Scaling-up Resources for HIV/AIDS Control and Macroeconomic Policies: The Case of Kenya

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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 November
• degol.hailu_at_undp.org

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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

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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 US1,185 million in 1990
  to US634 million in 2004.
• Disagreement on conditionality is major cause of
  aid fluctuation
• Slight recovery after PGRF agreements in 2000

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Kenya Aid in US and as a share of National
Income, 1975-2004Source World Bank World
Development Indicators (2006)
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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

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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)

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HIV/AIDS Spending Including Target, US Source
KNASP (2005)
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State of the Macro-economy(Source Calculated
from IMFs 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

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Aid Utilization
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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

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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

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END

• Thank You
• degol.hailu_at_undp.org