This article highlights the key points from the 3rd Semi-Annual progress report submitted by the Ministry of Finance to ADB. The report lists all COVID-19 related activities and efforts made to cover progress in the following reform areas: health system response measures supported-MOHP, social protection for the poor and vulnerable, and economic recovery for affected sectors.
CARES Program and The National Relief Program (NRP):
The COVID-19 Active Response and Expenditure Support Program (CARES Program), a program funded through ADB’s COVID-19 Pandemic Response Option (CPRO), is helping the government to implement the National Relief Program (NRP). ADB’s CPRO was established as part of ADB’s USD 20 billion expanded assistance for developing member countries’ COVID-19 response. The CARES program compliments SAARC and the South Asia Subregional Economic Cooperation to provide coordinated responses to limit the impact of the pandemic in the region and facilitate the recovery operation.
The National Relief Program (NRP) was launched on March 29, 2020, to minimize the impact of COVID-19. The total cost of the Relief Program is estimated at USD 1.26 billion, out of which USD 347 million has been allocated for medical and health response, USD 359 million has been allocated for social protection for the poor and vulnerable, and USD 555 million has been allocated for economic support for the affected sector. While the Ministry of Finance is the executing agency and the Office of the Prime Minister and the Ministry of Finance are responsible for the overall monitoring of NRP, different sector ministries and agencies are responsible for implementing individual response actions. Government agencies include Ministry of Health and Population, Local governments, Ministry of Industry, Commerce and Supplies, Ministry of Labor, Employment and Social Security, Department of Inland Revenue, Department of Customs, Nepal Rastra Bank, Ministry of Finance, Ministry of Federal Affairs and General Administration, Ministry of Energy, Water Resources and Irrigation, Ministry of Water Supply, and Ministry of Communication and Information Technology.
Key Implementation Progress:
The report highlights that the Government of Nepal (GoN) has increased the allocation for health sector budgets and has accounted for 30.56% of its total expenditure to contain the COVID-19 pandemic. As of August 2021, 1.9 million households are receiving food relief packages as an effort to minimize the socio-economic impacts caused by COVID-19. Similarly, financial incentives were provided to 9,712 health and frontline workers.
To help companies impacted by the pandemic, the government announced a major tax rebate and exemption, which included 90% tax exemption to businesses with less than NPR 2 million turnover and income of NPR 0.2 million (USD 1665[1]), 75% tax exemption to the business with turnovers of NPR 2 to 5 million (USD 16,660 to USD 41,650), 50% tax exemption to a person having business transaction up to NPR 10 million (USD 83,305), and charging 1% tax for businesses like hotels, travel, trekking, film businesses, party palace, media house, transportation, and aviation business that have transaction above NPR 10 million (USD 83,305). The total estimated tax relief amount would be around NPR 3.5 billion (USD 29.66 million). Furthermore, 1.12 million people have registered for employment in two fiscal years under the Prime Minister Employment Program (PMEP), while 278,477 have received employment in FY 2019/20 and FY 2020/21.
Similarly, the government took measures to increase access to RT-PCR testing and to minimize the spread of the COVID-19 pandemic. To cater to the demand, a total of 5,591 quarantine centers with 176,716 beds were established at the country’s various locations by June 22, 2020, and 1,195 additional quarantine centers with 55,307 beds were added by August 27, 2020. While RT-PCR testing was previously available only at one public laboratory, now 58 public and 38 private medical laboratories are authorized to carry RT-PCR tests covering all 7 provinces.
Major Challenges:
One of the main challenges of the implementation of NRP was the resurgence of the second wave of COVID-19 infections, which caused panic among people due to the scarcity of oxygen and other medical supplies in hospitals. Challenges caused by the second wave included ensuring an adequate supply of logistics such as PPEs, managing demand for ICUs and ventilators, handling an increased number of positive cases, and enforcing public health standards. These challenges were addressed with support from international community/donors. The following activities were targeted to manage the second surge of COVID-19:
- Increasing surveillance and starting operation of isolation centers at the Port of Entry (PoE) and strengthening health desks and check-up at international PoE.
- Mandating 10 days isolation for asymptomatic cases and hospitalization of symptomatic cases.
- Mandating quarantine of passengers arriving in Nepal after early March of 2021.
- Launching campaigns to increase awareness to follow public health standards and avoid mass gatherings and meetings launching.
The report also mentioned that the vaccination program that was launched on January 27, 2021, did not go forward as was planned because of factors such as India’s ban on vaccine supply. Hence, the goal to vaccinate 22.2 million people by December 2021 was not met.
Outlook:
As discussed above, the resurgence of the second wave of COVID-19 was challenging for Nepal. Hence, Nepal needs to be mindful of the potential third wave as the number of active cases has started increasing again. The report mentions that the COVID-19 second surge started to spread in major cities of 14 districts, out of which 9 districts were from bordering districts with India. When the second wave of the pandemic hit India, cases in Nepal subsequently started to rise. Nepal needs to take measures now as the cases of the Omicron variant of COVID-19 have now been reported in many states of India. This puts Nepal at risk because of its shared border with India which thousands of people cross over every day. Therefore, Nepal should increase surveillance in PoEs and should strictly enforce quarantine of entrants to Nepal. The progress report highlights that 250 new hospitals in 396 local levels are being constructed, which provides an additional 3,345 beds. Therefore, Nepal is comparatively prepared for a potential third wave. While the CARES program has closed, many quarantine facilities have been established after the second wave. Similarly, 39.8% of the population has had at least one dose of the COVID-19 vaccination and 31.8% is fully vaccinated.
[1] Using exchange rate 1 USD = 120.04 NPR
Aarya Rijal is a recent graduate with a B.A. in Economics from Union College, USA. Her key interests are in corporate finance, macroeconomics, and international economics. Before joining NEF, Aarya worked as a student data analyst and a research assistant at Union College. She is currently working as a fellow at NEF.
