2014 03 12 new funding model allocation external_short
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Allocation Communication, March 2014
New Funding Model Country Allocations
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12 March 2014
Allocation Communication, March 2014
Total funding from Global Fund is increasing
• The total funds for allocation are 20% higher than what we have disbursed in the past.
- The total funds to be allocated to countries, available as of January 1, 2014 (including existing funds): US$ 14.8 billion
- Average implied funding level: US$ 3.7 billion per year
- This compares favorably vs. the average annual disbursement rates of US$ 3.2 billion. However, this is less than the higher rate of disbursement in 2013 of US$ 3.9 billion
• In addition, the Global Fund will allocate:
- US$ 950 million of incentive funding which will be awarded to ambitious programs that deliver impact in country – which increases the average implied funding level to above US$ 3.9 billion per year
- US$ 200 million for new regional grants and US$ 91 million to finish existing regional grants
This represents US$ 16 billion for countries
Key messages1
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Allocation Communication, March 2014
On average, most countries will receive more funds
• On average, countries will receive more funds from the Global Fund for this Replenishment period than they did in the past.
• In many countries, funds from the Global Fund include (only) existing funds that must be used for maximum impact
• For many countries, 2013 was a peak year for GF disbursements as the Global Fund ‘unstuck’ grants and a backlog of funds flowed to countries. This means that there will be a decrease in funding compared to 2013 levels.
2010 2011 2012 20130
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2
3
4
5
DisbursementsUS$in bn
Key messages for countries1
3.12.6
3.33.73.9
3.2
2010-2013
(average)
2014-2017
(average)
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Allocation Communication, March 2014
Most countries are under-funded relative to need and should be ambitious in what they plan to achieve
In most countries, the allocation amounts (regardless of whether a country is over- or under-allocated) will still be insufficient to cover the gaps vs. real need
- Most countries are under-funded relative to their needs.
- This should not limit planning and ambition – to defeat the diseases, countries need to think creatively on how to use all resources available
The Global Fund is committed to working in partnership with countries, civil society, donors, technical partners to maximize impact
- By combining the skill and knowledge and determination of everyone responding to these diseases, we will find the best solutions
- By prioritizing and focusing on maximum impact, we may be able to achieve more in the future than seems possible today
Key messages1
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Allocation Communication, March 2014
Grant implementation period is flexible
The Global Fund will work flexibly with countries to determine the best strategy to invest for maximum impact, including adapting the implementation periods
• Less than 1 year on average to access funds (including country dialogue, concept note development, TRP and GAC reviews, grant-making Board approval)
• The typical duration of a grant is three years, but the Global Fund can work with countries to be flexible on timing, and to significantly shorten the timeline to maximize impact
• Timeline will be determined based on multiple factors including: - Ambition to achieve increased impact and sustain gains- Relative under-/over-allocation of countries - Alignment with national plans and schedules
• Country dialogue will be the main mechanism to determine the optimal grant duration.
Key messages1
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Allocation Communication, March 2014
• Funding requests are based on quality national strategies
• Resources are focused on targeting the right populations
• Decisions on the allocation of resources are based on evidence/data
• Costs can be driven down by optimizing procurement/supply chain
• Existing grants should be used as effectively as possible, ensuring that programs are regularly evaluated and grants reprogramed when it makes sense for maximum impact
• Any additional funding should be harmonized with existing funding; disease programs should be viewed in a holistic manner
• Donor funding should be coordinated and aligned in-country to avoid duplication/inefficiencies
Stronger resource prioritization is critical to achieving impact
Key messages1
Resources available to countries
Strategic investment for maximum impact
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Allocation Communication, March 2014
Contents
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Allocation Methodology
Allocation Communication, March 2014
Allocation methodology
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HIV(50%)
Malaria(32%)
TB(18%)
Band 1
Band 2
Band 3
Band 4
ApplyAllocation Formula
+ Qual.
Factors
Apply Qual.
Factors
(within Band)
Country allocation
Eligible Components
Total Amount
to allocate to
Country Bands
Global Disease Split
Indicative split from Global
Fund
HIV($25m)
HSS($15m)
TB($35m)
HIV($35m)
Malaria($30m)
TB($35m)
Final program split at country
level
Example: Country ATotal indicative funding
= $100m
Malaria($25m)
Allocation methodology2
Allocation Communication, March 2014
How does the allocation formula work? (Part I)
Calculate a country share for each
eligible disease component
Apply qualitative adjustments to country share
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2
Allocation methodology2
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Allocation Communication, March 2014
How does ‘Minimum Required Level’ work?
• The last 4-year (2010-2013) disbursement data available at the end of 2013, with a 25% reduction
• The existing grant pipeline remaining undisbursed as of 1 January 2014**
The MRL is the greater of the
following
Allocation methodology2
• A number of countries have historically received more funding than the allocation formula provides (based on disease burden and ability-to-pay)
• MRL is a provision for ‘graduated reductions’: the countries that would receive a lower allocation instead get their ‘Minimum Required Level’ (MRL)*
* Countries may be reduced below their MRL, due qualitative adjustments
** This includes: (1) committed funding that remains undisbursed; (2) uncommitted transition funding of the new funding model approved by the Board; and (3) uncommitted rounds-based funding (whether or not Board approved). Any such funding not yet approved by the Board will be adjusted by performance-based funding criteria and for Board-mandated savings.
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Allocation Communication, March 2014
Under/over allocated components
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Allocation methodology2
• Significantly over-allocated components (150% above original allocation) are not eligible for incentive funding.
• The Global Fund will work with over-allocated countries to take steps to move towards a more appropriate allocation in the future
Transfer
Allocation after MRL adjustment(e.g. large Phase II grant signed in 2013)
Original allocation formula amount
Under-allocated country
Allocation after MRL adjustment
(e.g. low past disbursement, low
existing grant pipeline)
Over-allocated country
Original allocation formula amount
Allocation Communication, March 2014 12
Determine country disease allocation
Determine total notional funding
amount per country
3
4
Aggregate all country allocations to their
relevant band
5Notional funding
amount for country A
Notional funding amount for country B
Notional funding amount for country C
Band 1
Band 2
Band 3
Band 4
How does the allocation formula work? (Part II)
Allocation methodology2
Allocation Communication, March 2014
Country band composition
Allocation methodology2
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Disease Burden
Inco
me
Lower Higher
Low
er
Band 1
Band 3Band 4
Band 2
GNI per capita US$ 2,000
Lower-income, higher-burden
39 countries
Higher-income, higher-burden
11 countries
Lower-income, lower-burden
18 countries
Higher-income, lower-burden
55 countries
0.26 composite
score
US$ 1.1bn US$ 1.5bn
US$ 0.9 bn US$ 11.3 bn
US$ 83 million of incentive funding
available for Band 3
US$ 825 million of incentive funding
available for Band 1
US$ 42 million of incentive funding
available for Band 2
Band 4 countries have incentive
funding calculated into their allocations
Hig
her
Allocation Communication, March 2014 14
The notional country disease allocation resulting from the allocation formula is further adjusted based on a number of qualitative factors
Any adjustments made have to be offset by other adjustments in the same band.
The majority of the qualitative adjustments, (except external financing, minimum required level and WTP) are made within the Band
Qualitative adjustments
The formula amount is decreased to 70% before application of qualitative factors
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2
3
Allocation methodology2
Allocation Communication, March 2014 15
How qualitative adjustments affect the allocation
Criteria Allocation impact
External Financing
Minimum required level
Performance
Impact
Increasing rates of infection
Risk
Absorptive Capacity
Willingness to Pay
Maximum decrease or increase in allocation of 50%
The higher of the two totals: total of past 4 years’ disbursement data reduced by 25% or total existing pipeline
Increase of up to 25% for good/exceptional implementation
Increase or decrease of up to 15%
Increase of 5%
Increase of up to US$ 1 million
Decrease (no defined amount)
15% of the allocation is conditional upon government’s willingness to make an additional investment into the disease program
Adjust- ments
to formula
Adjust-ments during
CD
Other considerations Decrease (no defined amount)
Adjust-ments within Bands
Allocation methodology2
Allocation Communication, March 2014
Example: Over-allocated disease component
18.5
90.983.6 84.6
Allocation through allocation process ($M)
*Note: Qualitative factor adjustments include those for performance, impact, increasing rates of infection, risk, absorptive capacity and other considerations
396% increase to be at 75% of past
disbursements
7% decrease for B1 performance rating and
limited / no impact
$1M increase for other considerations
Allocation methodology2
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Allocation Communication, March 2014
Example: Under-allocated disease component
35.1
16.9 17.2
25.8
Allocation through allocation process ($M)
~52% decrease because did not have high past disbursements /
existing funds
~2% increase for performance, impact, increasing rates, etc
~8M increase for other considerations.
Allocation methodology2
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Allocation Communication, March 2014
Appendix
Allocation Communication, March 2014
Parameters for disease burden indicators
Allocation methodology2
Indicator Proposed specification
HIVburden
[People with HIV]data from 2012
TBburden
[1 * HIV negative TB incident cases], [1.2 * HIV positive TB incident cases], [8 * estimated MDR-TB incidence], [0.1 * 50% of estimated number of people with known HIV positive status]data from 2012
Malariaburden
[1 * cases], [1 * deaths],[0.05 * incidence rate], [0.05 * mortality rate]data from 2000, indicators normalized
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Allocation Communication, March 2014
Ability-to-pay factor
Allocation methodology2
LIC
s
0 2,000 4,000 6,000 8,000 10,000 12,000 14,0000.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Ability-to-pay factor Eligible countries as of 2013
Counterpart Financing Thresholds
GNI per capita, Atlas method
Ability-to-pay factor
0.95
LMICs UMICs
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