Knowledge Brief Health, Nutrition and Population Global Practice Assessing Public Financing for Nutrition in Nepal (2011–2017) October 2021 Key Messages July 2021 • Nepal reports better nutrition indicators than the South Asian average, though significant geographic and income- related inequalities remain in relation to nutrition outcomes. • During the last decade, the government of Nepal has made proactive efforts to develop nutrition policy as a multisectoral priority. • The total nutrition-related public spending in Nepal stood at 0.73 percent of GDP in FY 2016/17, up from 0.57 percent of GDP in FY 2011/12. • Nutrition-related expenditure is primarily driven by nutrition-sensitive interventions, which may not directly target malnutrition but do contribute to improving general nutritional status in synergy with nutrition-specific policies. • On average between FY 2011/12 and FY 2017/18, 80 percent of nutrition-related allocations were spent, and spending of allocations was higher for nutrition-sensitive interventions than for nutrition-specific interventions. • The country’s new federal structure and fiscal resource allocation could be an opportunity to improve nutrition- related financing, especially nutrition-specific financing, and reduce nutritional inequalities according to regional needs. Introduction percent to 44.6 percent between 2001 and 2016 but are NUTRITION INDICATORS still high and affect almost half of children under five years Nepal’s nutrition indicators exceed the South Asian (World Bank Group 2019). average. Stunting in Nepal is lower than in Afghanistan, Despite improvements in national nutrition indicators, not India, Pakistan, and Bangladesh, and wasting is lower than all populations are benefitting equally, and geographic and in Bangladesh, India, and Sri Lanka. Nepal has the second- income-related inequalities remain. Stunting, wasting, and highest exclusive breastfeeding rate in the region. Stunting underweight collectively contribute to almost 52 percent of among children under five reduced from 57 percent in 2001 child mortality in Nepal (IHME 2019). Stunting prevalence to 36 percent in 2016, 1 and the proportion of underweight is unequally distributed along the country’s provinces, and children reduced from 43 percent in 2001 to 27 percent in inequities in stunting are associated with food insecurity. In 2016. 2 Low weight at birth (LWB) rates reduced from 26.7 2016, national household food security was 48.2 percent, percent to 21.8 percent between 2001 and 2016. In terms whereas in rural areas it was close to 38.8 percent. of undernutrition, it was estimated that in 2011 one-fifth of women (15–49 years) were underweight, with a Body Mass Malnutrition remains a serious problem in Nepal. It is Index lower than 18.5. Anemia rates dropped from 59.8 estimated that the country loses 2–3 percent of GDP every 1 Under-five stunting prevalence was 36.0 percent in 2016, but in 2 Proportion of underweight children further reduced to 24.3 percent in 2019, after the release of this report, the prevalence reduced to 2019 (Nepal, Central Bureau of Statistics 2020). 31.5 percent (Nepal, Central Bureau of Statistics 2020). Page 1 HNPGP Knowledge Brief • year due to high rates of malnutrition (Nepal, NPC 2018). spending in Nepal and areas where gaps exist, and Though the number of disability-adjusted life years recommends where actions are needed to fill the existing (DALYs) lost due to malnutrition has reduced by 47 percent gaps. since 2007, malnutrition remains a serious issue. In 2017, METHODS the Institute for Health Metrics and Evaluation (IHME) The analytical method largely followed the three-step reported that malnutrition was the highest risk factor in approach proposed by the Scaling Up Nutrition (SUN) Nepal, driving the most deaths and disability combined in methodology. All three steps—identification, classification, the country. Underlying causes for malnutrition in Nepal and weighting were applied in this study. In Step 1, include the poor quality of water, sanitation, and hygiene potential nutrition records were extracted, screened, and (WASH); insufficient nutrient intake; poor feeding practices; evaluated from identified nutrition-related policies, plans, food insecurities; early marriage; and illiteracy. official financial documents, and government reports to be Obesity and overweight are emerging risks in Nepal. The used as data sources. In Step 2, nutrition records were IHME findings show that dietary risks—the fourth major risk verified and categorized as nutrition-specific or nutrition- factor in Nepal in 2007—jumped to the third position in the sensitive. Classification was based on the Multisectoral ranking of risk factors in 2017, and the number of DALYs Nutrition Plan II (MNSP II) (informed by the Lancet associated with dietary risks increased by 37 percent Framework). In Step 3, weights were assigned to identified between 2007 and 2017. and verified nutrition-sensitive interventions. Weights were based on SUN budget guidelines and consultations with NUTRITION POLICY IN NEPAL experts. Since nutrition-relevant programs were not Nutrition has been a national priority for over a decade, and disaggregated at the activity level, each nutrition-sensitive since 2004, the government of Nepal (GoN) has been program was provided a weight as a surrogate to the actively involved in developing nutrition policy and proportion contributed by the line item for the nutritional guidelines. The National Nutrition Policy and Strategy outcomes. 2004, led solely by the Ministry of Health and Population (MoHP), was the first nutrition program. The Nutrition Table 1: Ministries/Agencies Included in the Analysis Ministry/agency Reason(s) for inclusion Assessment and Gap Analysis conducted in 2009/10 Ministry of Health and Implements both nutrition-specific and sensitive provided the basis for a multisector nutrition plan (MSNP), Population (MoHP) interventions [Health and Social Protection Sector] enabling the involvement of other government Ministry of Education Implements both nutrition-specific and sensitive (MoE) interventions (Food for Education, school meal program, stakeholders. The integrated approach to nutrition was etc.) [Education and Social Protection Sector] supported by the development of MSNPs, which were Ministry of Agriculture Implements nutrition-sensitive interventions (quality designed to improve nutrition outcomes under the and Development seed for farmers, livestock and fishery development (MoAD) programs, etc.) [Agriculture Sector] leadership of the National Planning Commission (NPC). A Ministry of Drinking Implements nutrition-sensitive interventions [WASH National Nutrition and Food Security Secretariat has been Water and Sanitation Sector] formed in the NPC to formulate policies on nutrition and (MoDWS) Ministry of Women, Implements nutrition-sensitive interventions (child food security. Children, and Social development and women empowerment programs, etc.) Welfare (MoWCSW) [Social Protection Sector] Nepal recently transitioned to a federal system with three Ministry of Federal Implements both nutrition-specific and sensitive tiers of government: national, provincial, and local. This has Affairs and General interventions (Golden 1,000 days, Environment implications on how provincial and local governments Administration Sanitation Program, etc.) [Health and WASH Sector] (MoFAGA) access budget allocations and program budget spending. Ministry of Urban Implements nutrition-sensitive interventions [WASH The federal model of governance is shifting governance Development (MoUD) Sector] and service responsibilities for social policies delivery and Ministry of Physical Implements nutrition-sensitive interventions [WASH Planning and Works Sector] management from a unitary system to a system where (MoPPW) responsibilities are shared among three levels of Ministry of Commerce Implements nutrition-sensitive interventions (food government. This devolved administrative structure and Supply (MoCS) supply program) [Agriculture Sector] Source: Authors’ compilations based on nutrition-related plans and Ministry of Finance, presents a promising prospect for restructuring public Red Book Program headings. services, empowering women and marginalized Note: WASH = Water, sanitation, and hygiene. populations, and improving the nutritional status of the population. The federal structure in nutrition is still under Key Findings discussion, and more years of federalism are needed to EXPENDITURE ON NUTRITION INTERVENTIONS define the distribution of nutrition policy functions among The total nutrition-related public spending in Nepal stood at the three levels of government. 0.73 percent of GDP in FY 2016/17, up from 0.57 percent in FY 2011/12, indicating that nutrition policies have been OBJECTIVES gaining momentum in the country’s public budget in recent This study aims to produce evidence on the level and years. Nutrition-related spending reached almost US$200 composition of public spending for nutrition in Nepal from million or around US$7 per capita in FY 2016/17. The 2015 FY 2011/12 to FY 2017/18. This study also intends to earthquake demanded specific interventions like food understand efficiency, equity, and effectiveness of distribution, resulting in increased nutrition-specific and nutrition-related spending. The study highlights areas sensitive spending that year (Table 2). where progress has been made to improve nutritional Page 2 HNPGP Knowledge Brief Table 2: Total Nutrition-Related (Specific and Sensitive) Figure 2: Public Funding Allocated for Nutrition in FY spending in Nepal, FY 2011/12 to FY 2016/17 2016/17 (Before) and FY 2017/18 (After) Federalism* Category 2011/12 2012/13 2013/14 2014/15 2015/16 2016/17 US$, millions (current prices) 107.0 98.4 1085 113.5 165.0 181.4 NPR, millions (current prices) 8,667.6 8,661.9 10,665.8 11,296.2 17555.7 19264.5 US$, millions (2018 prices) 162.1 136.7 140.9 136.8 189.7 199.3 Per capita, US$ (2018 prices) 6.04 5.02 5.11 4.89 6.69 6.94 Per capita, NPR (2018 prices) 489.2 441.8 502.3 486.6 711.8 737.0 Share of government expenditure (%) 2.56 2.42 2.45 2.13 2.92 4.81 Share of GDP (%) 0.57 0.51 0.54 0.53 0.78 0.73 Source: Estimated from Ministry of Finance, Red Book data (FY 2011/12 to FY 2016/17). Note: NPR =Nepalese rupee. Source: Estimated from Ministry of Finance, Red Book data (FY 2016/17) and Financial Comptroller General Office data FY 2017/18 NUTRITION-SPECIFIC AND NUTRITION-SENSITIVE Note: *FY 2017/18 does not capture conditional grants to provinces and other fiscal INTERVENTIONS transfers. Throughout the years of analysis, the share of nutrition- In the first year of federalism, the CGs for LGs were mostly sensitive interventions to the total nutrition-related for nutrition-sensitive interventions (57.6 percent nutrition- expenditure was more than 85 percent (the MNSP II sensitive vs. 42.4 percent nutrition-specific), and the recommends 25:75 split in nutrition-specific and sensitive allocation was more to provinces with higher levels of financing). In FY 2015/16, however, spending on nutrition- malnutrition. However, the real tracking of nutrition equity specific interventions was approximately 30 percent (US$ spending will be known when all data for CG expenditure 1.92 in per capita terms) as a proportion of the total for FY 2017/18 are issued, together with fiscal equalization, nutrition-related spending (Figure 1). The Integrated Child complementary and special grants for analyzing nutrition Health and Nutrition Program and Sunaula Hazar Din— spending in detail, revealing the budget absorption and Community Action for Nutrition Initiatives made up the spending capacity at the local level. Figure 3 reflects largest share of nutrition-specific expenditure. nutrition-related interventions (specific and sensitive) Figure 1: Per Capita Public Expenditure on Nutrition financed by CGs. Figure 3: Nutrition-Related Interventions Financed by Conditional Grants (FY 2017/18) Source: Estimated from Ministry of Finance, Red Book data (FY 2011/12 to FY 2016/17). NUTRITION BUDGET ALLOCATIONS IN THE FIRST YEAR OF FEDERALISM Source: Estimated from Ministry of Finance, Financial Comptroller General Office data FY The 2015 Constitution of Nepal established the federal 2017/18 Note: WASH = Water, sanitation, and hygiene. system distributing national budget allocations among federal, provincial, and local governments. FY 2017/18 was BUDGET ALLOCATION VERSUS EXPENDITURE the first year these new budget arrangements became From FY 2011/12 to FY 2016/17, budget allocations in functional. Nutrition financing data for FY 2017/18 is not nutrition surpassed expenditures in large proportions, comparable with data from the years before federalism. For meaning that the government was not able to use all FY 2017/18 only the conditional grant (CG) transfers from allocated resources despite priority being given to nutrition. the federal to local governments (LGs) were captured, but On average from FY 2011/12 to FY 2017/18, 80 percent of data on other grant allocations such as fiscal equalization, nutrition-related allocations were spent. However, average complementary and special grants were not captured by expenditure on nutrition-sensitive interventions achieved this exercise. Additionally, the study did not track CGs for 87 percent of budget allocations compared to 53 percent in nutrition received by provinces due to data limitations the case of nutrition-specific interventions over the entire (Figure 2). period. Given this situation, it is important to analyze why nutrition-specific interventions lack capacity and do not allow for spending a substantial part of the allocations. Page 3 HNPGP Knowledge Brief • EFFICIENCY AND EQUITY CONSIDERATIONS among women in reproductive age from 35.0 percent to Administrative efficiency: Figure 4 shows the average 40.8 percent. In this sense, the increased spending in nutrition budget spending ratio of the main ministries nutrition did not bring positive effects in all nutrition-related implementing nutrition programs between FY 2011/12 and indicators. FY 2017/18. Ministries that implemented predominantly nutrition-sensitive interventions (such as the Ministry of Limitations and Challenges Drinking Water and Sanitation, Ministry of Women, Since nutrition-related expenditure estimates were Children, and Social Welfare, and Ministry of Agriculture weighted using national experts’ opinions, the allocated and Development) present higher spending ratios than weights may have been exposed to subjectivity. In addition, those implementing nutrition-specific programs. the SUN approach may not offer direct comparability of findings across countries due to underlying assumptions Figure 4: Budget Absorption Rate of the Main Nutrition- and differing criteria for selecting nutrition-specific and Related Ministries: Average FY 2011/12 to FY 2017/18 nutrition-sensitive interventions across countries. The limited availability of subnational data prevented detailed analysis of nutrition-related expenditure at that level. Recommendations The key recommendations from this study are as follows; (i) improve recording of budgetary data and institutionalize the estimation of public financing for nutrition; (ii) increase availability of all expenditure-related data for evidence- Source: Estimated from Ministry of Finance, Red Book data (FY 2011/12 to FY 2017/18). informed decisions and unpack the allocation and expenditure data in nutrition, especially at subnational Equity in budget allocation: CG allocations in 2017 show levels; (iii) prioritize financing for nutrition-specific that commitment to per capita allocations is moderately interventions; and (iv) raise awareness about (mal)nutrition linked with provincial nutrition patterns (FY 2017/18) among ministries and LGs. (Figure 5). Figure 5: Correlation between Nutrition per capita Allocation References for LGs (FY 2017/18) and Stunting Rates (2016) at Provincial IHME (Institute for Health Metrics and Evaluation). 2019. GBD Compare. http://www.healthdata.org/nepal. Levels Nepal, Central Bureau of Statistics. 2020. Nepal Multiple Indicator Cluster Survey 2019, Survey Findings Report. Kathmandu: Central Bureau of Statistics, and 55 Province 6 UNICEF Nepal. https://www.unicef.org/nepal/media/11081/file/Nepal%20MICS%202019%20Final 50 %20Report.pdf. Under 5 stunting (%) Nepal, MoHP (Ministry of Health and Population), New ERA, and ICF International. 45 2017. Nepal Demographic and Health Survey 2016: Key Indicators. Kathmandu. Nepal, NPC (National Planning Commission). 2018. Nepal Multi-Sectoral Nutrition 40 Province 5 Province 2 Plan II (2018–2022). Kathmandu. Province 7 35 World Bank Group. 2019. “Prevalence of Anemia among Children.” Province 1 R-squared= 0.667 https://data.worldbank.org/indicator/SH.ANM.CHLD.ZS. 30 Province 3 Province 4 World Bank Open Data, Demographic Health Survey (DHS), and United Nations 1 1.5 2 2.5 3 Children’s Fund (UNICEF). Per capita nutrition-related allocation (in 2018 prices) Source: Estimated from Ministry of Finance, Financial Comptroller General Office data FY 2017/18 and Nepal Demographic and Health Survey 2016 data. This HNP Knowledge Brief highlights key findings from a World Bank study “Assessing Public Financing for Nutrition in Nepal (2011–2017)” by NUTRITION OUTCOMES IN RELATION TO NUTRITION Andre C. Medici, Mamata Ghimire, and Manav Bhattarai. Technical SPENDING support was provided by Shakil Ahmed, Aline Coudouel, and Hideki Despite fluctuations, public spending on nutrition in Nepal Higashi. Renu Warnasuriya provided support in summarizing this brief. Financial support was provided by the UK Aid from the UK Government increased from US$162.1 million to US$199.3 million and the European Commission (EC) through the South Asia Food and between FY 2011/12 and FY 2016/17 (at 2018 prices). This Nutrition Security Initiative (SAFANSI) and the Government of Japan increase of 4.2 percent per year is associated with a through the Japan Scaling Up Nutrition (SUN) Trust Fund. reduction in stunting from 40.5 percent to 35.8 percent of under-five children and a decrease in LWB from 24.2 percent to 12.1 percent. Despite these positive achievements, the rates of anemia among under-five children increased from 46.0 percent to 52.7 percent, and The Health, Nutrition and Population Knowledge Briefs of the World Bank are a quick reference on the essentials of specific HNP-related topics summarizing new findings and information. These may highlight an issue and key interventions proven to be effective in improving health, or disseminate new findings and lessons learned from the regions. For more information on this topic, go to www.worldbank.org/health. Page 4