Financing the response to AIDS in low- and middle-income countries: International assistance from the G8, European Commission and other donor Governments, 2006

Introduction

Financing a sufficient and sustained response to the HIV/AIDS epidemic in low- and middle- income countries has emerged as one of the world’s greatest challenges, and one that will be with us for the foreseeable future. International assistance from donor governments, through bilateral aid and contributions to the Global Fund to Fight AIDS, Tuberculosis and Malaria as well as other financing channels, is a critical part of this response. Other international financing sources include multilateral institutions and the private sector. Domestic spending by many affected-country governments to combat their epidemics, as well as spending by households and individuals within these countries, are also major parts of the response. Funding from all these sources has risen over the past decade. Despite these increases, however, the difference between UNAIDS’ estimates of resource needs compared to resources available in 2006 was US$6 billion, a difference that could even grow larger over the next few years. Most of this difference will need to be filled by the international community.

This analysis provides the latest available data on international assistance for AIDS in low- and middle- income countries provided by donor governments, including the Group of Eight (G8), the European Commission (EC), Ireland, the Netherlands, Sweden, Switzerland, and other donor governments who provide international development assistance. The data were collected and analyzed through a collaborative effort between UNAIDS and the Kaiser Family Foundation. The Center for Strategic and International Studies also conducted research for this project.

Key Highlights

In 2006, international AIDS assistance from the G8, EC, and other donor governments reached its highest level ever: ƒ

• Commitments totalled US$5.6 billion, of which US$4.5 billion was provided through bilateral channels (including earmarked multilateral commitments) and US$.943 billion to the Global Fund (adjusted to represent an AIDS share).
• The equivalent of seven in ten commitment dollars was disbursed in 2006 (including current and past commitments), totalling US$3.9 billion in resources made available for AIDS in low- and middle-income countries.

Funding from donor governments has risen significantly over the past several years:

• Between 2002 and 2006, commitments and disbursements each increased more than three-fold, although commitments rose at a faster rate than disbursements.
• Between 2005 and 2006, commitments rose by 28% and disbursements by 11%.

Increases in international AIDS assistance from donor governments have been driven by a subset of G8 Members and, notably, a few non-G8 Members:

• In 2006, the United States was the largest donor in the world, accounting for close to half (47%) of funding commitments by governments and 41% of disbursements. Among resources available for the fight against AIDS in low-and middle- income countries from all sources (domestic and international) in 2006, the U.S. accounted for 18%, the largest share.
• The Netherlands accounted for the second largest share of commitments from all donor governments and third largest share of disbursements in 2006. The United Kingdom accounted for the second largest share of disbursements. Sweden and Ireland each accounted for larger shares than some G8 Members.

Most funding provided by donor governments is channelled bilaterally or earmarked through multilateral instruments, accounting for 76% of disbursements in 2006; the remainder is provided through the Global Fund. Funding channel patterns vary significantly by donor.

UNAIDS estimates that US$14.9 billion was needed to address the epidemic in low- and middle- income countries in 2006:

• Of this, an estimated US$8.9 billion was available from all sources (public and private), with donor governments accounting for 44% (US$3.9 billion in disbursements).
• The U.S., U.K., and the Netherlands accounted for the largest shares of assistance funding.
• Still, there was a gap of US$6.0 billion between resources available from all sources and resources needed in 2006.

Assessing “fair share” in the context of international assistance is a challenging task and there is no single, agreed upon methodology for doing so. Two different methodologies used in this analysis indicate that, in 2006:

• While the U.S. government provided the bulk of international assistance for AIDS, it provided a smaller share of all resources available for AIDS (from donor governments, multilaterals, the private sector, and domestic sources) than the U.S. share of the world’s economy (as measured by gross domestic product or GDP). This was also the case for Canada, France, Germany, Italy, and Japan. The U.K., the Netherlands, Sweden, and Ireland each provided greater shares of all resources for AIDS than their shares of GDP.
• When standardized by GDP per US$1 million, to account for differences in the sizes of government economies, the Netherlands provided the highest amount in 2006, followed by Sweden and Ireland. The U.K. was fourth and the U.S., fifth.