A War Chest for Fighting HIV/AIDS
| Author | Maureen Lewis |
| Position | Senior Fellow at the Washington-based Center for Global Development |
With billions of dollars mobilized, the challenge is how to spend the money wisely
After close to two decades of neglect, battling the HIV/AIDS epidemic has become one of the highest priorities on the global agenda. UNAIDS estimates that some 40 million people are living with HIV-25 million of them in sub-Saharan Africa and 8 million in Asia-with close to 5 million people newly infected in 2004 alone. AIDS-related deaths total about 3 million people each year, with adults and children in Africa dying at the rate of 7,000 per day. In the short term, the loss of a large segment of adults in their prime, particularly women, devastates households. Over the long term, losses in human capital formation pose a further risk by decreasing the intergenerational transfer of knowledge and creating macroeconomic threats, especially in the hardest-hit countries. Prevention through behavioral change has proved difficult, and a vaccine remains elusive.
In response, the international community has mobilized billions of dollars for HIV/AIDS, with many low-income countries already receiving, or pledged to receive, huge sums. However, the recipients of these funds find themselves grappling with tough dilemmas. Could the size of the inflows be so large as to undermine macroeconomic stability or fiscal management? Can they-in a short period-effectively utilize the resources made available, or even the amounts already pledged and committed, given the institutional capacity and governance problems that often plague their health care systems? And can they mobilize the needed "collateral" domestic resources (such as labor, infrastructure, and an institutional base) to rapidly scale up services?
Although aid for combating HIV/AIDS is rising rapidly (see Chart 1), there is still expected to be a large gap between what is needed and what is provided in the coming years. UNAIDS estimates that between $9.6 billion and $11.3 billion will be required for low-and middle-income countries in 2005 to fight the pandemic, rising to between $14.1 billion and $18.8 billion by 2007, with further increases in the years ahead as the numbers of infected rise (UNAIDS, 2005). In 2004, the OECD estimates that some $6 billion was allocated in the developing world to HIV/AIDS, including about $3.7 billion from international sources. This contrasts with about $7 billion in annual commitments to overall development assistance (ODA) for health, which excludes earmarked HIV/AIDS funding.
[ SEE THE GRAPHIC AT THE ATTACHED ]
Donors are currently supporting activities in 140 countries, with about 72 percent of this funding allocated to 25 of them-mostly in highly affected countries in Africa and the Caribbean. For some of these countries, funding is growing so rapidly that the concentration of funds effectively replaces health budgets. The key sources of AIDS funding are domestic public spending; bilateral and multilateral assistance; the Global Fund to Fight AIDS, Tuberculosis and Malaria (financed by bilateral donors and private foundations); the private sector; and household out-of-pocket spending. Bilateral assistance is projected to grow faster than the other sources over the next few years.
The strong international response to HIV/AIDS can be seen at the country level in some of the nine hardest-hit sub-Saharan African countries (see Chart 2). From 2000-02 to 2002-04, the average level of external funding increased significantly in Lesotho (1,100 percent), Swaziland (951 percent), Tanzania (394 percent), and Zambia (698 percent). Only Kenya saw less than a doubling of aid for HIV/AIDS, and it was the country with the largest external commitments in 2000-02.
[ SEE THE GRAPHIC AT THE ATTACHED ]
Do recipients need to worry about the macroeconomic...
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