Review and analysis of flows from ODA and HIV spending accounts: Are donor funds additional at country level? Presented by Charu C. Garg ( [email protected])

Review and analysis of flows from ODA and HIV spending accounts: Are donor

funds additional at country level?

Presented by Charu C. Garg ([email protected])

Co-contributors: Ajay Tandon, Geir LieHuman Development Network

World Bank

Cape Town, South Africa

July 17-18, 2009

mailto:[email protected]

Outline1. Trends in Official Development Assistance (ODA) for health with focus on HIV/AIDS

2. . Implications of donor flows for HIV/AIDS funds at the country level

3. Additionality of aid flows in the health sector at the country level

• Experience from Kenya, Malawi, Rwanda, Tanzania, and Zambia

• Experience from Honduras, Rwanda, Thailand, and Malawi for HIV/AIDS aid flows

•Context: The global economic scenario and the financial crisis

Total ODA in 2007: US$125 billion; ODA for health in 2007: US$15 billion Increase in health’s share of ODA: 6% in 1995 to 12% in 2007.

Increasing Development Assistance for Health

Total

Health05

01

001

50U

S$

billi

ons

1995 1997 1999 2001 2003 2005 2007Year

Source: OECD-DAC

ODA commitments, 1995-2007

Rising share of external resources as share of total health spending in low-income countries, especially in sub-Saharan Africa.

Increasing Development Assistance for Health

Classification 1995 2000 2006

Low-income 4.2% 6.8% 11.3%

Sub-Saharan African 8.1% 16.3% 27.6%

Non sub-Saharan African 2.7% 3.3% 4.8%

EXTERNAL SOURCES SHARE OF TOTAL HEALTH EXPENDITURE

020

4060

8010

0Pe

rcen

tage

of h

ealth

com

mitm

ents

by co

mpo

nent

s (%

)

1995 1997 1999 2001 2003 2005 2007year

Health System Strenghtening

HIV/AIDS

Population & Reproductive Health

Infectious Disease Control

Basic Nutrition

Source: OECD DAC

Components of total ODA health commitments 1995-2007numbers in percentage (%)

ODA for HIV is increasing at a faster rate

Total Health

HIV/AIDS

050

0010

000

1500

0O

DA

com

mitt

men

ts, c

urre

nt U

S$

1995 1997 1999 2001 2003 2005 2007Year

Total Health

Health Systems Strengthening

050

0010

000

1500

0O

DA

com

mitt

men

ts, c

urre

nt U

S$

1995 1997 1999 2001 2003 2005 2007Year

Source: OECD DAC

ODA commitments for health, 1995-2007

4.0 59.7 0.4 25.7 10.2

23.5 34.7 12.6 14.6 14.6

24.7 35.5 0.7 13.2 25.9

61.2 0.7 38.1

50.5 17.7 2.3 18.5 11.0

0 20 40 60 80 100Share of health commitments by components (%)

European Commission

World Bank

United Kingdom

Global Fund

United States

Source: OECD DAC

Share of components in total ODA health commitmentsfor top 5 donors, 2005-2007, numbers in percentage (%)

HIV/AIDS

Health System Strenghtening

Basic Nutrition

Infectious Disease Control

Population & Reproductive Health

Total: 25651 US$ million



Total: 2675US$ million


Donor Prioritization

2. What happens to HIV/AIDS funds at the country level?

Disconnect between donor priorities and disease burden.

Changing composition at source and expenditure level.

NATIONAL HEALTH BUDGETS AND DONOR HIV/AIDS COMMITMENTS 2005-2007 AVERAGE

Country Population HIV prevalence (15-49 years)

National health budget

Donor HIV/AIDS commitments

Donor HIV/AIDS commitments

% national budget Ethiopia 81 million 2.1% US$360.2 million US$297.7 million 82.6% Mali 12 million 1.5% US$190.4 million US$ 27.5 million 14.4% Mozambique 21 million 12.3% US$237.5 million US$ 160.1 million 67.4% Rwanda 9 million 2.9% US$ 135.5 million US$ 95.7 million 70.6% Uganda 30 million 5.7% US$ 186.9 million US$ 181.3 million 97.0% Zambia 12 million 15.1% US$ 329.8 million US$ 148.2 million 44.9%

Sources: UNAIDS; WHO; OECD-DAC

Disconnect Between Aid Commitments, Disease Burden and national priorities

Acute respiratory infections: 25% of disease burden but only 3% of aid flows.

Spending on health and HIV/AIDS is increasing

What do HIV/AIDS funds finance?

Share of financing sources in HIV/AIDS funding

Share of financing sources for general health

Where is the increased funding for health and HIV coming from?

3. Is Donor funding additional to domestic resources

1. Experience from Kenya, Malawi, Rwanda, Tanzania, and Zambia

2. Experience from Honduras, Rwanda, Thailand, and Malawi

Absolute donors contributions, and as a percentage of total spending on HIV/AIDS

Have donor contributions crowded out resources or are they additional; government spending

Have donor contributions crowded out resources or are they additional; private spending

No concrete measures available to define additionality specifically for health sector

A financial concept concerned with whether expenditures from domestic sources increased or remained same on the receipt of external funding for a specific priority, activity or for health in general

Definition of additionality:

• External resources spent on specific health priority/activity are said to be additional if they lead to increased expenditure for that priority without reducing public expenditures for that priority/activity

Additionality does not look at:

• Whether the funds are well used or the impact of expenditures on the coverage of health services or on health outcomes

Operationalized indicators for measuring additionality for HIV/AIDS

Indicator definition and level Summary definition of Indicator (c stands for the current year and b for the base year in each subscript below)

National level: (definition 2 of table 2)Does an increase in contributions from external resources or Rest of the World (ROW) funds from one donor (GFATM in this case) for HIV result in concomitant reduction of external resources from other funding agencies for HIV in that country?

If ROW (Donor 1 for HIV)c / ROW ((Donor 1 for HIV)b ≥ 1And ROW (all other donors)c / ROW(all other donors)b ≥ 1Then it implies additionality

Health Sector Level: (definition 4 of table 2)Is an increase in HIV funding from external sources/ROW in country 1 associated with a decrease in spending from external resources in other parts of the health sector (H#)?

If ROW (HIV)c / ROW (HIV)b ≥ 1And ROW (H#)c / ROW(H#)b ≥ 1Then it implies additionality

Program level (definition 5 of table 2)Is an increase in HIV spending from external resources/ROW to country 1 associated with a decrease in domestic public expenditures (PE) on HIV?

If ROW(HIV)c / ROW(HIV)b ≥ 1 and PE(HIV)c / PE(HIV)b ≥ 1Then it implies additionality

Activity level (definition 6 of table 2)Is an increase in HIV on a particular activity (A) (e.g. prevention, treatment) from external resources/ROW to country 1 associated with a decrease in spending on that activity from domestic public resources

If ROW(A)c / ROW(A)b ≥ 1and PE(A)c / PE(A)b ≥ 1Then it implies additionality

Input level (definition 7 of table 2)Is an increase in external resources/ROW on a particular input (I) (e.g. medicines, wages) associated with a decrease in spending on that input from domestic public expenditure

If ROW (I)c / ROW (I)b ≥ 1and PE(I)c / PE(I)b ≥ 1 Thenit implies additionality

Additionality of External resources at Health Sector Level:Is an increase in HIV funding from external sources/ROW in country 1 associated with a decrease in spending from external resources in other parts of the health sector (H#)?If ROW (HIV)c / ROW (HIV)b ≥ 1And ROW (H#)c / ROW(H#)b ≥ 1Then it implies additionality

Additionality of External resources at HIV/ AIDS Program levelIs an increase in HIV spending from external resources/ROW to country 1 associated with a decrease in domestic public expenditures (PE) on HIV?If ROW(HIV)c / ROW(HIV)b ≥ 1 and PE(HIV)c / PE(HIV)b ≥ 1Then it implies additionality

Honduras (last year data available is 2003)

National Level Health Sector Level Program level Activity Level Input level

Years 1. ROW (GFATM for HIV)c / ROW (GFATM for

HIV)b

2. ROW (for HIV from all donors

except GFATM)c / ROW (for HIV from

all donors except GFATM)b

1. ROW (HIV)c /

ROW (HIV)b

2. ROW (H#)c /

ROW(H#)b ?

1. ROW

(HIV)c /

ROW

(HIV)b

2. PE

(HIV)c /

PE (HIV)b

1. ROW

(prev.)c /

ROW

(prev.)b

2. PE

(prev.)c

/ PE

(prev.)b

ROW

(ARV)c /

ROW

(ARV)b

PE (ARV)

c / PE

(ARV)

b

2003/2002increased from 0

to 45 m Lempiras

naIncreased from

2002 levelna

Increased from 2002 level

0.27 na 4.98

2002/2001 0 na 0.641.40

0.64 1.01 na na

2001/2000 0 na 1.520.66

1.52 1.12na

na

2000/1999 0 na 0.280.88

0.28 1.05na

na

Rwanda (last year data available is 2002)


2002/2000 No GFATM grants expended in 2000 or 2002

3.13 3.13 0.51 3.13 2.24 3.14 1.62 34.43 remain 0

2000/1998 2.03 2.03 0.85 2.03 1.99 na na remain 0 remain 0

Thailand (last year data available is 2003)


2003/2002increased from 0

to 166 m baht0.32 0.76 1.15 0.76 1.06 0.11 0.91 remain 0 1.25

2002/2001 na na 2.20 11.18 2.20 1.28 2.10 1.10 remain 0 1.98

2001/2000 na na 4.45 0.54 4.45 0.80increased from 0 to 151m baht

0.83 remain 0 0.68

Malawi (last year data available is 2003)


2003/2006Increased from 0

to 1738 2.2 4 1.5 4 0.99 0.69 69.9Increased from

0 to 1331

Decreased from 59 to 0

Discussion

1. Measurement Lack of good time series data and fluctuations in aid for

health render financial projections and counterfactual difficult to estimate

External funding could lead to reduced OOP expenditures -limited regular HH surveys at country level- difficult to test

2. Interpretation Causality not always possible- Domestic funding may

already be contracting and because of hardship/ crisis

Fungibility might simply reflect a lack of ability to absorb funds, rather than decision to reallocate domestic resources

Reduction in input prices - eg pharmaceuticals may reduce HIV expenditures and may not really be implying fungibility

3. Advisability

Additionality of Health Aid

External resources seem to be negatively related to out-of-pocket spending in low-incomee countries.

02

04

06

08

01

00

Out-

of-

po

cket sh

are

of to

tal he

alth

exp

end

iture

(%

)

0 20 40 60 80 100External sources share of total health expenditure (%)

Source: WHO NHA DatabaseNote: Sub-saharan Africa countries highlighted in blue

External versus out-of-pocket sources of health financingLow-income countries, 2006

1. The global economic scenario

The current global financial crisis is affecting almost all countries at all levels of income

Current crisis differs from previous; starting in the most developed countries, and spreading to those of middle and lower income

Forecast for countries economic growth rates are falling, and the effects for countries are still emerging

The evidence on what the effects on health will be for low income countries are slim But can expect:

Households will experience reductions in employment and income

If catastrophic health events occur many people may be pushed into extreme poverty

The global economic scenario cont.

Summarizing

ODA commitments for health has increased in recent years, but the share going to HSS has been declining, the share going to HIV/AIDS has increased.

HIV/AIDS funds at country level:

Experience show total resource envelope for HIV/AIDS has increased, largely due to the influx of donor funding

Spending shifted from hospitals to health centers and administration.

Additionality:

Recipient governments were generally to be found consistent with the concept of additionality

Donors however did not seem to practice what they preached not really advisable to enforce additionality as a condition.

The current economic crisis will make donors financing vital for HIV and health system but using this money effectively is much more critical for better outcomes.

Thank you

Documents

Review and analysis of flows from ODA and HIV spending accounts: Are donor funds additional at country level? Presented by Charu C. Garg ( [email protected])