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Too much of a good thing

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									Too much of a good thing?
Potential economic consequences of donor-financed HIV/AIDS spending
Karen Grépin Harvard University William Jack Georgetown University

Two motivations
• How much should donors give?
– Is there too much HIV/AIDS donor funding? – Is it too much for countries to handle?

• How should donors give it?
– Conditionality effects – Alternative delivery mechanisms

Impacts of donor funding
• Direct impacts on health outcomes
• Indirect impacts on economic well-being and growth

• Impacts on domestic resource allocations
– Distortions and inefficiencies

Outline
• Thinking about distortions
• Some data
– General trends in donor funding for HIV/AIDS – Country examples:
• Kenya, Rwanda, Ethiopia, Uganda

Two types of distortion
• Productive inefficiency
– Are we paying too much? – Could we get more?
• Patients on ART, Condoms in use • Students taught about safe sex, etc. • Bed net use, immunization rates

• Allocative inefficiency
– Are we addressing the wrong priorities? – What’s the right mix?

What can countries do?
Achievable health improvements
Improvement in other health indicators A
• All doctors work in other areas • No ARVs imported

• Move doctors into HIV/AIDS • Substitute imported ARVs for other drugs

B
• All doctors work in HIV/AIDS • Only ARVs imported

C

Improvement in HIV/AIDS indicators

Conditional aid
• In-kind aid
– Donor assistance used to import certain goods (ARVs)

• Conditional on-budget support
– Compensates governments for reforms

• Off-budget aid
– NGOs, FBOs, etc.

Other concerns
• Absorptive Capacity
– Interpret as availability of complementary domestic inputs – Same conceptual issues as with “doctors”

• Corruption
– Is there an HIV/AIDS-aid-resource curse? – Is corruption lower with NGO delivery?

• Volatility
– treatment interruption costly – Uncertain volatility – spending priorities distorted – “Potential” volatility could be necessary: for incentives?

ODA to SSA
45,000 40,000 35,000 30,000 2,000 2,500

SSA

1,500 25,000 20,000 1,000 15,000 10,000 5,000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 All SSA Ethiopia Kenya Rwanda Uganda 0 500

Source: OECD, DAC

Countries

Health and population in ODA
30% 25% 20% 15% 10% 5% 0% 1995 1996 1997 1998 1999 Ethiopia 2000 2001 Kenya 2002 2003 2004 2005 2006

All SSA

Rwanda

Uganda

Source: OECD, DAC

Health and population in ODA
30% 25%

20%

15%

10%

5%

0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Source: OECD, DAC

STIs in Health and Population
90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 SSA Ethiopia Kenya Rwanda Uganda

Source: OECD, DAC

ODA disbursements improve
120% 100% 80% 60% 40% 20% 0%

95

96

97

98

99

00

01

02

03

04

05 20

19

19

19

19

19

20

20

20

20

20

HIV Disbursements

Health Disbursements

ODA Disbursements

Source: OECD, DAC

20

06

National Health Spending
25 20

USD per capita

15

10

5

0 Ethiopia -5 Domestic health (2004) ODA STI (2005) ODA non-STI (2005) Kenya Rwanda Uganda

Source: WHO, OECD/DAC

PEPFAR allocations
100% 80%

60%

40%

20%

0% Kenya Rw anda On-Budget Uganda Off-Budget Ethiopia

Source: CGD

On-budget health spending Kenya and Rwanda
14 12 10
USD

60% 50% 40% 30% 20% 10% 0% 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 Total per capita health expenditure - Kenya Total per capita health expenditure - Rwanda % Development Budget - Kenya % Development Budget - Rwanda

8 6 4 2 -

Source: Kenya Ministry of Health, PER, Rwanda?

Kenya: budgeted health expenditure share falls
100% National Security Public Administration General Economic Services 60% Phyical Infrastructure 40% Education Public Safety Law and Order Agriculture and Rural Development 80%

20%

0%

/0 0

/0 1

/0 2

/0 3

/0 4

/0 5

/0 6

99

00

01

02

03

04

05

19

20

20

20

20

20

20

Source: Kenya Ministry of Health, PER

20

06

/0 7

Health

Rwanda health budget: STI growth
40,000 30,000 20,000 10,000 0 2002 2003 STIs 2004 Other health 2005

Rwanda health budget: Non-STI allocations
20,000 16,000 12,000 8,000 4,000 0 2002 Human Resources Malaria 2003 Child health TB 2004 2005

Reproductive health Other

Rwanda: on- and off-budget health spending
160,000

120,000

80,000

40,000

0 2004 2005 Public budget 2006 Off-budget health financing 2007

Conclusions
• Delivery mechanisms could introduce distortions to domestic resource allocations
• Very difficult to quantify without much higher quality data


								
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