Transcript Scaling-up HIV/AIDS Spending and Macroeconomic Management

Scaling-up Resources for HIV/AIDS Control
and Macroeconomic Policies:
The Case of Kenya
Global Conference on HIV/AIDS and Macroeconomic Policies
International Poverty Centre (IPC)
Brasilia, 20-22 November
[email protected]
Introduction
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About 1.2 million people live with HIV/AIDS
Overall ODA fell, but aid to the health sector and aid
to HIV/AIDS control increased significantly
HIV/AIDS spending was scaled up and the
prevalence rate declined: 14% (2001); 6.7% (2003);
6.1% (2004)
Macroeconomic stability was not affected
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Public health expenditure declined
HIV/AIDS spending is small as a share of GDP
Aid was not spent and was only partially absorbed
History of Aid flows
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Falling ODA flows for the last 15 years
Aid as a share of GDP was 17% in 1993, but fell
to 4% in 2004
Aid flows declined from US$1,185 million in 1990
to US$634 million in 2004.
Disagreement on conditionality is major cause of
aid fluctuation
Slight recovery after PGRF agreements in 2000
Kenya – Aid in US$ and as a share of National Income, 19752004
Source: World Bank World Development Indicators (2006)
18
1,400
16
1,200
14
1,000
800
8
600
6
400
4
200
2
ODA (% of GDP)
ODA (US$)
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
1980
1979
1978
1977
0
1976
0
Millions
10
1975
Percent
12
Aid and Expenditure in Health Sector
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Aid to the health sector as a share of total health
expenditure up from 13% in 1998 to 15% in 2003
But, total health expenditure as a share of GDP fell
from 4.9% to 4.3%
Public health expenditure fell from 2% to 1.7% as a
share of GDP (the LDC average is 2.4%); also fell
from 11% to 7% as a share of total government
expenditure (the LDC average is 9%)
Private health expenditure as a share of total health
expenditure increased from 55% to 61%
Scaling-up HIV/AIDS Spending
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As a share of overall aid, HIV/AIDS funding
rose from 6% in 2000/01 to 38% in 2004/05,
averaging 19%
As a share of total health expenditure HIV/AIDS
spending increased from 5% to 34%
But, as a share of GDP, HIV/AIDS spending
rose from 0.2% of GDP in 2000/01 to 1.5% in
2004/05 (averaging 0.7%)
HIV/AIDS Related Expenditure by Source, in Ksh million, 2000-2005
Year
2000/01
2001/02
2002/03
2003/04
2004/05
Total
KNASP (2005)
Government
Donors
Budgetary
70
10
120
40
156
396
302
1,165
1,796
2,685
6,794
12,742
Donors NGOs Total
Total
Non(in US$ m)
Budgetary
1,760
3,539
4,136
5,487
11,961
26,883
10
26
19
22
52
129
2,142
4,740
6,071
8,234
18,963
40,150
28
60
77
108
240
507
HIV/AIDS Spending Including Target, US$
Source: KNASP (2005)
700
605
600
533
488
500
428
400
338
300
240
200
108
77
100
60
28
/10
200
9
/09
200
8
/08
200
7
/07
200
6
/06
200
5
/05
200
4
/04
200
3
/03
200
2
/02
200
1
200
0
/01
0
State of the Macro-economy
(Source: Calculated from IMF’s IFS)
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Comparing the periods before (1995 to 1999) & after
(2000-2004) HIV/AIDS scaling-up
The CPI averaged 6% in the before period compared
with 5% in the after period and the GDP deflator
averaged 10% compared with 6% (PGRF target less
than 3%)
Depreciation of the real exchange rate by 3.9%
High and positive growth rates of exports and
imports
Growth Rates of Merchandise Exports and Imports, Value in US$
Year
Exports
Imports
1995-1996
10.06
-1.4
1996-1997
-0.67
11.18
1997-1998
-2.21
-2.48
1998-1999
-13
-11.42
1999-2000
-0.76
9.65
2000-2001
12.12
2.78
2001-2002
8.86
1.66
2002-2003
13.94
14.81
2003-2004
9.52
18.59
Source: UNCTAD Database
Aid Utilization
1995-1999
Deficit, Excluding grants (% of GDP)
-1.7
Deficit, Including grants (% of GDP)
-0.9
CA, Excluding transfers (% of GDP)
-4.0
CA, Including transfers (% of GDP)
-3.1
Share of ODA used for fiscal adjustments
22
Share of ODA used for additional imports
21
Reserves (US$ million)
735
Reserves (months of imports)
2.4
Interest Rate (91-Day Treasury Bills)
20.2
Real GDP Growth Rate
3.0
External Debt (US$ million)
5,939
Source: Calculated from IMF’s IFS and Bank of Kenya Quarterly Bulletins
Note:
The PGRF target for the fiscal deficit is 2.3% of GDP
Kenya is not under the HIPC Initiative
2000-2004
-0.8
0.4
-5.8
-4.6
33
32
1,244
3.3
8.1
4.1
5,399
Summary
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Overall ODA has been declining
HIV/AIDS funding increased, but even at a
higher level only make up 1.5% of GDP
Public health spending declined, while private
health expenditure increased
Aid was not spent; but partially absorbed and
added to reserves as well as used to retire debt
No sign of macroeconomic instability
Policy is geared towards a growth strategy
Recommendations
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Consider expansionary fiscal and monetary
policies: increase spending of external resources
(given the fiscal deficit target)
Reverse the decline in health expenditure,
particularly in light of the linkages between
HIV/AIDS and other diseases such as TB
Campaign and advocate for debt relief to Kenya
that will allow channeling resources to HIV/AIDS
control
END
Thank You
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