| Issue/Objective |
Global Development Assistance for Health (DAH) is showing a sustained downward trajectory, driven by reductions in Official Development Assistance from traditional donor countries and shifting geopolitical priorities in high-income settings. Nepal, where DAH has historically contributed between 27% and 51% of total health sector financing, faces growing vulnerability in sustaining health system gains. This challenge is further intensified by ongoing federalisation reforms and the country's impending graduation from Least Developed Country (LDC) status, both of which may alter external financing flows and domestic fiscal space.
This study aims to examine the potential implications of declining DAH on Nepal's health system and to identify feasible policy responses for sustainable domestic financing. |
| Methodology/Approach |
A narrative review was conducted using Ovid MEDLINE and Embase (1947-May 2025), complemented by grey literature from government reports, donor agencies, and development partner publications. Document analysis followed the structured READ approach (Ready materials, Extract data, Analyse, Distil).
Kingdon's MSF was applied to interpret the convergence of three streams: the problem stream (declining DAH and financing gaps), the policy stream (available financing reforms and strategic health sector plans), and the political stream (federal governance transition, donor policy shifts, and fiscal prioritization). Emerging policy windows related to aid transition and LDC graduation were also assessed. |
| Results |
The review identifies a clear global contraction in DAH, with Official Development Assistance declining by 7.1% in 2024 and projected reductions of up to 40% in health-related aid by 2025. Major donor realignments, including USAID funding suspensions and reduced commitments from European donors, are significantly affecting health programs across low- and middle-income countries.
In Nepal, DAH has been instrumental in achieving major public health gains, including reductions in maternal mortality (from 539 to 151 per 100,000 live births) and under-five mortality (from 118 to 33 per 1,000 live births). However, current financing trends show a gradual shift from grants to loans, increasing fiscal pressure and sustainability concerns. Out-of-pocket expenditure remains high at 54.2%, indicating persistent financial protection gaps.
Recent disruptions, particularly the suspension of USAID funding, have affected essential health system functions, including immunization programs, nutrition services, health information systems, and workforce capacity strengthening. While Nepal demonstrates relatively strong policy preparedness and political stability, significant fiscal gaps persist in sustaining essential health services without external support. |
| Discussion/Conclusion |
The declining trajectory of DAH represents a critical structural challenge to Nepal's progress toward Universal Health Coverage (UHC) and the Sustainable Development Goals (SDGs). Within Kingdon's MSF, Nepal exhibits alignment in the policy stream (through health financing reforms and strategic plans) and the political stream (through stable governance and federal restructuring). However, the problem stream, characterised by shrinking external aid and widening fiscal gaps, remains unresolved and increasingly urgent.
Without accelerated domestic resource mobilisation and strategic financing reforms, there is a risk of reversing key health system gains achieved over the past decades. |
| Presenters and Affiliations |
Sagun Paudel Public Health Initiative |
