Post-2015: Innovative Financing of HIV/AIDS Travis Mitchell Economic Affairs Division
High Burden (HIV/AIDS) Low Income countries will remain dependent on external funding for decades, creating major financial risks over which they have little control Lancet 2010, 376: 1254-60
Outline of Presentation The main Funders of HIV and AIDS Challenges for HIV and AIDS Financing - Reduced Aid Resources and the Financing Gap - Sustainability of Funds for HIV/AIDS - Competing Global Threats and the Impact on HIV/AIDS Finance - Post-2015 Development Agenda Innovative Financing for HIV/AIDS - Main innovative mechanisms for financing HIV/AIDS - Other Innovative Ideas
The Main Funders of HIV and AIDS Donor Governments - U.S (54.2%), U.K (13.0%), France (5.8%), Germany (4.5%) and Denmark (2.5%) Multilateral Funding Organizations - Global Fund (US16.2M by Nov. 2011. [61%] of total budget on HIV/AIDS) - World Bank Private Sector Funding (4% of global spending on HIV/AIDS) - Corporate Donors - Philanthropists (Bill and Melinda Gates Foundation) - Religious Groups - Charities - NGOs
The Main Funders of HIV and AIDS Domestic Spending - Domestic spending doubled between 2005 and 2007 - Accounts for a large part of the global response to HIV/AIDS - More sustainable than bilateral and multilateral donations - Domestic spending varies considerably - Some Governments have not made HIV/AIDS a priority in their budgets
Reduced Aid Resources and the Financing Gap Global response to HIV/AIDS increased from US$1.8 billion in 2001 to US$16 billion in 2010. Joint UN programme on HIV/AIDS estimates that annual global expenditure US$22-24 billion will be needed in LICs and MICs, US$6 billion more than currently available Key long-term financing issues for governments - How large will resource requirements be to combat HIV/AIDS over the next 20 years - Will countries succeed in controlling their epidemics given the scenarios - What share of funding will individual developing countries be able to contribute, and what can be expected from external donor agencies.
Reduced Aid Resources and the Financing Gap Report by the AIDS 2031 Project provides some answers - Resource needs for HIV/AIDS in LICs and MICs projected to increase to $18.5-35.3 billion per year by 2031 - Total outlay would be $397-722 billion where 2/3 would be needed in Africa alone - Rapid scale up scenario would cost $232 billion. An increase from $15 billion in 2009 to $30 billion per year by 2013 (improbable) - Hard choices scenario would cost $325 billion, $93 billion that current trends - Structural change scenario would require $579 billion by 2031 (best case scenario but more expensive than hard choices)
Sustainability of HIV/AIDS Funding HIV/AIDS is a long-term problem and not a short-term crisis International assistance is temporary by definition, relying on the goodwill of countries Progress is threatened by the reality of natural and man-made disasters creating turmoil for the poorest Recurrent instability in the global economic market place undermines the benefits of global charity repeatedly The Global Fund has helped to change the development paradigm by introducing a new concept of sustainability: not solely on domestic support but on redistribution of wealth between countries
Other Global Threats and the Impact on HIV/AIDS Financing High debt burdens in some MICs (Caribbean) have reduced fiscal space and the possibility of increased domestic financing Based on GDP projections, if countries increase assistance to EU target of 0.7% of GDP, ODA for AIDS will only cover 85% of future requirements (Hect et. al December 2009). Critics allege that AIDS programmes get a disproportionate share of domestic spending and donor assistance, short changing other health and social development programmes Competing demands from climate change, energy and food security and other global health issues may make it difficult to maintain the share of ODA for AIDS at 7%
Post-2015 Development Agenda No consensus on the way for the Post-2015 Development Agenda Status quo or a new model, what should be the structure of the new framework? Poverty Reduction targets or growth, what should be the main focus? The new framework will have implications for the amount of Official Development Assistance allocated for health- HIV/AIDS Current discussions seem to give greater weight to climate change and inclusive growth in the new development agenda
Innovative Financing for HIV/AIDS To redress this situation (HIV/AIDS financing gap) many developed countries have put in place mechanisms and timetables to achieve their targets of contributing 0.7% of GDP towards ODA by 2015. The UN General Assembly High-Level Meeting on AIDS (UNHLM) urged those developed countries that had not yet done so, to make additional concrete efforts to fulfil their commitments in this regard. In addition to the traditional sources of funding and ODA, the UNHLM also stressed the importance of complementary sources of financing. Anie, S. and M. Mbikusia (2011)
Innovative Financing for HIV/AIDS The Debt-to-Health Initiative (Global Fund) - German government the first to participate - Germany cancelled EUR 50M of Indonesia s debt contingent on half of that invested in domestic health programmes Product Red (Global Fund) - Aimed at increasing private sector support - Raising awareness on HIV/AIDS - 50% of Red branded products (e.g Dell, Nike) go to the GF UNITAID Air Tax - UNITAID responsible for negotiation and purchase of drugs against HIV/AIDS, tuberculosis and malaria - Funds raised from tax imposed on tickets for air travel by member countries French-Led Airline Solidarity Levy - Generated US $718 million 2009-2011
Innovative Financing for HIV/AIDS Massive Good (Millennium Foundation 2010) - Millennium Foundation specialises in innovative financing projects for healthcare in LICs and MICs - Similar to UNITAID Air Tax - But rather than a tax, offers the option of contributing US$, 2 or EUR 2 towards fighting HIV/AIDS Financial Transactions Tax (Robin Hood Tax) - Levy on all financial transactions to raise money for HIV/AIDS - A rate of 0.05% suggested on all financial transactions - Can raise an amount US$700 billion per annum - Experts believe that 0.05% too high and the huge amount of political capital needed to make it work makes the strategy impractical
Innovative Financing for HIV/AIDS Currency Transaction Levy - An alternative to Financial Transactions Tax - Involves a levy of 0.005% on all the major currencies - Would generate over US$33 billion per year - More feasible than FTT: taxation rate is high enough to raise a substantial amount of money but low enough not to have a significant effect on the global economy *Neither FFT nor CTL has been implemented as a global strategy to raise funds for global healthcare.
Other Innovative Ideas Government Guaranteed Bonds - To finance global health research and development - Pay for work on AIDS vaccine, cure, and other prevention technology changers Global Lottery Creation of Special Drawing Rights (SDRs) International Finance Facility (UK) Increased Remittances
Even in the current economic climate, it is clear that if endorsed and implemented broadly, innovative mechanisms for financing HIV/AIDS would more than compensate for the short-fall in current HIV/AIDS financing, so what is the problem??