Ukraine Aids Epidemic Could Lead to Slower Growth, Fewer Workers, Warns World Bank

KYIV, June 12, 2007 – If Ukraine’s AIDS epidemic is not curtailed quickly, by 2014, the total number of HIV-positive people could reach up to 820,400 under the pessimistic scenario. The economic consequences of HIV epidemic may hamper the country’s economic growth which could decline by at least 6 percent, warns the conducted jointly by the World Bank and International HIV/AIDS Alliance study Socioeconomic Impact of HIV/AIDS in Ukraine the Ukrainian version of which was released today.

The report finds that HIV/AIDS is a major obstacle to economic growth in the country, affecting households, businesses, and the government.  Since the young and women are hit hardest by the epidemic, Ukraine’s already declining population would shrink even faster in a generalized epidemic.  A worsening epidemic could also lead to reduced labor supply and worker productivity, ballooning health care costs, and decreased public and private savings and investment.

The spread of HIV/AIDS would exacerbate Ukraine’s already-adverse demographic situation: without AIDS, low fertility rates would drive the Ukrainian population down to 44.2 million by 2014; with it, an additional 300,000-500,000 would be lost, leaving a total population of 43.9-43.7 million.

The Socioeconomic Impact of HIV/AIDS in Ukraine study assesses the medium- to long-term impacts of HIV/AIDS and evaluates the effects of prevention and treatment.  Based on several scenarios, estimates are provided on socioeconomic effects with AIDS (both optimistic and pessimistic), compared to a “no-AIDS” baseline.  Parameters are the rate of mother-to-child transmission, the rate of progression from HIV to AIDS, and availability of antiretroviral therapy. 

The pattern of transmission is changing
While injecting drug use remains the primary source of HIV transmission in Ukraine (72 percent of cumulatively reported cases among adults), a risking number of cases are emerging among the heterosexual partners of injecting drug users and among children. The epidemic’s tendency to spill into the general population is reflected in official Ukrainian AIDS Center data indicating that the share of infections caused by intravenous drug use decreased from 84 percent in 1997 to 44 percent in 2006, while the percentage of heterosexually transmitted infections grew from 11 percent to 35 percent.

The young and women are hit hardest.
Two thirds of all new HIV infections are among young people aged 20-34, and 39 percent of the newly infected are women, according to the 2004 medium scenario. Young women are more vulnerable than young men: the incidence rate for women 20-24 is 0.88 percent and 0.5 percent for men of the same age. By 2014, it is estimated that the 20-34 age group will account for three-quarters of all new HIV infections, half of which will be among women.

The phenomenon of children being orphaned to HIV/AIDS is already taking a toll on both society and households in Ukraine. According to the medium scenario, Ukraine will have 42,000 dual orphans due to AIDS-related deaths of both parents by 2014. The number of children who have lost at least one parent to AIDS is projected to reach 105,000-169,000 by 2014, depending on the scenario. Those children are at risk of impeded access to quality education, health care, and even basic needs, which in turn puts them at higher risk for unemployment, diseases, and poverty.

HIV/AIDS is unevenly distributed across the country.
The epidemic could hit such labor-intensive sectors as agriculture and mining particularly hard, in part because such activities are concentrated in the higher-prevalence southern and eastern regions. Among the worst-affected regions are those in the southeast oblasts of Donetsk, Dnipropetrovsk, Odesa, and Mykolaiv. Accounting for only a quarter of the total population of Ukraine, these regions will bear an estimated 36-43 percent of accumulated HIV cases by 2014 and 31-38 percent of annual AIDS-related deaths. Donetsk Oblast will account for 13-19 percent of Ukraine’s HIV infections, followed by Odessa Oblast at 10-14 percent.

HIV/AIDS has become one of the major obstacles to economic growth in Ukraine.
AIDS affects all agents in an economy: households, businesses, and the government, and its effects impact many of the economy’s aspects: greater mortality and morbidity; reduced labor supply, labor efficiency, and labor productivity; loss of investments
Echoing the underlying demographic decline of 10.4 percent from 2004-2014, HIV/AIDS will cause an additional 1-2 percent reduction in the labor force nationwide. 

Medical expenses associated with treating HIV/AIDS and opportunistic infections can become catastrophic at the household level, driving poor households below the poverty line. Depending on the cost scenario selected, total annual AIDS care expenditure is estimated to be 41 million-629 million hryvnia (UAH) by 2014.

In the public sector, HIV/AIDS impacts both revenue and expenditures. HIV/AIDS, forgone income taxes, and unpaid pension and social security (temporary disability and unemployment) levies are estimated to reach 263-418 million UAH (in optimistic-pessimistic scenarios). The total HIV/AIDS-related, government-funded additional benefits are estimated to be 139-255 million UAH per year by 2014.

A comparison of the non-AIDS scenario with optimistic and pessimistic outcomes shows that Ukraine could experience a 1-6 percent reduction in the level of output (gross domestic product, or GDP, in constant prices), a 2-8 percent reduction in total welfare, and a 1-9 percent reduction in investment.

“The epidemic’s impact on economic, demographics and heals status could be devastating. – says Paul Bermingham, World Bank Director for Ukraine, Belarus and Moldova. - The World Bank remains strongly committed to work with the Ukrainian government, in partnership with other international organizations, to tackle HIV/AIDS epidemic in Ukraine.” 

Ukraine’s response to HIV/AIDS

Ukraine’s national response to the epidemic has received increasing attending in recent years, and a national program for 2004-2008 is being implemented, with patchy results to date.  On the positive side, 35 regional AIDS centers are operating and more than 5,000 patients are receiving antiretroviral therapy.  Moreover, as a result of ART program implementation the AIDS death rate yearly increase has dropped as the AIDS Center reports. However, speeding up the response requires intensified and better coordinated efforts, particularly in areas of prevention, access to HIV testing and counseling, access to integrated treatment and care programs

The Government of Ukraine is implementing activities supported by the the World Bank’s $ 60 million Loan within the framework of the Project “Tuberculosis and HIV/AIDS Control Project” which became effective in January 2004. The project is focusing on HIV prevention activities and strengthening of infrastructure. Up to date the Project has failed to reach the program’s goals. Taking into account that projected closing date of the Project is June 2007, the World Bank management started negotiations with the Government of Ukraine on possible extension of the Project. The World Bank is committed to continue financial and technical assistance to the Government of Ukraine in area of HIV/AIDS as one of the national priorities.

“If we miss a chance to reverse the flow of the epidemic today through preventing new HIV cases,
tomorrow we would be thinking of providing the growing number of positive people with treatment and care”, - says Andriy Klepikov, Executive Director of the International HIV/AIDS Alliance in Ukraine. He emphasizes that “without rapid scale- up of focused prevention efforts, particularly among injecting drug users, HIV treatment will never become socially and economically sustainable”.

Policy recommendations
The five year period from 2006 to 2010 will be decisive for addressing the HIV/AIDS epidemic in Ukraine. Success can only come from sustained national commitment, including allocation of appropriate funding from the domestic budget for key prevention, care and treatment activities. Supported by local and international resources, Ukraine can focus on realizing the most difficult components of HIV/AIDS work:

•  implementation of substitution therapy programs for injecting drug users through usage of
  substitutes (buprenorphine and methadone);
• large-scale coverage with prevention services of injecting drug users, who remain the most
  vulnerable group to HIV/AIDS;
• access to treatment for those HIV-positive people who have associated illnesses, first and
  foremost tuberculosis.

“The current transmission pattern signals a need for a prevention strategy focused on harm-reduction programs (such as methadone substitution and distribution of clean needles) as well as sex education for youth. Even though the mode of transmission is evolving towards heterosexuals, injecting drug users still constitute the majority of those infected; a special effort must be made to reach them, particularly in the worst-affected regions,” the report concludes.