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Month end blues: How to make the money stretch Ernest Massiah, UNAIDS RST, PANCAP AGM, Nassau, Bahamas, 2011 1 Presentation FormatKey Questions Asked and Answered • What has occurred - A Snapshot of the HIV trend • What has been the “spend” • What has been the outcome and result of the “spend” • What is the likely impact of the Changing Global Economic Environment? • In light of this, What is the suggested way forward 2 THE TREND 3 Snapshot of the HIV trends over the period 2001-2009 21,00 0 HEALTH IMPACT 18,000 new infections 12,000 deaths 2001 YEAR 2009 4 THE SPEND 5 Over $1.6 Billion in 10 years 6 External resources for HIV 2001-2011 (Current $) 1800 GF Global Fund eligibility changes 1600 GF Global Fund eligibility changes 1400 Most WB projects closed US$ milions 1200 1000 800 Start of World Bank MAP Global Fund Haiti grant 600 PEPFAR 400 200 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 7 A Tale of Three Countries 8 Trinidad 2009 • 84% Government funded programme • $ 90.3 million in 2009 9 Trinidad and Tobago: HIV Expenditure 2002-2009 60 US $ millions 50 40 30 20 10 0 2002 2003 Prevention 2004 Treat/Care 2005 2006 Advocacy/HR 2007 Surv/Res 2008 2009 Management 10 Trinidad/Tobago: HIV Expenditure Patterns, 2008 Coordination, 17 Research, 1 Advocacy, 1 Treatment/Care, 45 Prevention, 36 11 Trinidad/Tobago: HIV Expenditure Patterns, 2008 Research, 1 02-06 73% Donors funded Coordination, 17 Treatment/Care, 45 Advocacy, 1 In 2009, donor funding exceeded government’s 93% Gov funded Prevention, 36 12 Dominican Republic 2008 • 25% Government funded programme • US$31.3 million in 2008 13 DR: HIV Financing Sources, 2008 25% 49% Public Private International 26% 14 DR: HIV Expenditure Patterns, 2008 Social Protection Entrono Favorable 63% donor funded Research Prevention Human Resources 35% donor funded Prog. Management A Tale of Two Countries OVC Treatment 15 Guyana 2010 • 80% Donor funded programme • $ 28.9 million in 2010 16 Guyana: HIV Sources of Funding, 2010 Largest supporter in 2015, with 68%, but ends in 2016 2% 8% Ends in 2015 , declines from $18.7 in 2010 to $0m in 2015 25% UN PEPFAR GF Domestic 65% 17 EVALUATION OF THE SPEND 18 260,000 PLHIV 2008 250,000 PLHIV 2001 52% don’t get treatment 19 What did the money buy? $1.6 Billion $91m 2001 MONEY 2009 20 Impact of investment in HIV prevention, care and treatment 2001-2009 21,00 0 $1.6 Billion HEALTH IMPACT 18,000 new infections 12,000 deaths $91m 2001 MONEY 2009 21 22 3,592 receiving ART , 404 PLHIV on 2nd Line ARV , 40 PLHIV on 2nd Line ARV 23 7,503 needing ART 3,592 receiving ART 24 7,503 needing ART 3,592 receiving ART $4,324,640 , 404 PLHIV on 2nd Line ARV , 40 PLHIV on 2nd Line ARV $469,400 25 There is an economic crisis 26 Caribbean Real GDP: 2005 - 2010 13 Real GDP 8 3 -2 -7 2005 The Bahamas 2006 Barbados 2007 Dominican Republic 2008 Jamaica 2009 St. Lucia 2010 Trinidad and Tobago 27 The Economic Context • Before 2008 - with few exceptions, very low rates of growth and widespread fiscal and balance of payment deficits. • Post 2008 - worsened economic context with some countries experiencing negative growth rates and seeking IMF support. • Yet, the annual income of the region, including Puerto Rico and the Dominican Republic, is approximately US$60 billion with a population of 35 million people • The public sector accounts for roughly 30% of this income 28 Jamaica: 2006-2010: Impact of an economic crisis on the health sector Economy • GDP from 2.7% in 2006 to -2.7% in 2009 • Debt-to-GDP 132% in 2009 • Unemployment increased from 9.8% in 2007 to 11.4% in 2009 • Remittances slowed • Exchange rate declined • Alumina revenue delined by 60%, bauxite by 25% • 20% decline in Government budgets Health Sector Impact • Pre crisis (2006/07) health expenditures were increasing by 19.7% in real terms • In crisis, (2009-10) Health expenditures declines by 6.5% • In US$ health expenditures declined from $212.5M in 06/07 to $176.4M in 09/10 23% Source: Rapid Assessment of the Impact of the Economic Crisis on Health Spending in Jamaica, World Bank, 2011 29 Potential Effects of economic crises Lack of funding for MARPs Less prevention: increased risk taking Drug shortages: ART resistance Drug shortages: increased mortality and morbidity 30 Quo vadis? 31 What do we do? • Address the IDD • Be strategic in our choices • Put resources where the epidemic is • Be realistic about long term change • Develop a new message 32 What do we do? • Address the IDD = Implementation Deficit Disorder Of 7 World Bank loans totalling $157m, •only Be strategic in our choices $114m was used. Of 7 closed •grants, Put resources where theall epidemic is 5 did not use the funds •available Be realistic about long term change 33 What do we do? • Address the IDD • Be strategic in our choices No more implementation of costly schemes of uncertain effectiveness We must pay more attention to what things cost, their likely impact and reduce costs 34 Management expenditure, by total HIV programe costs in selected Caribbean countries, 2002-2009 50% 45% 40% Belize 35% 30% Barbados Barbados 25% Dominican Republic Trinidad 20% Trinidad Jamaica 15% Jamaica 10% 5% Trinidad 0% 2002 2003 Trinidad Barbados Trinidad Trinidad 2004 2005 2006 2007 2008 2009 2010 35 What do we do? • Address the IDD • Be strategic in our choices There must be better integration of HIV with STI, SRH services Also better alignment with country reponses to NCDs 36 What do we do? • Address the IDD • Be strategic in our choices • Put resources where the epidemic is • Be realistic • Develop a new message 37 DR: Modes of Transmission Study, 2010 38 DR: Mode of Transmission Study, 2010 Approximately 1.2% of expenditure, specifically targeted Approximately 16.1% of expenditure, specifically targeted 39 Prevention Spending Trinidad/Tobago 2002 and 2009 40 What do we do? • Address the IMD The project cycle is not a development •cycle Be strategic in our choices • Put resources where the epidemic is • Be realistic • Develop a new message 41 What do we do? • Address the IMD Second highestin prevalence in the world? • Be strategic our choices • Put resources where the epidemic is • Be realistic • Develop a new message 42 Where do we go from here – A look at the Financial &Fiscal Side Karl Theodore HEU, Centre for Health Economics, UWI Update on Cost of Regional Response to HIV/AIDS • Based on initial estimates produced jointly the World Bank and the HEU in 2000 the updated estimate of the projected cost of responding to HIV/AIDS in 22 CAREC countries is approximately US$ 300m per year. • This is significantly more than the average annual expenditure ( about $165mn) on the epidemic for the past eight years. 44 Update on Cost of Regional Response • On a positive note, in spite of the gap between actual and required expenditure the epidemic has more or less been kept in check. • If the sustainable financing requirement is set just a little higher than the recent annual average expenditure, with a new target of US$ 180million, for example, we would still be requiring just over three-tenths of one percent , or 3/1000 (0.3%) of the region’s annual income! 45 Sustainable Financing Feasible? • On the face of it an expenditure of 0.3% of the region’s income cannot be considered an infeasible target, especially in the context of an epidemic with the potential to annihilate the region. • It is, by all appearances, a matter of the political will to take full ownership of the epidemic, the will to mobilize a miniscule fraction of income to confront a survival threat. 46 A CHANGE OF ATTITUDE • The truth is that while the region is grateful for international support to fight the epidemic, the region has always had the financial capacity to fight this epidemic on its own. • To some this is the kind of statement that can make overseas support become even more scarce, but facing up to this is what independence and regional responsibility are about. 47 History of domestic support • More data required but three country experiences are instructive: • Country A: US$ 50mn spent over the period 2002 to 2009. • Over the same period the cumulative income of the country was close to US$ 135 billion. • The allocation to HIV was therefore less than 0.05%, that is less than 1/20 of one percent! • Country B: in 2006 5.1% of its GDP spent on health, with 3.8% of this five percent allocated to HIV/AIDS, or 0.2% of its income. • Country C in 2008 laid out a plan to spend US$ 90mn between 2008 and 2013 – an average of $18mn per year • Since the country’s income for 2008 was US$4,046mn this means that the planned expenditure was just over 0.4% of 48 income, slightly more than the regional target! Additional Dimension of the Context • In addition to a challenging epidemiological and economic context, the HIV/AIDS response is now faced with the prospect of reduced financial resources, mainly because of the lingering effects of the 2008/2009 global recession. • The need now is to do at least as much as before with less resources than previously available. • It is in this context that the question of the sustainability of the HIV/AIDs response rears its head. 49 Sustainable Sourcing • Although support for HIV/AIDS programmes mainly comes directly from fiscal and international sources, in the final analysis all such support comes from the global and national levels of income. • If we assume that decline in international support will follow UK trend, where DFID has cut by 32%, it follows that sustainability will require countries to find significantly more domestic fiscal space to support national programmes. 50 Finding Fiscal Space for HIV/AIDS response • Two broad approaches – generating more revenues and using resources better • In all there are at least five different ways of making fiscal space: 1. Expanding the tax base – not likely without growth 2. Increasing the effective rate of taxation – dealing with fiscal slippage, introducing new taxes (sin taxes?) 3. Better targeting of fiscal resources – reducing negative impact of epidemic on the economy - and responding to evaluation of use of resources – improving value for money 4. Linking HIV/AIDS response to other health threats to socioeconomic development – life style diseases the candidates here 5. Contributing to a regional pool for specific programmes 51 Comments of Fiscal Space creation • Expanding the tax base: issue here is that in some countries per capita income is relatively high, but fiscal deficits prevail – A&B, BVI examples. Also more countries need to resort to sales taxation. Those with no income taxation need to reconsider this position. Need to tap in to more private sector support of the HIV/AIDS response programme • Increasing the effective rate of taxation: Estimates of slippage range between 20% and 45%. Countries on the higher end are foregoing valuable income for the government. • GIVEN THE PARALYSING DEBT/GDP RATIOS, SOME DEGREE OF FISCAL REFORM SEEMS TO BE WARRANTED FOR STRENGTHENING THE REVENUE BASE 52 Effectively Expanding Fiscal Space 3. Better targeting of fiscal resources :same level of fiscal allocation will do more for the HIV/AIDS programmes if resources are prioritized to address problems according to severity, according to economic evaluation and M&E findings . 4. Linking HIV/AIDS response to other health threats to socioeconomic development : since HIV/AIDS is itself a lifestyle disease the response to the epidemic may benefit from complementary efforts in addressing other lifestyle diseases – use of same trained personnel, use of same facilities, joint procurement of drugs, etc 53 Philosophical summary • Situation may indeed be a bad one, with the prospect of dwindling resources in the presence of an epidemic that is not yet fully under control. • However, given the options countries face the situation cannot be described as hopeless: • a)The opportunity for fiscal reform is presented. • b)The opportunity for health system reform is also presented. • c)The case for private sector resource mobilization is clear. • In this sense the sustainability of the HIV/AIDS response in the region is, in a very real sense, within our hands. 54 Way Forward • It will make sense 1. to assume that overseas support over the years will level out at around 30% of 2007 levels and 2. to gear the domestic sources – public and private- to take over funding responsibilities • In particular the prevention programme should be 100% locally or regionally funded, with external donor support going wholly to the treatment programme. 55 One New Message • One new message today is that in their determination to control the HIV/AIDS epidemic the countries of the region are taking control of the funding of their response programmes. • HIV/AIDS and other threats to development to be covered by a new one percent rule. 56