) development of procurement guidelines for International Competitive Bidding (ICB) and for National Competitive Bidding (NCB).

In spite of the progress made, a number of challenges remained, such as the per recent reviews and audit observations, including: (i) weak control environment, monitoring and follow-ups; (ii) continued delays in preparing IPRs, FMRs and sector financial statements; (ii) weak internal control environment, including lack of adherence to policy directives for maintaining books of accounts or records, payments made without adequate supporting documents, financial procedure rules not followed to freeze unspent balance at the end of fiscal year or refunding unused advances; (iii) weak management and control of bank accounts; (iv) no/weak/insufficient arrangements for fiduciary controls beyond district offices; (v) inadequate follow-up on the audit observations and irregularities; (vi) financial management understaffing at the central level; (vii) weak asset management; (viii) slow progress in establishing a computerized Financial Management Information System. The on line connectivity provided to the MOHP by FCGO for accessing expenditure information through FCGO FMIS was discontinued. This indicates a need for continuous financial management capacity strengthening.

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The Auditor General also carried out a performance audit in 2009 which revealed some positive stories mainly on improvement in health service delivery. A number of challenges highlighted in the performance audit are centered on the points discussed in the above para but more particularly emphasizing the need to improve procurement, improving monitoring of service delivery and ensuring adherence to various directives and policies, controlling on some malpractices mainly related to non-compliance to procedures and directives and ensuring service standards and quality. While steps have been undertaken in procurement reform, other areas would be addressed through the implementation of the Governance and Accountability Action Plan (GAAP) which have been discussed and embedded into the design of the second phase of SWAp.

The final Implementation Progress Report related to the third trimester of FY2009/10 was submitted within the disbursement grace period. IDA Credit 3980-NEP (SDR6.9 million) and IDA Grant H125-NEP (SDR27.3 million) were fully disbursed. Additional Financing IDA Grant H368-NEP (SDR31.3 million) disbursed SDR30.69 million (98%), and SDR0.613 million was cancelled. By the time of finalizing this ICR the only outstanding issue of NHSP1 was the finalization of FY2008/09 audit. Although the audit report was submitted, it was not acceptable as a large proportion of the health sector expenditures had not yet been audited. Further, there are a number of system and control issues raised by the Auditors, and IDA has taken necessary steps in sending follow-up letters asking for the MOHP plan for improvements. During implementation of NHSP2, sector governance and accountability which include implementation of GAAP will receive a high priority.

The final sign-off of budget expenditures in the MOHP is the responsibility of the Finance Controller who reports to the FCGO. MOHP and NHSP I implementation benefitted from the continuity of staffing of this position over the life of the Project, so that capacity building benefits and accumulated experience could contribute towards improved disbursement performance. Both MOHP and FCGO should be commended for this arrangement that was an exception to the usually faster rotation of these staff between sector ministries.

Procurement under the Project followed the use of IDA International Competitive bidding procedures for works over US$1 million per contract and goods for over US$ 500,000 per contract. Procurement under these thresholds followed national guidelines – with modifications - as described in the Government Financial Administration Regulations, later replaced by the procedures described in the Public Procurement Act. The procurement of goods was conducted by the Logistics Management Division in the Department of Health and under defined thresholds devolved to District Health Offices and District Development Committees. At the time of Project preparation, the procurement risk was rated high for decentralized procurement level and moderate at the level of central Department of Health. Responsibility for procurement of works at central level was given to the Ministry of Planning and Works. This appears to have been in line with Government systems although there was no discussion of this arrangement or related procurement capacity appraisal in the Project Appraisal Document. Procurement capacity strengthening actions were recommended

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and implemented during the Project, supported by DFID and KfW, and the provision of a team of procurement assistance consultants, financed by KfW, was a key measure to enhance capacity.

Procurement comprised 20-25% of the expenditures under the AWPB. Several challenges had to be overcome during Project implementation. Preparing and agreeing on procurement plans were delayed by months after agreement on the AWPB and reasonable cost estimations were difficult in the Nepal context given the unregulated retail prices. For new items to be introduced to Nepal, e.g. vitamin A, no local references were available. International reference prices were initially not accessible and informal quotes from potential suppliers highly variable. Stock management and final delivery posed challenges as well. Decentralized procurement arrangement resulted in highly variable performance and differential procurement outcomes in terms of quality and prices of similar goods. This was mostly because of local level capacity constraints. There were allegations of intimidation and collusion under centralized procurement of goods by the Department of Health. However, these challenges were recognized and additional risk mitigation measures were put in place after in depth capacity assessments and investigations. These measures comprised: (i) introducing international price comparisons; (ii) installing CCTV cameras in the Department of Health Services, Logistics Management Division; (iii) conducting procurement capacity assessment; (iv) agreeing with the Government about technical audits of procured equipment; (v) “governance audit” into essential drugs, medical equipment and civil works procurement with results leading to specific measures to strengthen procurement capacity and the capacity to elaborate technical specifications; (vi) value for money analysis; (vii) facilitating other agencies to use and strengthen Government systems, thus expanding government ownership and at the same time consolidate support to strengthen fiduciary systems. The requirement for all drug suppliers to meet Good Manufacturing Practice (GMP) standards introduced under the NHSP I (and initially facing significant political resistance), provided additional quality assurance for the drugs delivered.

As a result of capacity building and risk mitigation measures, a gradual improvement has been noted in the quality of centralized goods and pharmaceuticals procurement. The latest procurement ex-post-review of the procurement of goods resulted in a clean bill. As reported by the Department of Health Services’ Logistics Management Division, by the end of the Project, the MOHP procurement plan was completely executed. Centralized procurement of civil works, however, continued to face significant challenges and irregularities. The MOHP may have had limited influence on activities conducted by another Ministry and there may have been a missed opportunity to enter into capacity improvement agreements at the time of Project preparation and negotiation as the Ministry of Planning and Works appeared not to have been a party to Project preparation and subject to relevant capacity assessments. The main recommendations coming out from the NHSP I implementation comprise: (i) to review and streamline processes for decentralized procurement that would still allow to take into account local preferences and decentralized public finance management but ensure the efficiency and effectiveness of overall procurement processes: (ii) to introduce multi-year procurement plans and associated budget management arrangements, and enabling multiple delivery dates; (iii)

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to consolidate and mainstream procurement planning into AWPB process to avoid delays after budget approval and improve efficiency and effectiveness of procurement; (iv) to initiate a system for e-submission of bids in parallel with the traditional manual submission method; (v) recognizing that procurement function is broader than processing competition bidding, to strengthen procurement capacity with technical expertise in works, pharmaceuticals, medical equipment and supplies to strengthen the quality of forecasting needs, understating of market situation and other technical aspects of procurement processes.

Lessons learned during the implementation of NHSP I have been incorporated in the agreed GAAP that was first introduced at the time of AF and further strengthened for the follow-up project and reflected in the upgraded JFA for NHSP II.

Social safeguards. As Nepal has over 100 different social groups with 92 different languages and a mix of Hindu, Buddhist, Kirat, Animism and Muslim religions, social inclusion issues featured prominently in the national health strategy. The MOHP had prepared a vulnerable community development plan drawing on findings and recommendations of the Social Assessment and the Stakeholder Participatory Framework. The key recommended actions to strengthen social inclusion comprised: (i) recruitment from local populations for training and deployment of health staff to ensure cultural and social sensitivity; (ii) generation, monitoring and acting upon data on health system performance across gender, ethnicity, religion and caste attributes. Decentralization under the 1999 Local Self-Governance Act was expected to increase the role of local communities in health services oversight but this process had stalled due to lack of locally elected authorities. However, the Interim Constitution provided additional significant impetus for social inclusion by institutionalizing free access to essential health care at sub-Health Post, health Post and Health Centre level. This prompted the Government to strengthen its social inclusion monitoring capability and a number of studies were commissioned to monitor progress.

Health Care Waste Management. The Environmental Impact Assessment of the Nepal Health Sector Program had identified health care waste management as the critical environmental issue in the health sector. A Health Care Waste Management (HCWM) Assessment and a Strategic Framework and Action plan for improvement were developed comprising: (i) the development of institutional framework for HCWM; (ii) the preparation of various guidelines on HCWM and their dissemination; (iii) the conduct of feasibility studies on appropriate technical solutions for HCWM in different settings; (iv) training of staff; (v) the preparation of HCWM regulations; and, gradually bringing health care facilities in line with appropriate HCWM practices. Some progress was made with regard to individual activities, including the preparation of HCWM guidelines in Nepali, selected awareness building activities, institutionalizing a requirement of new facilities design allocating adequate space for HCW management, and the inclusion of HCWM in recurrent health budget. However, overall and systemic progress of implementing the action plan remained limited. This was partly because of the lack of a clear institutional home and full time responsibility of senior MOHP staff for HCWM. Safeguards compliance in the ISRs was consistently rated at Moderately Satisfactory

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however and the combination such ratings and the limited progress reported may indicate insufficient attention given to safeguards compliance by the Bank team.

The practical lessons learned from the implementation of the NSHP I comprise: (i) the Environmental Management Action Plan need to be realistic to the country context and implementation capability; (ii) management and oversight needs to have clear institutional home, dedicated staff and resources; (iii) supervision of the implementation plan needs to be continuous and consistent, progress and issues to be reflected in respective Aide-Memoires and ISRs.

2.6 Post-completion Operation/Next Phase The follow-up operation (Second HNP and HIV/AIDS Project) to support the implementation of Nepal 2nd Health Sector Program (NHSP II) for the years 2010-2015 and comprising US$129.2 million equivalent of IDA financing has been prepared and approved by the IDA Board of Directors. The project will be implemented under enhanced SWAp arrangements with expected participation of DFID, AusAID, GAVI, KfW, USAID, UNFPA, WHO, UNICEF and potentially other partners as signatories to the Joint Financing Arrangement. This will enable the continuation and strengthening of the health sector development dialogue and broaden the stakeholders in strengthening relevant Government systems. It will sustain ongoing reforms and programs in short and medium term. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation The objectives, design and implementation arrangements remain highly relevant. The development objective of the follow-up operation is very similar to the original objective of this Project, the global attention to achieving MDGs by 2015 is intensifying and the Project’s focus on cost-effective essential health care interventions is supportive to MDG attainment; the supported policy reforms and institutional arrangements are line with the World Bank’s 2007 Interim Strategy Note, emphasizing implementation through government systems and sector wide arrangements, genuine partnerships between public and private sectors, improvement of public services, and emphasis on the inclusion agenda. 3.2 Achievement of Project Development Objectives The program largely achieved its stated PDO level objectives as described by key performance indicators in the table below. Because progress was substantial by the time of Additional Financing, the Project upgraded the targets for CPR from 45% for any method to 48% for modern methods, the immunization target for measles from 85 to 88% and for DPT3 from 85 to 90%, and also introduced specific targets for the lowest income group. No representative survey was completed after the 2006 DHS to inform the actual data on knowledge of HIV prevention among men but world-wide as well as regional

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data do suggest that knowledge among men would exceed the knowledge among women. The DHS of 2010 (with expected data publicly available in 2011) will be the earliest occasion to verify the achievement of this target. The skilled attendance at birth was defined at baseline as attendance by a health worker, but later changed to mean attendance by a skilled birth attendant (SBA) making it a more stringent indicator. Applying the original definition throughout the Project period would most likely have resulted in the target being met by Project completion. Table 1. Project PDO indicators

Indicator Baseline (2001)

Actuals (2006)

Actuals (2009)

Target (2010)

Increased contraceptive prevalence rate (CPR) any method modern method

35% 48% 44.2%

51.7% 46.6%

47% 48%

lowest quintile 40.6% 35%

Skilled attendance at birth 8% 19% 32.6% 35%

lowest quintile 2% 5% 8.5% 10%

Percentage of children immunized against measles/DPT3

71% 85/88% 89/90% 88/90%

lowest quintile 68/75% 85/83% NA/80%

Proportion of women/men correctly identifying method of preventing HIV infection

38/51% 62/81% 88%/NA 75/85%

Sources: 2001, 2006 Demographic and Health Survey; 2008 Family Planning Project Midterm Review Survey; 2010 Family Planning, Maternal, Newborn and Child Health Situation in Rural Nepal Survey, USAID Annex 2 provides more detailed discussion on linkages between Project outputs (in particular Output 1 on Essential Service Delivery) and PDO progress. NHSP I financing significantly expanded health systems capacity to deliver immunizations, skilled birth assistance, family planning services. NHSP I demand side interventions, such as Safe Delivery Incentive Program, introduced during Project implementation, further accelerated progress. Output 5 on health financing and resource allocation delivered its key commitments in terms of prioritization of Essential Health Care Services and increase in budget allocation to health sector. Although significant challenges still remained in select output areas by the end of the Project, in particular in human resource policy and management and logistics management output areas, overall targets under NHSP I were met. It is likely though that these constraints will need to be tackled to make further progress under NHSP II. The Program outcomes have a contributory link towards improved higher level MDG outcomes. Nepal has made considerable progress in reducing maternal and under-five mortality rates. Between 2001 and 2009, Maternal Mortality Ratio (MMR) declined from 415 to 229 deaths per 100,000, an achievement for which Nepal was recognized in 2010 with the Millennium award for progress in MDG5; under five mortality from 91 to 50 per 1000 births; infant mortality rate from 64 to 41 per 1000 births; and total fertility rate from 4.1 to 2.9. Analysis done at the Mid-term review concluded that that up to 82% of

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reduction of under-5 mortality rate could be attributed to the scaling up coverage of EPI & measles campaign, vitamin A coverage and community based integrated management of childhood disease programs that are part of the 11 primary health care programs within the Essential Health Care Services package prioritized for Government Program support. Similar linkages may exist for the reduction of maternal mortality where the prioritized Program scaled up emergency obstetric care (rate of C-sections), skilled birth attendance, antenatal care coverage and family planning. Nepal received the GAVI award for MDG 4 for its achievement in improving child health outcomes. Although not part of original monitoring framework, there is evidence on and improved equity of distribution of the outcomes among socio-economic groups from special purpose studies commissioned under the Program. In spite of the progress noted there is still a wide disparity in the health outcome indicators. For example, infant mortality in rural areas is still 73% higher than that in urban areas, and infant mortality is almost double in the Mountains compared to the Hills. There are also important achievements in other Program areas, in particular health financing. As a share of GDP, health sector spending doubled in five years from 0.8% in 2006 to 1.7% in 2010. Health sector absorptive capacity improved significantly. 3.3 Efficiency Project support to the implementation of the Government health sector program under SWAp arrangements does not lend itself to standard economic and financial analysis as specific investments for IDA financing cannot be identified. The financial and economic analysis rather focused on key public financial management parameters underpinning sector expenditures and financial sustainability. As discussed in Annex 3, the key original economic and financial assumptions held during Project implementation and the main public finance targets were met. As a broad cost-effectiveness analytical measure, a study commissioned by DFID during Project implementation, estimated that the Government health Program saved one Disability Adjusted Life Year (DALY) at the cost of US$144. This amount, being less than Nepal’s Gross National Income per capita, meets the WHO benchmark of cost-effective health intervention. An interesting insight about efficiency of delivering ODA came from a District Health Officer who testified that from a district level health system management perspective he did not experience additional transaction costs related to the Project. Nepal managed to absorb additional resources through government systems and deliver improved health system performance outcomes by managing the EDP related transaction costs at the central level and so allowing the lower levels of government to focus on service delivery. However, there is still scope to improve equity of resource allocation across different socio-economic regions in Nepal and improve efficiency of public procurement.

3.4 Justification of Overall Outcome Rating

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Rating: Satisfactory The Project development objective, design and implementation arrangements remained highly relevant, the Project largely met or exceeded stated development outcomes, and supported the Government health program delivering improved health outcomes in a cost-effective way. The minor issue initially was the inability of disaggregated performance assessment to assess the impact on disadvantaged groups, which was corrected during Project implementation.

3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development As discussed above and in Annex 2, the Project support contributed toward significant progress in improving health MDG outcomes in Nepal, including improved equity across socio-economic groups. This was achieved through prioritization of cost effective essential health care services, phased roll-out first targeting the districts with lower Human Development Index, addressing key barriers to access, including removing financial barriers to access and providing demand and supply side incentives to increase coverage of key health interventions. (b) Institutional Change/Strengthening Implementing the Project via government systems had significant impact on strengthening key Government functions, in particular sector wide planning and financial management that are expected to be sustained. As noted by one respondent during the implementation completion review, there was both pressure and support to strengthen institutional capacity. (c) Other Unintended Outcomes and Impacts (positive or negative) Interviews with key stakeholders suggested that the SWAp modality of channeling development aid to the health sector and the joint Government-EDP commitment for health sector performance may have helped to make health sector less vulnerable to the political uncertainties and disruptions during Project implementation. During this period the country experienced security problems due to insurgency, suspension of democratic rule, abolition of monarchy and the birth of the republic, the Comprehensive Peace Accord integrating Maoist insurgency into democratic governance, Interim Constitution, etc. The pooling arrangement allowed the Government to frontload the pool with IDA resources at the time when DFID, the other pooling partner, temporarily had slowed down its disbursements during the politically fragile period, thus ensuring the continuation of the sector expenditure program.

4. Assessment of Risk to Development Outcome Rating: Moderate The key risk for development outcome is sustainability. Sustaining free health care policy requires effective institutional and policy responses to important health system

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constraints. Financial sustainability risk is managed for short and medium term through a follow-up IDA operation and significant commitments from other EDPs under the continuing SWAp approach for the years 2010-2015. Mitigating longer term financial sustainability risk requires further health financing reform. The Government needs to address procurement and logistical constraints that are impacting the availability of free drugs in health facilities as evidenced by Health Facility Surveys. Deployment and retention of quality health workforce in remote areas at the time of increasing demand will also be a challenge requiring comprehensive policy interventions in addition to selected measures introduced to date. The health sector enjoys broad support across parties in the National Assembly and the Government has a clear health sector strategy and program for 2010-2015 that has been jointly reviewed and endorsed by EDPs and civil society. The inclusion agenda is prominent in the strategy. However, the observed difficulties in establishing an effective Government since the latest election, and continuing constitutional uncertainty in relation to the division of responsibilities under the federal system, pose some risks to implementing policies around the agreed strategy, and agreeing on still unresolved long term policies on health financing and public-private sector arrangements. Mitigation of this risk is difficult, but the NHSP I experience of the benefits from joint commitment by EDPs and Government to the strategy helped the sector to stay on track and make consistent progress. Governance risks to the development outcome are recognized and in short and medium term addressed by the agreed Governance and Accountability Action Plan supplementing the EDP supported NHSP II. Continued attention and support is needed to mainstream actions and policies into Government systems for the long term.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry Rating: Satisfactory As discussed in this report, significant economic and sector work contributed to the preparation of this operation, both technical and fiduciary; QERs were mobilized for both the original operation as well as for the AF to gain additional inputs to the Project; dialogue with EDPs was effective leading to harmonization and alignment of commitments under the SWAp. As discussed earlier in the document, there were three areas where preparation could have been strengthened: (i) Project preparation could have benefited from a more structured political economy analysis and risk discussion given its significant ambitions in policy and institutional reform areas in a fragile country setting; (ii) M&E arrangements for PDO emphasizing equity outcomes would require attention to availability of disaggregated data; and (iii) some of the indicators could have been

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selected more carefully with regards to the availability of more recent baseline data as well as end-of-project data. (b) Quality of Supervision Rating: Moderately Satisfactory Supervision quality benefited from continuity of task team leaders (two over the life of the Project with a six-month care-taker arrangement in-between); the eventual placement of TTL to the field greatly enhancing the World Bank participation in JARs and development partner dialogue in the SWAp context; mobilizing a task team with appropriate skill mix, including international and national staff, technical and safeguard expertise; and, from personal characteristics of TTLs facilitating relationships with EDPs and the client. The task team effectively used the SWAp flexibility for necessary adjustments in Project implementation as a result of the changing political economy context, and addressed early in Project implementation the need for additional M&E arrangements for monitoring equity aspects of PDO. Consultations on the budget between the government and Bank team (and other partners, pooling or not) was very limited and treated as an “after-the-fact” matter, although the Project financed a significant slice of the government’s budget for the health sector. This created the risk of the Bank (and other pooling partners) financing budget items that it would not necessarily agree with. This risk was noticed – and experienced – but not acted upon until the preparation of the next project in which budget consultation protocols have been incorporated. Fiduciary challenges were met with fast and adequate response to procurement issues of alleged fraud, collusion, intimidation practices by engaging the client to undertake mitigating measures. Financial management performance continued to improve during Project implementation, supported by Bank oversight and monitoring of the implementation of the FMIAP, in particular after the mid-term review. Environmental safeguards supervision did not receive the attention required and the ratings for safeguard compliance do not reflect the limited progress made. ISRs were filed regularly and included candid and clear assessment of implementation challenges, M&E status, and actions for the task team and management. The treatment of safeguard compliance issues in the ISRs are an exception to this general conclusion. (c) Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory

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Despite the flexibility and responsiveness of the team, weaknesses in M&E design, insufficient safeguard compliance supervision and the lack of substantial consultations on the budget warrant a Moderately Satisfactory rating

5.2 Borrower Performance (a) Government Performance Rating: Satisfactory The key Government actions related to the Project were about keeping the broad commitments for health sector funding that were agreed in the health strategy and underpinning the overall health sector program. As discussed in the Annex 3, these financial commitments were largely kept. The key stakeholders in the National Planning Commission and the Ministry of Finance that were engaged in the annual review and approval processes for ABWPs were supportive. The Project was audited by the Government General Auditor’s office and although for most of the Project implementation period the office was managed by an acting Auditor General, the audit reports were submitted in time and of good quality. During the period of political uncertainty and insecurity, the health sector continued to enjoy broad based support from all competing political forces thus suffering fewer disruptions than other sectors. (b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory The relatively lower Implementing Agency performance rating is linked to fiduciary issues, significant turnover of senior civil servants overseeing the Project, and understaffing of the key unit in the Ministry of Health coordinating Project implementation. On several occasions, the IPRs and FMRs were delayed; during the first half of Project implementation the auditor reports had qualified opinions citing numerous irregularities and an acceptable last audit report was still outstanding by the time this ICR was finalized. Effective FMIAP implementation was delayed until after the Mid-term review reflecting relatively low perceived political priority in the initial phases. Managing procurement was a challenge, and although the procurement of goods improved significantly by the end of Project, procurement of civil works continued to face significant problems as recorded in the most recent post review conducted by IDA staff. The Health Reform Unit in the MOHP, coordinating the SWAp processes, was understaffed - essentially having one very dedicated professional carrying the workload of coordinating the pooled funding part of the SWAp, preparing progress reports, assisting the Secretary(ies) of Health in program matters, and organizing JARs and other Government EDP meetings. (c) Justification of Rating for Overall Borrower Performance Rating: Satisfactory

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Given that the Project supported the first SWAp in the sector, the natural steep learning curve required for the implementing agency in fragile country settings, improvements in several key Government functional areas (e.g. planning and monitoring), and successful development outcomes, the overall satisfactory rating of Borrower Performance in these circumstances is justified.

6. Lessons Learned Ambitions and expectations for policy and institutional reform under an uncertain political and security environment need to be more realistic. Decentralization policies, restructuring of Government departments, changing the basic principles of budget allocation are difficult reforms to implement in any country setting, and more so in a fragile country. Political economy analyses would help to assess the realism of a proposed reform agenda and mitigate risks. In the Project, the original policy and institutional reform ambitions had to be scaled back during Project implementation. More detailed discussion on the ambitions of policy and institutional reforms under the NHSP I and the Project is provided in Annex 2 under respective Output areas. Improving access to essential health care requires comprehensive and consistent tackling of key health system constraints. Whereas there was progress in terms addressing financial constraints for access to health services in the NHSP I, health human resources deployment and retention, and strengthening logistical systems remain challenges that need to be more comprehensively tackled under NHSP II. Any project with equity related development objective needs to include clear monitoring and evaluation arrangements for disaggregated data. Although pilots were launched during the Project, it is probably unrealistic to expect administrative health information management systems to provide this information as part of routine reporting. Mainstreaming select survey instruments into the overall health sector monitoring arrangements and/or obtaining necessary information of other cross-sectoral household surveys (e.g. socio-economic household survey) need to be considered. This was recognized during Project implementation, adjustments were made in results framework, and the lessons applied in the design of the follow-up operation. Malnutrition did not get the level of attention in NSHP I it warranted. During 1995-2002, Nepal had one of the highest rates of stunting in children under five in the world. Progress in tackling the issue has been slow. There is mounting evidence that nutrition is an important determinant for health but also for other developmental outcomes, including educational attainment and future earnings in life. One should note however that this a retrospective lesson learned as the Project followed the NHSP I that at the inception had been jointly reviewed and endorsed by the EDPs; the lack of progress was recognized during the period of Project implementation; and, that recognition of the issue is facilitated by resurgence of nutrition in the global development agenda. The NSHP II has duly recognized this and has allocated significantly more resources to address this concern to be supported by the follow-up operation.

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Cross-sectoral health determinants (e.g. water and sanitation) also did not get sufficient attention in the NHSP I as recognized by several policy makers during ICR mission interviews. Institutional arrangements and appropriate support modalities need to be identified to support the health sector’s advocacy role and convening power in these areas that have significant health impact. Management of technical assistance in parallel to pooled funding support to Government health program was pragmatic and an effective design choice. Given the usual reluctance and slowness of governments in allocating adequate resources, recruiting technical assistance (in particular international) under credits and grants administered by them and under their own budgets, the implementation arrangement where TA was funded directly by DFID (one of the pooling partners) resulted in effective technical support to the program and should be considered in similar situations. To ensure effective coordination and alignment, institutional arrangements need to be agreed upon between the Government and EDPs on how to steer such a technical assistance facility. SWAp partnership arrangements were quite informal during the implementation of the Project. The JARs were held as planned semi-annually but the institutional arrangements for organizing, preparation of content, format and end products of these reviews were not formalized. Whereas this may have provided needed flexibility for the learning curve to happen and ongoing adjustments to be made, for more mature SWAp arrangements the parties may consider agreeing more clearly on what kind of inputs and outputs would be prepared for JARs to ensure continuous and consistent monitoring of NSHP II implementation and performance as well as continuous feedback from JARs to AWPBs. JARs should be more directly integrated with the Government’s own review processes. Language barriers have been cited as impediment but this could be overcome through participation of EDP national staff, and selected incremental events being organized for direct international staff participation. Relationships among pooling partners were on informal basis and this worked out well in the context of small number of partners (2-3) and good personal relationships. With the increased number of signatories to the JFA for NHSP II, participating EDPs are making progress in defining more clearly the roles and working arrangements within the group and establishing transparent communication channels to the Government (for clarity, efficiency, consistency) and agreeing on technical lead partners in particular sector policy or program areas to distribute workload more evenly. A field based Task Team Leader (TTL) for SWAp operations is an important factor for successful Project implementation. Given the needs for continued dialogue with Government and EDPs, the TTL placement in the field office is an important determinant for successful implementation of such projects. This was recognized by multiple development partners and client representatives during the ICR review mission and may have reflected their more recent experience with the preparation of the NHSP II, as the NHSP I was implemented until 2009 without a resident TTL. Presence of a strong national public health specialist in the Nepal World Bank office and effective coordination/cooperation with the Washington and New Delhi based TTLs may have helped to compensate for remote TTL-ship in the first half of the Project implementation.

22

Integrating procurement planning with AWPB processes would save time and ensure clearer linkages. Given the time required for processing international bidding processes and to improve effectiveness and efficiency of procurement, multi-year programming and contracts with multiple delivery dates should be considered. This would require also MOF approval for multi-year budgeting. Procurement and financial management capacity needs further and continuous strengthening. The procurement function is broader than processing competitive bidding for goods and works and selection of consultants. It needs to include capacity in needs forecasting, technical expertise in the elaboration of technical specifications, monitoring the quality of deliverables, and market analysis. Decentralized procurement arrangements under the Project proved to be a challenge and the Government is considering streamlining the bidding processes and at the same time remaining responsive to local needs preferences. Financial management capacity also needs to be adequately strengthened in light of severe control weaknesses in the system. More systematic strengthening of governance arrangements as adopted at the time of processing the Additional Financing and for the follow-up operation (Governance and Accountability Action Plans) are particularly important for projects that are implemented through Government systems, thus having a potential for broader impact than a particular project implementation. This ICR discusses multiple dimensions of governance issues in the context of health sector strategy and planning, decentralization, hospital autonomy, financial management and procurement. Having brought these different elements together into one GAAP for NHSP II will help to ensure comprehensive and consistent approach to governance arrangements across health sector policies, institutional development and project implementation. Sustainability. By the end of the Project, the EDP contribution to Government health sector budget was 48%. Although down from the peak of 52%, it still signals significant reliance on ODA for financing health sector expenditures. Free health care policies as well as increasing burden of non-communicable diseases and growth of hospital sector continue to increase demands for public resources. Developing and agreeing on policy and institutional options for a more sustainable path for mobilizing financial resources to meet population needs urgent attention.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies: The comments of the implementing agency (MoHP) on this ICRR have been incorporated in the text. (b) Co-financiers and (c) Other partners and stakeholders (e.g. NGOs/private sector/civil society):

23

No comments were received from co-financiers or other stakeholders.

24

Annex 1. Project Costs and Financing Table 2. Project Cost by Component (in USD Million equivalent)

Components Appraisal Estimate

(USD millions)

Actual/Latest Estimate (USD

millions)

Percentage of Appraisal

STRENGTHENED SERVICE DELIVERY

434.30 659 152%

INSTITUTIONAL CAPACITY & MANAGEMENT DEVELOPMENT

63.98 164 256%

Total Project Costs and Financing Required

498.28 823* 165%

* updated 2008 estimate for six years Table 3. Project and Program Financing by Source

Source of Funds Type of

Cofinancing

Appraisal Estimate

(USD millions)

Actual/Latest Estimate

(USD millions)

Percentage of Appraisal

Borrower Pooling 285.61 485.61 170% UK: British Department for International Development (DFID)

Pooling 36.75 43.75 119%

Australia: Australian Agency for International Development

Pooling 0 5.30 N/A

International Development Association (IDA)

Pooling 10.00 10.00 100%

IDA GRANT FOR POOREST COUNTRY

Pooling 40.00 90.00 225%

FOREIGN SOURCES (UNIDENTIFIED)3

Parallel 125.92 188.34 150%

3 The main non-pooled foreign financiers of the sector were USAID, the Global Fund to fight AIDS, Tuberculosis and Malaria, KfW, GTZ, the UN Agencies, the Global Alliance for Vaccines and Immunization, and JICA

25

Annex 2. Outputs by NHSP I Component Table 4. Program (NHSP I) Intermediate Outputs

Output Original Indicator Revised Indicator

Comments Baseline

Target/ Actual

Baseline Target/ Actual

Essential Health Care Services

See text in this section, too many variables to be included in the table

Decentralization No of District Hospitals Under Autonomous Boards

1 10/10 10 17/29

No of SHPs under decentralized management form

1,114 3,129/ 1,433 (100%)

Dropped at mid-term

MOHP provides formula based block grants to districts

0 28 Dropped - decentralization efforts stalled due to lack of elected local authority

Public Private Partnerships No of District Hospitals under PPP Management

1 5/5

At least two new PPP modalities in EHCS areas supported by MOHP

0 2/2 Uterine prolapsed surgeries performed by private sector under public contract Contracts in 5 districts with non-state hospitals to provide emergency obstetric care

NHSP-II to include increased and formalized collaboration

achieved Introduced at the time of additional financing.

Sector Management Capacity Assessment and follow-up actions

No assessment

Assessment and Management actions taken

Mid-term review concluded that initial policy benchmarks for monitoring were not useful for monitoring actual sector management improvement. Dropped at mid-term

Prepare NHSP-II No NHSP II prepared/yes

Introduced at the time of additional financing

Health Financing and Resource Allocation

% of MOH budget allocated to EHCS

50 70/75

% of MOH recurrent budget allocated to non-salary costs

25 35/55

Physical Assets and Procurement Management

No essential drug stock outs in public health facilities for more than 1 month in a year

N/A 100% Less than 25%/20%

Target was revised at the time of additional financing, further defined

Share of construction budget designated for maintenance

No designated budget

20%/20% Introduced as part of enhanced monitoring framework at the time of additional financing

Human Resource Policy and Management

% of public health facilities with full complement of staff

Not available

BOEC 56 districts and COEC in 33 districts with 84% skill mix

BOEC in 75 districts and COEC in 39 districts with 90% skill mix

Enhancement at the time of additional financing, focus on BOEC/COEC

Integrated Management Information Systems

Increased use of survey data for evidence based policies

Analysis available on MOPH web site

Introduced as part of enhanced monitoring framework at the time of additional financing

Strengthened HMIS Pilots completed and evaluated

Introduced as part of enhanced monitoring framework at the time of additional financing

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Within the SWAp context the Project outputs need to be reviewed alongside the outputs of the First Nepal Health Sector Program (NHSP I). The Project design and components followed the design and structure of the health sector plan. It also needs to be noted that for the sake of feasibility and simplicity, the Project outputs and indicators monitored through ISRs constituted a subset of the NHSP I indicators. As discussed in Section 2.3, the main outputs of the NHSP I remained the same; the intermediate results framework was adjusted during Project implementation to reflect changing policy context and enhancements resulting from mid-term review and enhancement at the time of processing of AF. The table above summarizes the key outputs as per original program document and updates after the mid-term review and AF. Below is the summary of achievements and challenges under the eight key program outputs. Essential Service Delivery: Increased Access to and Utilization of EHCS (Output 1). As discussed elsewhere in this report, the Program supported key components of EHCS package that have contributed to significant improvement of health outcomes. These services include Family Planning, Extended Program of Immunization, Community Based Integrated Management of Childhood Illnesses (CB-IMCI), Vitamin A supplementation, the introduction of Zinc supplementation for the treatment of diarrhea, together with ORS, the continuous improvement in the availability of iodized salt (90% of households), and antenatal and delivery care. During Project implementation there was rapid expansion of coverage of access. Progress was further accelerated by free health care policy and specific demand side incentives (safe delivery incentive program) for selected services mid-way through Project implementation. At the time of processing additional financing, selected additional services were added, including action to address the common problem of uterine prolapse. Immunization services increased to be available in 100% of public health facilities, up from 60%. Immunization coverage met or exceeded targets (see Section 3.2). Similarly, availability of family planning, antenatal and post natal care increased from 50% to 100% of public health facilities. Attendance of births by skilled provider surpassed the target (see Section 3.2). Basic Emergency Obstetric Care availability expanded to all districts and Comprehensive Emergency Obstetric Care availability to 48 districts with 5 using private sector. Almost 1,000 skilled birth attendants were trained during the program. The Safe Delivery Incentive Program (launched in 2005) and making delivery care universally free (2009) accelerated the growth of institutional deliveries. Safe abortion services are available in 240 sites in all districts. Uterine prolapse surgeries surged from 1,000 by 2007 to more than 14,000 in 2010 with significant private sector involvement. CB-IMCI expanded from 6 to all districts and special neonatal health programs launched and evaluated in 10 districts. The ARI4 symptoms among children under 5 dropped as the use of ARI treatment by health care facilities surged from 36% in 2006 to 54% in 2009.

4 ARI – acute respiratory infection

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Progress was made in addressing tuberculosis through DOTS. Although the case detection rates of 71% and treatment success rates of 88% among estimated 20,000 new infectious cases a year fall a bit short of national targets (80% and 90% respectively), they are internationally still very respectable outcomes. HIV/AIDS remained a concentrated epidemic with improvement of knowledge (see Section 3.2) and expansion of ARV5 treatment, voluntary counseling and testing centers and facilities implementing PMTCT. 6 The Government financing target (15% of Government funds) was not met (estimated actual 10%) but significant donor support to HIV/AIDS was provided outside Government channels funded by ODA. The PDO put particular focus on vulnerable and disadvantaged population segments, i.e. equitable distribution of access and utilization of essential health services. However, initially the program lacked targets or indicators to monitor progress towards improved access by the poor and marginalized populations. After the mid-term review and as a result of introduction of free essential health care policies7 by the Government of Nepal, several monitoring instruments were launched, enabling segregation of the key performance indicators by income quintile, ethnic group, religion and caste. Progress was made in reducing inequalities in several indicators, including immunization coverage, contraceptive use (except among Muslim population). In some areas (e.g. antenatal care), disparities have initially widened as the increases among wealthier population segments outpaced (also significant) increases among the poorest, most likely reflecting other barriers to access (e.g. education of women). Decentralization (Output 2). The expected outputs were decentralization of management of sub-health posts to Community Health Facility Committees and increase of hospital autonomy. For the management decentralization of sub-health posts the expected target was 3,129 by the end of the program, in reality 1,433 were transferred (adding about 300 compared to baseline). The key constraint was the absence of elected local authority and changing political context. Also, decentralization also faced resistance from professional health staff who were concerned of losing professional career development options when transferred from the MOHP to the Ministry of Local Development. At mid-term review, this output target was dropped. In hospital autonomy, a total of 29 hospitals were granted partial autonomy compared to the original target of 10, although the extent of autonomy varies and regulations about accountabilities and decision rights about human resources, financing and user fees, residual claimant, etc. need further strengthening. By the end of the Project, the districts’ share of Government health budget increased from 13% to 34%, and with the addition of further central funds disbursed to districts (national programs), the total was 58% for 2009/10 FY.

5 ARV- anti retroviral 6 PMTCT – prevention of mother to child transmission of HIV 7 Free services comprise all services provided by sub-health posts and health posts, 40 essential drugs, all institutional deliveries, uterine prolapsed surgery

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Private Public Partnerships (Output 3). The NHSP I called for recognition of the important role of private and NGO sectors play in service delivery, defining appropriate roles for each, and for working in partnership where appropriate. Specifically, the NHSP I monitored contracting out public hospital management to private sector in at least five hospitals. This PPP model was implemented in five hospitals. The mid-term review suggested moving away from a narrowly defined indicator of a complex hospital PPP arrangement and rather promoting dialogue and monitoring progress along a broader concept of appropriate private sector involvement. Indeed, several developments can be reported, including making abortion services legally available in both public and licensed private facilities (85% of these services being provided by private sector), entering into partnership with the private sector for performing significant number of uterine prolapse surgeries, contracting the private sector to provide logistical services for drugs distribution, the provision of family planning services by NGOs (40% in private sector), the collaboration with private medical schools for free training of Government appointed students (20% of places), and making the Safe Delivery Incentive Program eligible also for deliveries in private facilities. Sector management (Output 4). Original outputs envisaged moving towards unified sector-wide planning, programming, budgeting, financing, and performance management to support service delivery, supported by EDPs and involving NGOs and the private sector. Also envisaged was the restructuring of MOHP as appropriate to be conducive and supportive to the vision. As discussed in Section 2.2 and Annex 5, the Government made significant progress in sector wide arrangements. A Decentralization Forum was established in 2007 to guide policy making and decentralization activities. However, less progress was made in streamlining and restructuring of the MOH. The original milestones of Policy Reforms included a significant policy and institutional agenda to support decentralization, including removing vertical management structures, support to district based planning, budgeting, quality assurance, and performance management systems. Except decentralized budgets, progress in actual institutional strengthening of decentralized management of health services was limited. This was also linked to changing overall policy context after the Comprehensive Peace Accord and power sharing in a broad coalition government. The enhanced monitoring framework under AF also included the preparation and approval of the follow up 2nd Nepal Health Sector Program that was duly completed and jointly appraised by the Government, civil society and EDPs. Health financing and resource allocation (Output 5). The Project aimed at increasing public spending on health, prioritization of Essential Health Care Services, developing and implementing equitable resource allocation formula, better execution of budget, and broadening the sources of financing by mobilizing local authorities, regulating user fees, and piloting community insurance and revolving drug fund schemes. During Project implementation, significant policy decisions were taken by the Government to abolish user fees for a basic essential health care package thus moving the discussion about alternative financing sources for hospital based and specialist care (that was out of scope of the current Project). There was significant progress in other areas in the output.

29

Health expenditure as proportion of Government budget increased from 5.9% to 6.24% between 2004/5 and 2009/10 fiscal years (with a peak of 7.2% in 2007/8 budget). Although shy of the target 7%, one needs to recognize that this took place in the context of rapidly increasing overall budget. As a share of GDP, Government expenditures for health increased from 0.8% to 1.7% of GDP. Expenditure prioritization towards essential health care exceeded its original target of 70% (latest 75% in 2009/10 FY). One needs to note, however, that the calculation of the percentage reflects an agreed formula between the EDPs and MOH and it also includes select hospital based services, including institutional deliveries and emergency obstetric care. This explains how this high proportion can be maintained at the time when MOF reports significant increases of Government expenditures on hospitals and declining share to MOF definition of essential health care (primary health care provided by health posts and sub-health posts). MOF data indicate that spending on “Beyond essential health care services” rose 10-times in nominal terms after 2004, mainly reflecting additions of two new state hospitals/facilities each year. Spending on hospitals increased from an average of 13% of total health expenditure in the Tenth Plan to 31% in 2010 and it is expected to rise further as pressure grows for more public services in urban areas. The NHSP I prioritization of basic health care services has helped to protect the essential services but it can be reasonably expected that pressure for hospital spending will increase in the future, adding another argument to the need of further health financing reform providing adequate funding for essential health care and public health goods and providing adequate catastrophic health expenditure risk protection for population needing to access hospital level care. The absorptive capacity of the health sector as reflected in the execution of health budget improved from 69% in 2004/5 to 85% in 2008/9 in the context of significantly increased budget. Financial management review prompted streamlining of Government health budget categories from 50 to 35, thus simplifying the budgeting and management and improving flexibility. However, these improvements mask an un-balanced disbursement profile within each fiscal year during which only limited resources are available for districts during the first 6 months of the fiscal year and the bulk of disbursements take place in the last 2 quarters. Several coping strategies were employed, including district treasuries releasing 1/6 of previous year’s releases when budget approval processing was late, prioritizing expenditures (essential health services, salaries), and requesting Village Development Committees to fill the gaps when stock-outs of essential drugs occur. The Program also achieved increased capital spending in health (actual 26% from baseline of 13% against the target of 30%) and maintaining the non-salary component of Government health expenditure at or higher than 39% (latest actual 55% in 2008/9). However, only limited progress was made towards more equitable resource allocation. Budgeting and programming is still facility based favoring Kathmandu Valley. In per capita terms, the central region residents receive double of what those in the far west get, and the people in the Hills get 30-40% more than what Mountain residents receive. But

30

differences are declining, perhaps partly helped by budget transfers to public health facilities to compensate for free health care redressing these inequities somewhat as the transfers are based on actual care provided to the eligible poor. Use of public sector health services is reported by 60% of the poorest vs 36% of the richest. Physical assets, logistics and procurement management (Output 6). Under the joint financing arrangements public procurement in the health sector was conducted according to the Procurement Law (latest version from 2007) that reflects international standards, except for procurement above International Competitive Bidding threshold when the World Bank guidelines applied. As discussed in the Section 2.5, the Program experienced various procurement issues, in particular related to decentralized procurement of drugs and supplies, as well as national level procurement of equipment and civil works. Risks of collusion and conflict of interest were raised during Project implementation. Several health system issues impacted the procurement performance – late budget approvals delayed the start of procurement processes, low capacity in implementing agencies and programs delayed submissions of cost estimates and technical specifications, new eligibility criterion of WHO Good Manufacturing Practice certificate created temporary difficulties until sufficient number of national producers could obtain it. It took time to address these constraints, but overall continued improvement in the management of procurement of goods was observed during Project implementation, however procurement of works (conducted by Ministry of Planning and Construction) continued to experience problems. Logistics for supplying drugs to service providers remained a challenge during Project implementation, exacerbated by the surge of demand introduced by free health care policies that made 40 essential drugs free at the point of service delivery. Although several initiatives were undertaken to reform the traditional facility based and geographic drug distribution formula, the impact of some of them (e.g. “pull” system responding to actual demands from health care providers within districts was limited as the central level forecasting capability and distribution methods were not compatible with this. Further improvements of centralized procurement better responding to local demands are ongoing. The Program output indicator of 100% of public health care facilities not experiencing stock-outs of essential drugs during a year was not met (in fact 75% of facilities experienced stock-outs), the key factor for it is likely to be the free health care policy that put significant additional strain on the system. During Project implementation a health facilities inventory and maintenance plan was developed and at the time of processing additional financing an agreed target was set that 20% of construction budget be allocated for maintenance of existing stock of buildings to ensure adequate financing of the plan. This Output also addressed the health care waste management that is discussed in the Section 2.5 of this report. Human resource policy and management (Output 7). This component intended to address the imbalance of the size of health workforce, its distribution and expected

31

workload. It aimed at undertaking several analyses and support upgrading the traditional fragmented human resource related management functions – personnel administration, training and human resource management information system into more integrated human resource development and management function. Retention and availability of skilled health personnel are major issues at state health institutions. Over 25% of the sanctioned posts at public institutions remained vacant and similarly, on an average, 12% of nursing and paramedic posts remained unfilled. Absenteeism is another issue at public health institutions. According to a recent survey,8 64-84% of posted doctors, 68-81% of nurses and 81-92% of paramedics were available at their posts. During the Program implementation, the Government undertook several measures to improve the situation, including compulsory 2-year service for new medical and dental graduates receiving Government scholarships, as a result of which 305 of them were serving outside the Kathmandu valley at the time of project completion; about 1,000 additional maternal and child health workers were trained in an 18-month course; local authorities are allowed to contract additional staff to fill vacancies. However, this has not been sufficient to bring about significant improvement in human resource distribution compared to 2006 situation and more comprehensive measures are needed to address the income, professional and family benefits related expectations of health staff.

At the time of processing additional financing, enhanced monitoring framework emphasized the improvement in availability of adequate staff mix in health facilities providing BOEC/COEC which was achieved to a large extent by the deployment by the Department of Health Services of contract staff.

Further strengthening is needed in the human resource management function at the Ministry of Health, including integration of the key human resource management functions and completing the HR management information system that in 2008 had less than 30% staff included and lacked linkages between different HR functions. In addition, consideration should be given to an appropriate balance of health human resource management functions between the central MOHP and decentralized authorities. Local health authorities with human resource management decision rights could be more effective in filling vacancies in remote areas. Experience from a field visit to Dhading District revealed that the district hospital was able to fill 6 vacancies on contract basis with less cost compared to Government civil service deployment. Local recruitment was the key factor for this success. It needs to be noted that decentralized human resource management would put different demands to the Government human resource management function, in particular in the area of quality assurance.

Integrated management information systems (Output 8). The Nepal HMIS provides reasonably accurate data for most EHCS programs that have been validated by household survey instruments. During the program implementation, the HMIS data were

8 RTI International – December 2009.

32

supplemented by a range of regular household and facility surveys, complementing the administrative information with insights about equity of utilization of services and population’s perception about quality. During Project implementation, the Government started pilots in three districts for disaggregating health services data by age, gender, caste, ethnicity and religious minorities. The pilots were completed and evaluated but the initiative could not be scaled up to other districts due to budgetary constraints. The enhanced monitoring framework at the time of processing AF included increased use of survey data in evidence based policy making as well as making the analysis results widely available. The challenge remaining from the implementation of NHSP I is in the use of information generated by HMIS, in particular at district level in the context of decentralization. Although Nepal’s HMIS performed well compared to the countries of similar socio-economic circumstances, both the Government and EDPs indicated that they had had even higher expectations for the NHSP I support, in particular in the areas of integration of different data and information streams (e.g. health outcomes, health system performance, resource use) and more of disaggregated data. But these expectations may have been simply unrealistic for the given time frame and fragile country circumstances. IDA Core Indicators. Per IDA institutional policies, the Project began reporting on institutional core indicators mandatory to all IDA financed projects in the last year of Project implementation. The status of these indicators is recorded in the table below. The unilateral way in which IDA Core Indicators and targets were introduced may make the data for these indicators less reliable than for others that were part of the original Results Framework design. Not being integrated in the government’s M&E system in use for the project, they are most likely the best estimates by the World Bank and client staff. This is reflected in lack of targets, inconsistent treatment of cumulative and annual performance numbers. Table 5. Performance along IDA core indicators

Indicator Baseline Target (2010) Actual (latest) Direct project beneficiaries 28 million 28 million 28 million Health staff trained 0 Annual targets 12,143 (cumul) Health facilities built, renovated, equipped

0 3,000 1,843 (2009 only)

Children immunized 0 450,000 (cumulative) 583,819 (2010 only)

Pregnant women receiving antenatal visits

0 1,400,000 (cumulative) 746,067(2010 only)

Children receiving vitamin A 0 110,000 (cumulative) 2,624,101 (2010 only)

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Annex 3. Economic and Financial Analysis Government expenditure: One of the pillars of the financial and economic analysis of the Project was assessing the government’s commitment to the sector through its budgetary allocation. It was assumed that the budgetary allocation to MOHP will increase to 7% of total budget during the life of the Project. In the years of implementation of the Project, the share of health budget has increased steadily reaching a peak in 2007/08 (Table 6). The initial assumption that the share will reach 7%is more or less confirmed. The share of government expenditure has also increased as a percentage of GDP. Table 6. Share of health in national budget (NRS million), health expenditure in GDP (%)

Budget Expenditure

Fiscal year National Health Share (%) % of GDP

2004/05 111690 6553 5.87 0.84

2005/06 126885 7555 5.95 0.93

2006/07 143912 9230 6.41 1.07

2007/08 168996 12099 7.16 1.25

2008/09 236016 14946 6.33 1.45

2009/10 285930 17840 6.24 1.68 (budget)

Source: MOHP, 2010. Budget analysis FY 2010/11; WB PER, 2010 (draft)

Expenditure prioritization: The government commitment was also assessed based on its ability to prioritize expenditures such that there would be major shift away from secondary and tertiary care towards EHCS. It was envisaged that budgetary spending on EHCS will increase from 56% to 70% by the end of the Project. By 2008/09 the share of EHCS has reached more than 74% (Table 7). Though expansion of the EHCS package that has occurred at one point may partly be responsible for such increase in the share, there is a clear upward trend in the share during the years. Table 7. Share of EHCS from total budgetary expenditure (NRP million)

Fiscal year

Budgetary expenditure

Total EHCS Share

2004/05 4598 2932 63.77

2005/06 5723 3666 64.06

2006/07 7441 4967 66.75

2007/08 9844 6742 68.49

2008/09 12731 9505 74.66

Source: MOPH, 2010. Budget Analysis FY 2010/11.

Composition of expenditure: The composition of expenditure is analyzed in terms of three broad categories: i) EHCS versus beyond- EHCS expenditures; ii) capital versus recurrent expenditures; and iii) salary versus non-salary recurrent expenditure.

34

It was envisaged that the expenditure will gradually shift towards EHCS. It was projected to increase from 56% of total MOHP expenditure in 2004/05 to 69% in 2008/09. As shown in Table 7, this projection was surpassed and the EHCS account to more than 74% of expenditure. Under the Program the share of capital expenditure was expected to increase to reach 30% of the total budget. It was to remain at this level throughout the Program years. As shown in Table 8, the share of budget for capital expenditure has been fluctuating significantly and it has never exceeded 26%. Table 8. Capital and recurrent share of health budget (%)

Fiscal year Recurrent Capital

2006/07 84.7 15.3

2007/08 75.8 24.2

2008/09 80.3 19.7

2009/10 79.2 20.8

2010/11 74.1 25.9

Source: MOPH Budget Analysis for respective years

The share of non-salary recurrent expenditure was projected to be maintained on at 39 % during the Project. The assumption was attained as the share of non-salary recurrent expenditure has steadily increased reaching 57% before coming down to 55% (Table 9). Table 9. Share of non-salary recurrent expenditure in health (NRS million, %)

Fiscal year Total Non‐salary recurrent

Share

2004/05 4598 2344 51%

2005/06 5723 2780 49%

2006/07 7441 4241 57%

2007/08 9844 5137 52%

2008/09 12731 7051 55%

Source: MOPH 2010. Budget Analysis FY 2010/11 Absorptive capacity. The Program aimed to resolve the constraints that led to under-spending of the allocated budget. During Program implementation the absorptive capacity of the MOHP improved significantly. As shown in Table 10, the ministry has increased the spending to 85% of allocated budget. Table 10. Expenditure of allocated health budget (NRS million)

Fiscal year Budget Expenditure Execution

2004/05 6553 4598 69%

2005/06 7555 5723 72%

2006/07 9230 7441 81%

2007/08 12099 9844 80%

35

2008/09 14946 12731 85%

Source: MOPH 2010. Budget Analysis FY 2010/11 However, the aggregate improvements mask significant fluctuations within each fiscal year. A significant proportion of expenditures occurs during the last trimester (Table 11). While the share of spending in the first trimester has decreased, that of the third trimester has increased steadily. Such increase in third trimester spending may mean higher pressure to spend that could compromise the quality of spending and this has resulted in service delivery being forced to employ several copying strategies in the first trimester. Table 11. Share of actual health sector expenditure by trimester

Fiscal year

Share of spending

I Trimester II Trimester III Trimester TOTAL

2004/05 18.57 18.54 32.14 69.25

2005/06 16.54 17.67 37.92 72.13

2006/07 10.85 33.16 36.61 80.62

2007/08 10.83 21.79 47.62 80.24

2008/09 13.01 22.51 49.67 85.19

Source: MOPH 2010. Budget Analysis FY 2010/11 The Medium Term Expenditure Framework has served as a tool for prioritizing government expenditures in general. The Program has effectively used the MTEF as a tool to prioritize certain expenditures, especially those related to EHCS. Though initially the MTEF was no more than a general budget projection, it eventually came to provide a realistic outlook of government commitment to health. It categorizes the budget projection in to three expenditure priorities areas where priority I is the least affected by any subsequent revision of the budget. MOHP has ensured that EHCS budget is categorized under the priority category. The current MTEF exercise however is maturing by the year. As the MTEF exercise matures, budget preparation at MOHP would benefit from it. Efficiency and cost-effectiveness of Public Spending. While recognizing the significant progress made towards improved health system performance and outcomes during Project implementation, questions have been raised about the efficiency of significantly increased public spending. As discussed above in the report, the NHSP I supported by the Project increased the allocation towards EHCS that included some of the public health practice’s best buys. A study commissioned by DFID concluded that the Nepal public health spending saved one Disability Adjusted Life Year (DALY) at the cost of US$144 that is lower than the WHO’s benchmark of cost-effective interventions defined as cost per DALY saved less than per capita income (latest around US$400). However, as discussed elsewhere in this report, there appear to be further opportunities for efficiency and cost-effectiveness improvement in the areas of public procurement and improving equitable resource allocation.

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Fiscal sustainability. The Project estimated that the expanded MOHP Program will be sustainable under the assumption that fiscal deficit will be maintained under 5% of GDP and domestic borrowing at 2% of GDP. These predictions are in fact agreements between the government and the IMF. Furthermore the Project was assessed fiscally sustainable based on the prediction that: (i) real GDP will grow at around 5.5% in 2005/06 and beyond; and ii) tax revenue will grow steadily to 14% of GDP by 2007/08. As shown below, these predictions were not realized (Table 12). A number of political developments may explain such deviation from the initial predications. Table 12. Select Nepal macro-economic indicators

As a percentage of GDP

Fiscal year Real GDP Tax revenue Fiscal deficit Domestic borrowing

2004/05 3.50 9.20 5.50 1.50

2005/06 3.40 8.80 5.90 1.80

2006/07 3.30 9.80 6.30 2.50

2007/08 5.30 10.40 6.60 2.50

2008/09 4.70 12.20 7.40 2.60

Source: Ministry of Finance, 2009. Economic Survey, FY 2008/09

Initially, the NHSP I approach towards financial sustainability aimed at reducing dependence on external assistance by (i) increasing the Government contribution; (ii) improving resource mobilization through cost-sharing; and (iii) improving allocative efficiency of sector expenditures. Whereas progress was made along (i) and (iii), the (ii) assumption changed dramatically during the Program implementation with the Government commitment to free health care and abolition of user fees for essential health services. This will imply additional Government outlays for free essential drugs, compensation to health care providers serving identified poor, additional human resource, medical equipment and infrastructure inputs. The Government has estimated the financing needs for financing of US$1,527 over the years 2011-2015 under NHSP II. In the short term, the Government will be able to meet the estimated need if it secured an amount of US$1,037 million of ODA under a follow up SWAp operation. However, this would arrest the decrease of ODA as proportion of the MOHP budget from 51% in 2007 to 48% in 2010, and instead might increase the proportion to 68% over the period of 2011-2015. This will put pressure on the Government and EDPs to start in earnest discussions on medium and long term health financing strategy.

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Annex 4. Bank Lending and Implementation Support/Supervision Processes

List of Task Team members

Names Title Unit Responsibility/

Specialty Lending Jagmohan S. Kang Consultant SASHD Tirtha Rana Senior PHN Specialist SASHD Kiran R. Baral Senior Procurement Officer SARPS Naima A Hasci Senior Social Scientist ECSS4

Eliezer Orbach Consultant, Institutional Development

SASHD

Laura M. Kiang Senior Operations Officer SASHD Kirtan Chandra Sahoo Environment Specialist SASES Julie Mclaughlin Senior Public Health Specialist AFTH1 Sundararajan Srinivasa Gopalan

Senior PHN Specialist SASHD

Bigyan B. Pradhan Senior Financial Management Specialist

SARFM

G.N.V. Ramana Senior Public Health Specialist SASHD Elfreda Vincent Program Assistant SASHD Sushila Rai Program Assistant SASHD

Supervision/ICR Roshan Darshan Bajracharya

Senior Economist SASEP

Kiran R. Baral Senior Procurement Officer SARPS Tekabe Ayalew Belay Senior Economist (Health) SASHN Agnes Couffinhal Senior Economist (Health) ECSH1 Phoebe M. Folger Operations Officer SASHN Drona Raj Ghimire Environmental Specialist SASDI Sundararajan Srinivasa Gopalan

Senior HNP Specialist SASHN

Naima A Hasci Senior Social Scientist ECSS4 Jagmohan S. Kang Consultant SASHD Jaya Karki E T Temporary SASHD Laura M. Kiang Senior Operations Officer SASHN Luc Laviolette Senior Nutrition Specialist SASHN Nagendra Nakarmi Senior Program Assistant SARFM Toomas Palu Lead Health Specialist EASHH Bigyan B. Pradhan Sr Financial Management Spec SARFM

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Sushila Rai Program Assistant SASHD Tirtha Rana Consultant SASHD Sandra Rosenhouse Sr Population & Health Spec SASHN Nastu Prasad Sharma Public Health Spec SASHN S. R. Tiwari Consultant SASHD Elfreda Vincent Program Assistant SASHD Albertus Voetberg Lead Health Specialist SASHN Alejandro Welch Information Assistant SASHD Staff Time and Cost

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks USD Thousands

(including travel and consultant costs)

Lending FY97 N/A 0 FY98 3.56 18.35 FY99 2.12 4.25 FY00 6.91 18.27 FY01 16.4 45.85 FY02 N/A -1.03 FY03 5.6 52.89 FY04 64.85 330.75 FY05 48.98 131.21

Total: 148.42 600.54

Supervision/ICR FY04 0 3.66 FY05 15.91 76.85 FY06 63.32 182.74 FY07 41.50 166.60 FY08 62.76 209.66 FY09 53.34 192.28 FY10 44.59 183.01 FY11 11.78 62.23

Total: 293.20 1077.03

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Annex 5. Implementation Arrangements for Sector Wide Approach Application of SWAp building blocks under NHSP I

SWAp Component

Application under NHSPP

Comments

1. Sector Policy and Strategy

Sector strategy was in place and stayed relevant throughout the Project implementation period

Strategy and its implementation plan with EDP backing was effective as an instrument for prioritization of resources and monitoring performance. Interim constitution added a dimension of free health care

2. Sector MTEF

Limited. Policy in place officially and the MOF requested sectors to prepare 3-year rolling plans, it was not applied for practical purposes to actual planning in the MOHP. Annual budget ceilings from MOF may differ based on previous year's actual experience.

Although MTEFs were not actively used, the health strategy included specific commitments about increasing the health share within the Government budget and the allocation threshold within the budget to Essential Health Care Program that served as important benchmarks for resource allocation throughout the project.

3. Programming resources

Annual Work Plan and Budget development process is in place. During the implementation an electronic tool was developed and applied to facilitate programming. Annual plans and budgets are reviewed and agreed with external development partners during Joint Annual Reviews.

Lesson learned during the implementation that more continuous interaction is needed during the annual plan and budget preparation phase. For the NHSP2 - more regular meetings were agreed.

4. Performance Monitoring Systems

The Project used a sub-set of National Health Strategy Indicators. Earlier studies had confirmed reliability of Government administrative data. Interim reports were prepared for on-going monitoring and feeding in to twice a year Joint Annual Review meetings. Parallel, DFID funded technical assistance and research program provided additional evidence.

This pragmatic arrangement seemed to have worked well. Segregation of data by socio-economic quintile, caste, ethnic group requires additional data sources and analysis. Several partners/stakeholders also emphasized the need for continuous effort to strengthen HMIS.

5. Process of Dialogue and Aid Coordination

Key processes and instruments are defined by a Statement of Intent (2004); Code of Conduct and IHP+ Compact; Joint Financing Arrangement 1 signed by Gov., DFID, WB (2004) and AusAID (2009). MOH Structure. Health Sector Reform Unit organizes government and EDP meetings, JARs, coordinates the pooled part of SWAp support, prepares progress reports, assists Health Secretary in ODA harmonization and alignment issues. Regular meetings with Government and among DPs. Quarterly Meetings under Health Sector Development Partner Forum and monthly health sector External Development Partners meetings. Joint Annual Reviews in place - twice a year, one dedicated to the review of past year's health sector performance; and, the other to agreeing to the next years work plan and budget.

Nepal has adopted and implemented almost ALL internationally known ODA harmonization and alignment instruments, some streamlining and consolidation could be useful. JAR process has been a continuous learning and adaptation process that has been improving over time. Informants noted that JAR has evolved from input to output/outcome oriented process. JARs could benefit from more structured preparation process (e.g. draft progress reports). Stakeholders in country had decided to move from 2 JARs to one JAR (performance review) and replace the planning JAR (perceived as formalistic) with more continuous consultations during AWP&B programming.

6. Moving towards

Annual programming using Government Work Plan and Budget format in place.

Pooled partners fully relying Government programming. It was felt that the JAR was

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harmonized management systems in health sector

Project used Government M&E framework and indicators complemented by additional studies/surveys as appropriate to gain more insights of particular issues. Procurement under the Project followed the use of IDA International Competitive bidding procedures for works over US$1 million per contract and goods for over US$ 500,000 per contract. Procurement under these thresholds followed modified national guidelines. The program utilized Government systems for financial management, reporting and auditing. Other capacity. The Program included a comprehensive Action Plan for Capacity Building in the Ministry of Health, including functional analysis for division of labor and structure of work; availability, deployment, use and management of human resources; availability, deployment, use and management of material resources; and, availability and use of information for policy making and administration.

not the most efficient modality to discuss and agree on AWB and it was suggested to be replaced by a series of consultation/coordination meetings over the programming period. Reliability of HMIS data had been demonstrated in earlier studies. This combined with additional studies with dedicated direct funding from DFID was a pragmatic arrangement that served the project well. Time bound capacity building plan had been agreed and implemented. Decentralized procurement of goods (drugs, supplies, small equipment) posed significant capacity challenges and it was partly re-centralized under the follow-up project (central bidding-local purchase). The FM assessment acknowledged impressive legal and regulatory framework but pointed out weaknesses in compliance and implementation capacity. Time bound financial management improvement plan was agreed and implemented. The FM systems performance improved over the life of the project, reflected in higher disbursement rates and cleaner audit reports. There was not much evidence of significant progress of comprehensive implementation of the plan from general reporting instruments. However, in selected areas, apparent progress was made, e.g. inventory of medical equipment.

7. Funding Arrangements and Pooling

IDA and DFID provided funding support through pooled arrangements. AusAID joined as a pooled partner in 2009. Pooled funding accounted for 19-23% of Government health program budget, varying slightly year by year.

Pooled funding support was very effective. It provided additional credibility to the budget during the years of conflict, increased predictability and flexibility of use of ODA financing.

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Annex 6. Summary of Borrower's ICR and/or Comments on Draft ICR

Nepal Health Sector Programme (2004-2010)

Implementation Completion Report (ICR)

Prepared by

Dr. Babu Ram Marasini Senior Health Administrator &

Programme Coordinator for NHSP-I Ministry of Health & Population

Government of Nepal Kathmandu

January 2010

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Abbreviations CB-IMCI Community Based Integrated Management of Childhood Illness DoHS Department of Health Services DPHO District Public Health Officer EDPs External Development Partners FCHV Female Community Health Volunteer GoN Government of Nepal HepB Hepatitis B HFMC Health Facility Management Committee Hib Haemophilus Influenza type B HMIS Health Management Information System ICR Implementation Completion Report IMR Infant Mortality Rate INGO International Non-Government Organization JE Japanese Encephalitis LLIN Long Lasting Insecticide Treated Nets MCH Maternal Child Health MCHW Maternal Child Health Workers MD Management Division MDGs Millennium Development Goals MDR Multi Drug Resistance MMR Maternal Mortality Rate MNH Maternal and Newborn Health MoHP Ministry of Health & Population NDHS Nepal Demography Health Survey NHSP Nepal Health Sector Programme NGO Non-Government Organization NPC National Planning Commission SAS Safe Abortion Services SBA Skilled Birth Attendance SMNH Safe Motherhood and Newborn Health SWAP Sector Wide Approach TFR Total Fertility Rate TYIP Three Year Interim Plans U5MR Under Five Mortality Rate UNDP United Nations Development Programme FCHV Female Community Health Volunteer WB World Bank WHO World Health Organization

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Implementation Completion Report of

Nepal Health Sector Programme-I (2004-2010) Introduction The Nepal Health Sector Programme- I (NHSP-I) was launched in July 2004 as a strategic health sector plan and completed its six year cycle in July 2010. Initially, it was planned to launch along with the Tenth National Five Year Plan dedicated to Poverty Reduction Strategy (2002-2007), but it could not be launched simultaneously due to incomplete preparation for entering into sector wide approach (SWAp) in the health sector. In 2007, Government of Nepal (GoN) launched Three Year Interim Plan (TYIP) 2007-2010, to support the national development and ongoing peace building process initiated in 2006 to resolve the decade long armed conflict in the country. So, to align with the TYIP (2007-2010), NHSP-I (2004-2009) extended for an additional year with revision of some key targets and indicators and thus NHSP-I became a six year health sector plan. NHSP-IP-I is the road map for implementation of the Health Sector Strategy: An Agenda for Reform (2003) and a complex combination of poverty reduction strategy (2002-2007) for health sector, Millennium Development Goals (MDG) with health sector reform and health sector wide approach as new initiatives. Objectives Increase the coverage and quality of essential health care services (EHCS), with a special emphasis on improved access for poor and disadvantaged groups, through an efficient sector wide health management system. Design of the NHSP-I The NHSP-I design was based on a programme approach with health SWAp and health sector reform as important components. The financing of NHSP-I planned in three ways- budget from GoN, health sector budget support with pooling of funds from the World Bank (WB) and Department of International Development (DFID), UK with provision of any other partner can join pool fund anytime. Other donors and development partners such as AusAID, China, India, GAVI, Global Fund, GTZ/KFW, JICA, SDC, UNAIDS, USAID, UNICEF, UNFPA, and WHO continued to support via the project approach. NHSP-I design included poverty reduction, MDGs and other national plans. NHSP-I had three programme outputs and five management outputs and a set of definite reform agendas to be implemented during the programme period. Pool funding by two donors proposed following national systems, processes and procedures for expenditure as agreed in the Joint Financing Arrangement (JFA), while parallel funding from other partners was possible.

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Every year, two joint annual reviews (JAR) were proposed– one in November or December for performance review and another for planning in May or June. Despite this, health sector development partner’s forum meetings to be held periodically for consultations and discussions on health sector development issues at least three times every year. The strategy of pool partners was results-based financing and targets agreed upon were health sector MDGs and contribution to poverty reduction. Under additional financing of USD 50 million by WB, indicators related to utilization of health services by socially excluded groups were also included in the programme document and proposed periodical monitoring process. Similarly, Nepal became member of the International Health Partnership Plus (IHP+) in 2007 and issue of Paris Declaration became prominent in the later part of NHSP-I. In summary, the design of the NHSP-I included the following as important components:

Implementation of health sector reform with definite agendas Initiation of SWAp in health sector Health sector MDGs Poverty reduction and vulnerable community development plan Increase coverage of quality EHCS focusing poor and disadvantaged groups Reduce disparity in health services and bring equity in health care Decentralized management of primary health care level public sector health

facilities and improved service delivery Partnership arrangements to improve delivery of EHCS with non-government

sector Enhance capacity of health sector Health care waste management Donor harmonization

Implementation Institutional arrangements At the national level, the Secretary, Ministry of Health and Population (MoHP) was identified as the overall chief of the NHSP-I. The Secretary was supported by the Chief of the Health Sector Reform Unit (HSRU) and other divisions, centers and departments of MoHP for implementation and advancement of the reform agenda. HSRU was also given the responsibility of progress reporting with pool partners as well as a contact point for donor concerns. No special project implementation unit was created for NHSP-I implementation and the existing organizations of health services at national, regional & district level were made responsible for implementation of the NHSP-I. Implementation of services and interventions carried out through the existing public sector health facilities under the Ministry of Health and Population such as female community health volunteers, sub health post, health post, primary health care center, district hospitals, and other government hospitals, partner hospitals, Regional Health

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Directorates, Department of Health Services and other Departments and in some cases by MoHP. To strengthen health service delivery at the local level an approach of decentralized management of health services by forming local health facility management committees was introduced in 29 districts with handover of 1435 health facilities to local management committees. Partnership arrangements and contracting out of essential health care services (EHCS) was done in areas where there are constraints in service delivery by the public sector. MoHP made a formal arrangement with Department of Urban Development & Building Construction under Ministry of Physical Planning & Works for construction and renovation of buildings of health facilities costing more than one million NRs, while works less than one million continued by Management Division of DoHS. Close coordination maintained for financial management with Ministry of Finance and Office of the Comptroller General. All the NHSP-I related annual audit of the financial expenditure (included in red book of annual budget) were done by Office of the Auditor General of Nepal. Monitoring and evaluation of the NHSP-I was done through the existing systems of MoHP with a plan to strengthen it during the program period. For smooth implementation, the policy documents agreed upon were documents such as Health Sector Strategy: an Agenda for Reform, NHSP-IP and Letter of Intent to Guide Partnership in Health Sector Development signed by both government and health sector donors and letter written by Finance Minister on Government of Nepal’s decision to implement sector wide policy in health sector. Operational experience The implementation of NHSP-I was quite smooth and satisfactory in view of the ongoing armed conflict and political instability when it started and at the middle of the programme peace building process started after signing of the comprehensive peace accord in 2007. After starting peace building process, the law and order situation improved satisfactorily in many parts of the country except some hilly districts in eastern development region and central terai districts. But, MoHP continued to deliver the health services in all parts of the country and no major obstacle encountered for service delivery. The macro-economic situation of the country remained stable over the NHSP-I period except decreasing trend in export of Nepalese goods abroad with imbalance in export and import. The Ministry of Finance continued to collect the revenue as targeted in each financial year. Tourism industry showed signs of recovery with increasing flow of tourists and increasing number of international airlines operating in Nepal. The major source of foreign currency was remittance send by migrant Nepalese workers abroad in NHSP-I period.

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In environmental situation, Nepal experienced new challenges of communicable diseases outbreaks arising due to climate change. In health sector there was a plan to improve the health care waste management in the country and some works initiated during the NHSP-I period. Nepal is a multi-ethnic, multi language and multi-cultural country and Government of Nepal adopted a strategy of social inclusion to mainstream the all excluded castes, ethnic groups and communities. Health sector also initiated several new schemes targeting poor, women, children and socially excluded groups to improve the health status. Social protection in health become an important issue at later phase of NHSP-I. No special unit was established to implement NHSP-I and use of existing government mechanism largely worked well and to some extent it enhanced the capacity of government to lead the health sector. Similarly, it also increased the ownership of the government and MoHP officers advocating project approach initially started to support the programme approach in later part of the programme. It helped to reduce the transaction cost of NHSP-I and more budget was available for service delivery. The capacity of government increased significantly in procurement of goods, construction and services, though procurement remained problematic during NHSP-I period. As per the concept of SWAp, five core indicators: immunization rate, contraceptive prevalence rate, skilled birth attendance rate at birth and knowledge of HIV prevention were identified for annual monitoring and evaluation purpose and this was decided by a high level meeting of National Planning Commission, Ministry of Finance and Ministry of Health from government and country head of DFID and Country Director of the World Bank from pool partners. Ten JAR meetings were held during the NHSP-I period and 3-5 health sector development partners forum meetings were held each year. The evaluation, monitoring and reporting system couldn’t improve as expected and timely reporting of progress reports remained problematic. The decision of National Planning Commission and Ministry of Finance to release GoN budget to all activities related to priority one projects for first trimester irrespective of availability of donor fund, helped to continue the activities right from first month of the new Nepali financial year. This also lessened the impact of the delayed disbursement of budget and delayed implementation of activities from donor agencies having different financial year. NHSP-I period also increased the donor harmonization and partnership with non-state actors and this helped to bring more resources for health sector. No donor with formal commitment pulled out from health sector during this period; however China, India and INGOs continued to support the health sector in a different way. The signing of the National Compact as per IHP+ membership requirement further strengthened the health SWAp.

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Though the WB and DFID began pooling funds in the first year of NHSP-I, parallel funding was also made available as projects by DFID in safe motherhood and HIV/AIDS prevention and control and by WB in Avian Flu prevention and control. AusAID decided to provide health sector budget support in 2008 and became the third pool partner during NHSP-I period. The leadership of the Ministry of Health remained satisfactory despite frequent political and bureaucratic changes and this was instrumental in bringing more resources both from national and external sources. Outcome of operation against the agreed objectives The outcomes of the NHSP-I is mainly the progress towards achieving the MDGs, which is shown in Table-1. To monitor the annual progress four core indicators were identified as shown in Table 2. Tables 3 and 4 show the progress towards the improvement of health status of the poorest and the situation of reduction of disparity in health. The progress towards achievement of health sector MDGs is quite satisfactory and Nepal is doing quite well in MDG-4 child health and has reduced maternal deaths significantly in achieving the MDG-5 maternal health. The achievement on MDG-6 also seems to be doing well as shown in Table-1 and the situation of halt and reverse has already started in TB and malaria. In HIV/AIDS also, the situation of concentrated epidemic in high risk groups is declining and this led to the overall reduction of HIV prevalence, however millions of migrant workers are working abroad and if they get infected it is likely that they will infect the wives when they return home during vacation. The causes behind the achievements in health outcomes was many new policies and health initiatives initiated during this period focusing on MDGs. Both demand side and supply side policy initiatives implemented to improve the MDG goals 4, 5, and 6 and all of these initiatives were targeted. The issue of success of the health services and social inclusion became prominent after the promulgation of Interim constitution of Nepal in 2007 and free health care concept with abolition of users fees and free provision of 34-40 essential drugs at primary health level introduced as a non-targeted scheme. Studies have shown that the access of women, children and poor and marginalized groups increased after the introduction of free health care. The partnership arrangement with NGOs, not for profit, private sector for profit, and academic sector also increased the coverage and utilization of EHCS and this ultimately helped to improve health outcomes. Though the improvement of health outcomes is quite impressive, in health outcomes across the development regions, the poor are not the same and the Nepal health sector needs to put more effort on reducing the disparity in health services.

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Table-1: MDG indicators including impact indicators Indicator MDG

Target Baseline year (2004-05)

Mid term (2006-07)

End line year (2009-10)

Remarks

Infant mortality rate 34 64 48 41 Under five child mortality rate/1000 live births

54 91 61 50

Maternal mortality ratio/100,000 live births

134 420 281 229

HIV prevalence rate/100,000 population

Halt & reverse

290 550 390

TB prevalence rate/100,000 population

Halt & reverse

310 280 244

Malaria prevalence rate/100,000 population

Halt & reverse

52 25 18

Total fertility rate/women

2.4 4.1 3.1 2.9

Poverty rate (living on <I USD/day)

17% 31 25.4

Source: Baseline- Nepal Demographic Health Survey 2001 and Nepal Living Standard Survey 2003 Midterm- Nepal Demographic and Health Survey- 2006 End line- National Maternal Mortality and Morbidity Survey-2009 and Rural Health Survey- 2009 Table-2: Core or Coverage indicators Indicator MDG

Target Baseline year (2004-05)

Mid term (2006-07)

End line year (2009-10)

Remarks

Immunization rate 90% 72 88.6 88.8 Contraceptive prevalence rate

67% 35.4 44.2 45.1

Skilled birth attendance rate

60% 12.9 18.7 25.8

Knowledge of at least one method of HIV prevention

100% for both sex

F: 37.6 M: 50.86

F: 58.3% M: 81%

F: 70.9

Nutrition stunting rate (height for age) %

30% 57 48 45.5

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Table-3: Poverty-lowest wealth quintile and health indicators Indicator Baseline year Midterm End line % of children immunized against DPT-3 by 12-23 months age

62.1 75.2 82.6

Skilled birth attendance % 3.6 4.8 8.1 Contraceptive prevalence rate (modern methods)

23.8 30.3 38.1

Nutrition stunting rate (height for age) %

61.6 58.8

Table-4: Status of health disparity Area of health disparity

Programme indicator

Baseline End line

Gender Immunization –all vaccines

Male- 67.5 Female-63.9

Male -90.6-2 Female -86.8-6

Poverty- Wealth quintile

Assistance during delivery

Lowest quintile-8.1 Highest quintile-58.6

Geography-Remote vs. accessible

Nutrition (height for age) %

56.9- mountain-hill 47.1 –terai

51.9-mountain-hill 43.9-terai

Rural vs. urban Contraceptive prevalence rate (modern methods)

Urban-62.2 Rural- 56.9

Urban--- Rural-45.1

New health policy initiatives Major new policy initiatives to increase access to coverage and utilization of health services started during NHSP-I period, and these can be categorized as targeted or non-targeted or pro-poverty schemes. Supply side Pro-poor scheme: this provides fully subsidized medical care in emergency and inpatient services to hard core poor at primary health care center and district hospitals. Free health care: this has abolished user fees at district hospital and below public sector health facilities with provision of 34 essential drugs in sub health post and health post and 40 items in primary health center and district hospitals. Free maternity care: all maternity care provided free of cost in public sector health facilities including enlisted partner hospitals. Free surgery of uterine prolapsed: women having prolapse of uterus offered free reconstructive surgery or hysterectomy.

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New immunization: vaccination against Japanese Encephalitis in 26 terai and three districts of Kathmandu valley and Haemophilus Influenzae B started in all 75 districts. Long lasting insecticide impregnated bed nets: the target area is 26 terai districts and NHSP-I period 1.6 million bed nets distributed focusing high endemic malarial areas. Zinc distribution during diarrhea and its coverage expanded to all 75 districts. PMTCT and ART-initiated during NHSP-I period and services expanded to 31 hospitals for ART and 21 for PMTCT. Catastrophic expenditure during chronic illness for poor: Government of Nepal made a decision to provide up to 50,000 NRs for poor suffering from chronic catastrophic illnesses such as kidney disease, heart disease, cancer, Parkinson’s disease and Alzheimer’s disease. Scaling up of the health interventions Safe abortion services: safe abortion services scaled up to 75 districts during NHSP-I period. IMCI: services expanded to all 75 districts from 12 districts before NHSP-I. Communicable disease elimination programme initiated during this period as below: Communicable Disease Elimination Programme Name of disease elimination programme

Current status Remarks

Poliomyelitis Sporadic cases seen Leprosy Elimination declared 2010 Neonatal tetanus Elimination declared in 2005 Trachoma Elimination continuing in endemic districts Lymphatic filariasis Elimination programme continuing in

endemic districts in phases

Kala-azar Elimination programme ongoing in endemic districts

Measles Second dose of measles administered to under five children in 2005 and 2009

Demand side financing Maternity incentive scheme: incentive as a transport compensation initiated during this period providing 1500 NRs in high mountain areas, 1000 NRs for mountain areas and 500 for terai areas. Similarly, 400 NRs is provided for completing 4 antenatal, institutional delivery and 2 post natal visits.

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Kala-azar incentive scheme: laboratory diagnosed positive Kala-azar cases are provided 1000 NRs as transport compensation. MDR TB and HIV: demand side financing to support nutrition and housing needs. Ministry of Health and Population or Borrowers own performance Ministry of Health and Population worked for at least two years (2002-2004) to prepare and finalize the Nepal Health Sector Programme- I, document wide consultations carried with stakeholders to finalize the document. The main policy document, Health Sector Strategy: An Agenda for Reform, was agreed by Ministry of Finance and National Planning Commission and final approval was given by the Cabinet meeting of December 2003. The Cabinet also approved the ‘statement of intent to guide the partnership for development of health sector in Nepal’ and later it was signed by government and donors in February 2004 and this made it possible to establish the health sector development partner’s forum. In July 2004, the Finance Minister wrote a letter to the World Bank on sector development policy in health sector endorsed by the Cabinet. Government of Nepal endorsed the Nepal Health Sector Programme-Implementation Plan (2004-2009) in August 2004. The Ministry continued to hold the JAR meetings and health sector development partners’ forum periodically. Ministry also took the leadership to develop new policies and, as a result of this, several policies were implemented as mentioned above. The ownership of government in aid management also increased during this period and overall leadership to steer the health sector saw ups and downs due to frequent changes and political instability. Financial performance The financial performance improved significantly during NHSP-I period. The total budget of the health sector increased nearly threefold during this period. The health sector budget always remained more than 5% each year and in one year it crossed 7%. The actual expenditure rate also improved significantly from 70% in first year to nearly 90% in sixth year. The budget irregularity rate also was low than the NHSP-I period. Out of the total budget for the health sector, two thirds of the budget was allocated for the health sector for EHCS in each and every financial year. The total resource envelope initially planned was USD 498 million; however the availability of resources for six years was nearly USD 1,000 million. Table 5: Financial performance during NHSP-I Financial year

Total health budget (NRs Billions)

Health budget as a % of national budget

Actual expenditure rate as a % of planned budget

Budget irregularity rate (%) as pointed by audit

2003-04 5.5 4.93 73 13.56 2004-05 6.54 5.86 70 8.12 2005-06 7.56 5.96 76.5 9.12

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2006-07 9.23 6.41 81 11.18 2007-08 12.1 7.16 81 12.75 2008-09 14.94 6.33 84.9 8.91 2009-10 17.84 6.24 90 Not finalized Human resource management During the NHSP-I period, GoN implemented the mandatory two year rural service for all physicians completing physician or dentist course under the scholarship scheme and with this nearly 230 doctors are now working in rural areas or outside Kathmandu valley. Similarly, large numbers of health workers are taken into the contractual service in the vacant post or where the number is less and work load is high. Lessons learned

The focus of NHSP-I in poverty reduction and health sector MDGs with the approach of SWAp and health sector reform helped to achieve the targets leading to increased flow of resources;

No special unit for implementation worked well and transaction cost reduced Retroactive financing and reimbursement system NHSP focus on MDGs and poverty reduction attracted increased health sector and

this improved the results as well as spending leading to further increase in health sector budget;

Pool funding with flexible financing strategy and use of national system with continuous financial management approach enhanced government ownership;

Holding of joint annual review for annual planning and work plan and performance review every year led to build confidence between government and donors;

Allocation of two third budget for EHCS helped improve health outcomes and achievement of health sector MDGs on right track.

Performance of the World Bank The work of the World Bank remained good throughout the NHSP-I period in view of the disbursement of annual budget and financial management, coordination with pool as well as other development partners, advancement of SWAp and harmonization. The major accomplishments of the bank were:

Reward with additional USD 50 million financing for excellent achievements in health sector MDGs and poverty reduction, as a part of performance based

Retroactive, predictable and flexible financing for each financial year Coordination with pool partners and non-pool partners enhancing SWAp in health

sector Strengthening of procurement and financial management systems

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The World Bank continued to send small missions for supervision except once in 2008. The country office continued activities related to quality control such as exp-post review of procurement, and quality test of drugs. The only comment that came from divisional directors of DoHS was related to international competitive biddings in which the time taken for concurrence was unusually long. DfID DFID being a pool partner along with the World Bank performed well during the NHSP-I period. British Government in initial period of IHP+ coordinated at global level to bring the major partners working in health sector on the basis of Paris Declaration on Aid Effectiveness and health sector MDGs followed by creating a supporting environment at national level. DFID also provided additional financing as a IHP+ signatory to Nepal Health sector. AusAID AusAID was supporting Nepal health sector through NGOs only, but became a pool partner in 2008 and it was a big breakthrough for MoHP. UN Agencies UN agencies e.g. UNAIDS, UNICEF, UNFPA, WHO performed better with the initiation of common country framework- United Nations Development Assistance Framework (UNDAF). WHO performed better than other UN agencies in terms of harmonization with the government. Despite being a signatory of 2004 letter of intent and IHP+ at global level, International Labour Organization (ILO) remained totally outside the donor harmonization and coordination with the Nepal health sector. GTZ/KfW GTZ adopted the approach of technical assistance, while KfW provided the financial assistance adopting the programme approach in specified activities. USAID USAID is a major contributor to the health sector, largely worked through the NGOs, but practically it supported the approach of aid effectiveness. JICA JICA worked through the government in school health and nutrition project. SDC Worked vertically to implement the rural health development project.

54

GAVI GAVI also worked through the government in project basis. Global Fund The Global Fund adopted the disease specific project approach with individual project implementation units with separate country coordination mechanisms (CCM). China China is an important partner in health sector development contributing in the health infrastructure and tertiary medical care in Nepal. India India is also an important partner in health sector development contributing in medical education, tertiary medical care and strengthening of ambulance services in Nepal. INGOs INGOs contribute significantly in the development of the health sector in Nepal, and there is lot to do for harmonization in Nepal. Coordination and effectiveness between donors Coordination and effectiveness significantly improved between donors in during the NHSP-I period. Harmonization and aid effectiveness efforts continued with formation of external development partner’s forum by donors and initiation of periodical dialogue. However, China, India, ILO and INGOs remained outside the alliance. GAVI and Global Fund also remained outside the alliance as there is no country office of these organizations. Lessons learned

Retroactive financing helped to continue the implementation of the planned activities if the procedures from Government and Donor were completed in time;

Significant reduction of abroad missions in later part of NHSP-I in comparison to

initial phase;

The SWAp approach brought the large number of development partners in one forum and reduced their differences on aid management;

In the NHSP-I period the health sector observed reduction of abroad missions

from individual donor agencies and the timing of visits also planned during JAR.

55

Good trend also seen during this period with some joint missions’ visits from abroad represented by several organizations at a time with same purpose.

Proposed arrangements for future operation of the programme The following areas should be given due consideration for future operations:

Health system strengthening approach in supporting health sector Harmonization of technical assistance Difference of the financial year Initiation of joint monitoring visits Dialogue with China, India and Global Fund for harmonization Assist strengthening health management information system so that required

information for NHSP-II can be obtained from routine administrative procedures annually

No parallel funding at least by pool partners Addressing the long time taken for providing concurrence in ICB Joint missions from different agencies from abroad at a time Implement package for deployment and retention of HRH working in rural and

remote areas

56

Annex 7. Comments of Cofinanciers and Other Partners/Stakeholders No comments were received.

57

Annex 8. List of Supporting Documents Project Appraisal Document, August 2004 Project Paper for Additional Financing, April 2008 Joint Annual Review, Aide-Memoires, Procurement Post Reviews Annual Work Plan and Budget [FY 2007/08]. Ministry of Health and Population. Government of Nepal Assessing Implementation of Nepal’s Free Health Care Policy: First, Second, Thirds, Fifth and Sixth Trimester Health Facility Survey Reports. April 2009, June 2009, December 2009, June 2010. RTI Equity Analysis of Health Care Utilization and Outcomes. August 2008, RTI Family Planning, Maternal and Newborn and Child Health Situation in Rural Nepal: A Mid-Term Survey for NFHP II. March 2010. New Era, Kathmandu, Nepal Managing Public Finances for a New Nepal: A Public Finance Management Review, Draft, July 5, 2007, World Bank Nepal Country Assistance Evaluation. April 2009, IEG, World Bank Nepal Demographic and Health Survey Report 2006, 2007, Ministry of Health and Population, New Era, Macro Nepal Health Sector Program: Quality Enhancement Review, Final Report, march 2004 Nepal Health Sector Program 2: Programme Memorandum. March 2010, DFID Nepal Health Sector Program: Third Trimester and Annual Implementation Progress Report 2008/09. Health Sector Reform Unit, Ministry of Health and Population Nepal Health Sector Support Program Project: Quality Enhancement Review. Final Panel Report, March, 2008. Nepal Health Sector Program: implementation plan I 2004-2009. June 2004, Ministry of Health and Population, Government of Nepal Nepal Health Sector Program: implementation plan II 2010-2015. February 2010, Ministry of Health and Population, Government of Nepal Nepal: Public Expenditure Review. Draft, June 16, 2010, World Bank Nepal Trend Report: Trends in Demographic and Reproductive Health Indicators. Macro, 2007 Quality Enhancement Review: Nepal Health Sector Support Program Project. Final Panel Report, March 2008 Participatory Stakeholder Framework (PSF) for Nepal Health Sector Project (NHSP). Pro-poor Health Care Policy Monitoring: Household Survey Report from 13 Districts. April 2010. RTI Review of Nepal Health Sector Program: A Background Document for the Mid-Term Review. Mick Foster Economics Ltd. November 2007 Social Assessment of the Nepal Health Sector Reform. Consultant Report, 2004 Survey of Medical & Other Equipment – Nepal Health Sector Program. Final Report, February 2010. Faith Health Care Private Limited The Sector Wide Approach in the Health Sector: Achievements and Lessons Learned. May 2010. Ministry of Health and Population, Government of Nepal

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SEPTEMBER 2004

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