scaling-up resources for hiv/aids control and macroeconomic policies: the case of kenya global...
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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 [email protected]
Introduction 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 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 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, 1975-2004
Source: World Bank World Development Indicators (2006)
0
2
4
6
8
10
12
14
16
18
Perc
ent
0
200
400
600
800
1,000
1,200
1,400
Mill
ions
ODA (% of GDP) ODA (US$)
Aid and Expenditure in Health Sector
Aid to the health sector as a share of total health expenditure up from 13% in 1998 to 15% in 2003
But, total health expenditure as a share of GDP fell from 4.9% to 4.3%
Public health expenditure fell from 2% to 1.7% as a share of GDP (the LDC average is 2.4%); also fell from 11% to 7% as a share of total government expenditure (the LDC average is 9%)
Private health expenditure as a share of total health expenditure increased from 55% to 61%
Scaling-up HIV/AIDS Spending
As a share of overall aid, HIV/AIDS funding rose from 6% in 2000/01 to 38% in 2004/05, averaging 19%
As a share of total health expenditure HIV/AIDS spending increased from 5% to 34%
But, as a share of GDP, HIV/AIDS spending rose from 0.2% of GDP in 2000/01 to 1.5% in 2004/05 (averaging 0.7%)
HIV/ AIDS Related Expenditure by Source, in Ksh million, 2000-2005 Year Government Donors
Budgetary Donors Non-
Budgetary
NGOs Total Total (in US$ m)
2000/ 01 70 302 1,760 10 2,142 28 2001/ 02 10 1,165 3,539 26 4,740 60 2002/ 03 120 1,796 4,136 19 6,071 77 2003/ 04 40 2,685 5,487 22 8,234 108 2004/ 05 156 6,794 11,961 52 18,963 240
Total 396 12,742 26,883 129 40,150 507 KNASP (2005)
HIV/AIDS Spending Including Target, US$ Source: KNASP (2005)
77108
488
605
338
60
533
428
240
280
100
200
300
400
500
600
700
State of the Macro-economy(Source: Calculated from IMF’s IFS)
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 2000-2004 Deficit, Excluding grants (% of GDP) -1.7 -0.8 Deficit, Including grants (% of GDP) -0.9 0.4 CA, Excluding transfers (% of GDP) -4.0 -5.8 CA, Including transfers (% of GDP) -3.1 -4.6 Share of ODA used for fiscal adjustments 22 33 Share of ODA used for additional imports 21 32 Reserves (US$ million) 735 1,244 Reserves (months of imports) 2.4 3.3 Interest Rate (91-Day Treasury Bills) 20.2 8.1 Real GDP Growth Rate 3.0 4.1 External Debt (US$ million) 5,939 5,399 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
Summary 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
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
