This study examines the impact of currency fluctuations on HIV and AIDS funding both from the international community and domestic resources
There is a growing perception that countries in the developing world are experiencing sustained economic growth and getting richer. At the same time, there are indications that, at best, international development assistance will be constant, and at worst, may decline. This has important ramifications for the health sector and is especially significant for HIV and AIDS.
Currency fluctuations can have a significant impact on the economic performance of a country. The authors’ interest is primarily on the impact of funding for HIV and AIDS, both from the international community and domestic resources. This is particularly important where so much is spent in hard currency on drugs, test kits and other externally produced resources. In some countries over 90% of all the resources for HIV and AIDS comes from external sources. In others support for vulnerable and marginal groups such as intravenous drug users and men who have sex with men is predominantly funded by foreign donors. Some governments actively discriminate against these groups, including denying access to services.
Countries are now under considerable pressure to find more domestic funding for their health services. In 2015, we saw the first decline in donor funding for HIV and AIDS in over 5 years. At the same time, we will continue to see increased resource needs as ever larger numbers of people are placed on anti-retroviral therapy (ART), which has to be taken for life.
When the bulk of resources were provided by donors, exchange rates were relatively unimportant; indeed, falling exchange rates meant donor dollars went further domestically. In 2012, for the first time ever, the majority of global funding for HIV and AIDS came from domestic sources within low and middle-income countries. The growing emphasis on increased domestic financing means fluctuating currencies can cause problems. First, because donor budgets are primarily in US dollars, fluctuations in domestic currencies will make burn rates appear lower or higher than they actually are. Lower rates of spending are a particular problem for donors as they and their governments expect predictable high rates of spending in order to avoid carry-overs. Secondly, ARVs are primarily purchased internationally, in foreign currencies, which means the exchange rate of the domestic currency will have an impact on how much can be purchased and at what cost.
This paper looking at the following trends:
economic growth in recipient, high prevalence countries and how it might influence domestic funding availability
the increased need for money for the AIDS response and what is driving this
the effect of currency fluctuations on funding and the impact from both the donor and recipient points of view
This study was funded by the Department for International Development’s Policy Research Fund
Professor Alan Whiteside and Nick Zebryk. Crumbling Currencies and Public Health Interventions: The Case of HIV and AIDS. Wilfrid Laurier University (2017), 52p