COVID-19 Recovery and Shifting Priorities

While COVID-19 continues to heavily influence provincial allocations, the priority has shifted from emergency response to recovery and economic revival. All three provinces have drastically reduced direct allocations on COVID-19 emergency response, by as much as 65% in Karnali Province. Provinces have been using this allocation to support the operation and management of quarantine centers, testing, incentives for frontline workers, and relief distribution.

Increased Health Sector Allocations

Provincial allocations on health have increased significantly from the pre-COVID period and continue to remain modest despite the shifting priority to economic recovery. Karnali Province has particularly stood out, allocating 8% of its total budget to the health sector for two consecutive years. The province has set aside NPR 2.5 billion to strengthen provincial health infrastructure and improve the quality of health services.

Policy Priorities for Recovery

In the current fiscal year, provincial governments have prioritized physical infrastructure, agriculture, and employment for COVID-19 recovery and economic revival. Road construction continues to dominate infrastructure allocations, ranging from 6% in Province 2 to 20% in Karnaki. While Lumbini and Karnali have prioritized agriculture, Province 2 has given continuity to the Electoral Area Development Programme.

Variations in Local Government Responses

Local governments continue to heavily rely on federal and provincial allocations, making some level of direct allocations on COVID-19 response, prevention, and control. Priority and preference for local infrastructure, especially roads, remains unchanged, with many local governments packaging this and other “development” headings as part of recovery and economic revival.

Strengthening Health Infrastructure, but Lack of Professionals

The pandemic has contributed to significant improvements in health infrastructure and facilities across the country, especially in remote municipalities and provincial and district hospitals. However, this strengthening of health infrastructure is yet to be supported by adequate and skilled medical professionals.

Procurement Irregularities and Politicization

Irregularities in procurement for COVID-19 relief and response have been observed across all three provinces, impacting both the quality of health infrastructure and the timely delivery of services. Patronage and politicization have also defined the distribution of federally-sponsored funding for hospitals and medical aid, leading to a lack of equitable allocation.