IMF workshop: Sizable boost in HIV/AIDS assistance will challenge low-income countries

• Author: Peter Heller and Erik Lueth
• Pages: 202-203

Page 202

Over the next several years, funding for HIV/AID prevention and treatment is expected to rise dramatically-from $5 billion in 2003 to $8 billion in 2004 and $20 billion by 2008. This increase represents an enormous opportunity to intensify the fight against HIV/AIDS and to strengthen health systems in general. But such rapid increases in external funding can pose serious challenges for countries seeking to absorb the added resources effectively. If these challenges are not confronted, they could not only compromise the expected benefits but also endanger longer-term political support.

The IMF's Fiscal Affairs Department sponsored a half-day workshop on June 28 to listen to the concerns of agencies directly involved in this effort, to clarify the IMF's role, and to explore areas for greater cooperation and coordination. The workshop drew participants from UNAIDS; the UN Millennium Project; the World Trade Organization; the World Bank; the European Commission; the U.K. Department for International Development; the President's Emergency Program for AIDS Relief at the U.S. Department of State; the Center for Global Development; the Global Equity Center; Harvard University; Friends of the Global Fight Against AIDS, Tuberculosis, and Malaria; the Clinton Foundation; Physicians for Human Rights; ActionAID USA; and Debt AIDS Trade Africa (DATA).

Identifying the challenges

Workshop participants voiced concerns about the IMF's role in countries expected to receive increased aid. Would IMF conditionality-in the form of ceilings on budget deficits, on government employment and overall wages and salaries, or on debt-prevent health ministries from making use of the increased aid? There was some understanding of the concern that a large boost in financing for the Millennium Development Goals might create macroeconomic pressures that would be difficult to manage, but some fear that an IMF that is focused on short-term macroeconomic stability might put at risk programs designed to save lives and produce substantial long-term benefits. Thus a number argued for the need to balance concerns about short-term macroeconomic stability with the desire to expand beneficial policy programs.

IMF staff identified several concerns associated with the use of grants. The unpredictability of such flows, sometimes caused by donors'...