Financing the Response to AIDS in Low- and Middle-Income Countries: International Assistance from the G8, European Commission and Other Donor Governments in 2009

Introduction

Financing a sufficient and sustained response to the HIV epidemic in low- and middle- income countries has emerged as one of the world’s greatest health and development 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 (the Global Fund) and other financing channels such as UNITAID (the international drug purchase facility) is a critical part of this response. Other funding sources include multilateral institutions, the private sector, and domestic spending by many affected-country governments and the households and individuals within them. Although funding from all these sources has risen significantly over the past decade, the gap between UNAIDS’ estimate of resources needed to combat the HIV epidemic and resources available was approximately $7.7 billion in 2009, up from a $6.5 billion gap in 2008. Moreover, after years of funding increases for AIDS from donor governments, this report finds that funding was essentially flat between 2008 and 2009. While this finding generally mirrors the larger trend in overall official development assistance over the same period, and is in part due to exchange rate fluctuations, it also reflects real decreases among some donors, and raises concerns about the ability to fill the AIDS funding gap going forward. Tracking donor funding to combat the epidemic, therefore, is critical.

Each year, UNAIDS and the Kaiser Family Foundation collect and analyze data to document international assistance for AIDS in low- and middle- income countries. This latest report provides data from 2009, the most recent year available. As such, it represents funding levels reflecting budgeting decisions that occurred during the current global economic crisis. The analysis is based on data provided by governments — including the Group of Eight (G8), Australia, Denmark, Ireland, The Netherlands, Norway, Spain, Sweden, and other donor government members of the Organisation for Economic Co-operation and Development (OECD)’s Development Assistance Committee (DAC) — as well as from the European Commission (EC). It includes bilateral assistance and contributions to the Global Fund and UNITAID. Data were collected and analyzed as part of a collaborative effort between UNAIDS and the Kaiser Family Foundation, with research assistance provided by the Stimson Center.

Key Highlights

After years of significant increases for international AIDS assistance provided by the G8, EC, and other donor governments, funding remained essentially flat over the 2008-2009 period:

• Disbursements (actual resources available in a given year) were US$7.6 billion in 2009, compared to $7.7 billion in 2008 (see Chart 4). The observed decrease in disbursements between 2008 and 2009 is difficult to interpret due to currency fluctuations and reporting cycles.
• Identified new commitments (enacted amounts by governments, not all of which are necessarily disbursed in a given year) totalled US$8.7 billion, the same as in 2008 (see Chart 4).
• Level funding for the AIDS response between 2008 and 2009, follows years of significant increases: disbursements to combat the epidemic rose more than six-fold between 2002 and 2008 (see Chart 4).
• In 2009, funding provided to the Global Fund totalled US$2.7 billion in 2009, of which US$1.6 billion represents an adjusted “AIDS share” (see Chart 7). Funding for UNITAID totalled $250 million, of which $123 million represents an adjusted “AIDS share”.

A subset of G8 Members and, notably, a few non-G8 Members, account for the majority of international AIDS assistance from donor governments:

• In 2009, the United States was the largest donor in the world, accounting for more than half (58.0%) of disbursements by governments. In fact, without U.S. funding, international AIDS assistance from donor governments would have significantly declined between 2008 and 2009.
• The United Kingdom accounted for the second largest share of disbursements in 2009 (10.2%), followed by Germany (5.2%), the Netherlands (5.0%), and France (4.4%). Denmark accounted for 2.5% (see Chart 5).
• After adjusting for exchange rate fluctuations, real changes in international AIDS assistance were observed among some donors between 2008 and 2009. Funding provided by the U.S., Sweden, and the European Commission increased in real terms, while funding from Canada, France, Germany, Ireland, Italy, and the Netherlands decreased; funding provided by Australia, Japan, and Norway was essentially flat. Further analysis is required to assess the extent to which changes in funding provided by the UK were the result of currency exchange rates or other factors.

Most international assistance to combat the epidemic is provided bilaterally, although funding channels vary by donor:

• Bilateral assistance as identified for purposes of this analysis (which includes funding earmarked for AIDS through multilateral instruments, such as UNAIDS), accounted for 77% of disbursements in 2009; the remainder was provided multilaterally through the Global Fund and UNITAID.
• Funding channel patterns vary significantly by donor (see Chart 8).
• Other international financing sources — not documented in this report — include multilateral institutions such as U.N. agencies, multilateral development banks such as the World Bank, and the private sector.

UNAIDS estimates that US$23.6 billion was needed to address the epidemic in low- and middle- income countries in 2009:

• Of this, an estimated US$15.9 billion was available from all sources (public and private), with bilateral international assistance accounting for 37% (US$5.9 billion in disbursements).
• The U.S., U.K., and the Netherlands accounted for the largest shares of such assistance funding.
• Still, there was a gap of US$7.7 billion between resources available from all sources and resources needed in 2009, as estimated by UNAIDS (see Chart 9).

Assessing “fair share” in the context of international assistance is complex and there is no single, agreed upon methodology for doing so. Two different methodologies used in this analysis indicate that, in 2009:

• The U.S. provided 27% of the funding available for AIDS from all sources (donor governments, multilaterals, the private sector, and domestic sources), the largest share of any donor and just below its share of the world’s economy as measured by gross domestic product or GDP (25% in 2009). The U.K. and the Netherlands each provided greater shares of total AIDS resources than their shares of GDP (see Chart 10).
• When standardized by GDP per US$1 million, to account for differences in the sizes of government economies, Denmark provided the highest amount of resources for AIDS in 2009, followed by the Netherlands, Sweden, the United Kingdom, and Ireland (see Chart 11).