Friday, October 1, 2004
9:00-10:30 am
World Bank The summary note was taken and drafted by an independent consultant, Paula Duggan, and reviewed and edited by the speakers. Attribution is given only to the panelists since it was not feasible to allow audience participants to review the draft text of the questions and comments before posting this note on the web. If any of the participants have comments or suggested edits to this text we ask that they send an email to the Bank’s Civil Society Team at civilsociety@worldbank.org.
The moderator of this session on HIV/AIDS was Phillip Hay (World Bank). Panelists were Sudhir Shetty (World Bank), Rick Rowden (ActionAid), Anna Thomas (Christian Aid), Haidy Ear-Dupuy (World Vision), Godfrey Kalinga (International Monetary Fund), and Jonathan Brown (World Bank). The background for this panel were three reports: Downward Spiral: The Absence of HIV from Economic Policy-Making (Christian Aid), Blocking Progress: How the Fight Against HIV/AIDS is Being Undermined by the World Bank and International Monetary Fund (Action Aid, Results, Global AIDS Alliance).
Mr. Hay started off by inviting panelists to offer some thoughts about what might constitute an effective meeting. Ms. Thomas summed up for the other CSO representatives, Ms. Ear-Dupuy and Mr. Rowden, saying that there is now a lot of recognition of the importance of HIV/AIDS in development and that donors have stepped up their response over the last couple of years. This is something CSOs are glad to see, she said, but CSOs and other groups are all looking at different ways HIV can be integrated across the board in development, and particularly macro-economic policies, because it still tends to be kept in a box of its own. The CSOs would like to have suggestions and discussion of this issue. Mr. Kalinga, speaking as a representative of the IMF, said that he would like to see a better appreciation of how different groups are approaching the issues, that everyone was working toward the same goals and that shouting at one another is not useful. Mr. Hay, summing up for Mr. Shetty and Mr. Brown from the Bank, spoke about the 14,000 people who are newly infected with HIV/AIDS every day. He said that the stakes are enormously high and that they would like to see progress in discussions especially around the Poverty Reduction Strategies Papers (PRSPs) and the Policy and Social Impact Analyses (PSIAs). He also said he agreed with Mr. Kalinga that “united we stand and divided we fall in facing the AIDS crisis”. Ms. Thomas was the first panelist to speak and in her opening remarks she pointed out that Mr. Wolfensohn has said that HIV/AIDS is turning back the clock on development. Peter Piot, Director of UNAIDS, however, finds he keeps having to repeat the case that AIDS is not just about health, it also affects the economy. AIDS is destroying the fabric of society, affecting mainly young adults and other people who keep the economy going. Also, because there is a 10-year delay between the time HIV spreads in a country and the impact, it is particularly difficult to address since countries tend not to prioritize issues that are going to be a problem in 10 years time. Christian Aid has been looking specifically at how AIDS affects poverty and how poverty makes people more vulnerable to HIV. HIV/AIDS not only increases poverty at the level of the household, it also is affecting growth. A Bank study projects that over a 20-year period in African countries, GDP could be 67 percent lower than it otherwise would be; another Bank study indicates that in South Africa, if nothing further is done there may be ‘complete economic collapse’ over three generations due to HIV. At the same time there is now strong evidence that HIV/AIDS disproportionately affects the poorest people and that there is a correlation between inequality and HIV/AIDS. Of the 10 most unequal countries, 7 are countries with the highest prevalence of HIV. She then cited a case in Kenya where trade liberalization led to a sharp decline in the sugar industry. Subsequently there was an increase in inequality and an increase in HIV vulnerability. . Desperate for income, people were engaging is riskier behaviors. Far more women were involved in sex work than before, there was a resurgence of wife inheritance, which was spreading AIDS because if a man dies (frequently of AIDS) a brother or another close relative becomes a new partner of the wife. Other changes included the manufacturing of illegal alcohol which then tends to lead to more risky situations. Going back to the main point, Ms. Thomas said, policy architects can argue that impoverishment caused by trade liberalization will be temporary and that in the long term everybody will become better off. Whether or not this is the case, if HIV increases as a result of temporary or long-term impoverishment, the impact can not be offset. At the same time if growth is depressed by the HIV epidemic, it also makes countries less able to act, and these are two of the factors jeopardizing the attainment of the Millennium Development Goals (MDGs) across the board. There are many ways the Bank and the Fund and countries can take action. One of these is to continue to increase the prioritization of HIV/AIDS. Mr. Hay, she said mentioned the PRSPs, and while the PRSPs are improving, in over a third of the countries that have completed them, HIV/AIDS resourcing is not discussed. HIV is not mentioned in the Users Guide to PSIA. HIV status plays no part in countries’ eligibility for special trade deals. But mostly, the questions have not been asked. . She then mentioned six things that Christian Aid wants to see: 1) that the IFIs recommend no policies or conditions likely to worsen HIV; 2) that HIV considerations be fully integrated into the PSIAs; 3) that national plans to respond to HIV are supported by ensuring budget limits do not preclude adequate financing; 4) That HIV/AIDS be considered in all PRSPs; 5) that governments do projections of the likely impact of HIV on their economies and their societies, and 6) that more resources be directed to HIV/AIDS programs. Mr. Rowden began his opening statement by saying that countries are unwilling to spend more on AIDS because they want to stay within budget constraints. He said that ActionAid hears the same frustrations voiced by many organizations including Doctors without Borders, and UNAIDS and everyone needs to be searching for alternative solutions. In binding loan conditions that continue to go out with IMF loans, 27 out of 52 African countries have inflation targeting at or below five percent and this is of serious concern. The IMF has said that it needs to be more flexible on this issue and CSOs are happy to hear that but they don’t see the flexibility manifesting itself yet in the binding loan conditions. Everyone knows, he said, that spending is going to have to go up in the fight against AIDS, but when funding goes up there is the risk of an inflationary response: there has to be a tradeoff. Nobody wants higher inflation but also nobody wants health and education budgets to stay insufficiently low. These trade-offs are difficult, he acknowledged. Right now, he said, IMF conditionalities are constraining countries from taking the path some of them need to take. Not only does that mean that necessary spending is not possible it also means that the absorptive capacity is not being built. Right now there are 4,000 nurses unemployed in Kenya because the low health budget means they can’t be hired. So this adds to the brain drain. Unpleasant tradeoffs are going to be required, and there needs to more debate over these issues. But it is a debate that needs to go beyond conversations between AIDS activists and economists at the IMF. Therefore ActionAid is calling on health professionals, AIDS activists and others, citizens of the G7 countries primarily and particularly citizens of the United States to address these issues with their own governments. ActionAid wants governments to change what they are doing on the IMF executive board. Mr. Kalinga, spoke and returned to the sugar issue that Ms. Thomas had raised. He said that parts of Uganda and parts of Kenya face similar problems. He said that sugar is a special problem in both countries; the sugar content of the cane is very low, and in order for them to produce, they have to rely on high protection, and that alternative employment sources must be identified. Returning to the main issues he remarked that spending for HIV/AIDS needs to be raised, and again taking the example of Kenya, he said that the spending for the whole health sector is grossly inadequate. Virtually no donor funding goes to this in Kenya because the accounting and delivery systems are so weak that most donors shy away from moving into the sector. He discussed the problems at length with government officials at a recent mission to Kenya, he said. Kenya has had to cut its expenditures by over 2 percent of GDP since July and spending in virtually every sector has been compressed. The crisis has hit both education and health, but health has been affected the most in part because while education depends on one time expenditures for text books and other supplies, health relies on a continuous flow and the budget for the health sector has become highly unpredictable. This is partly because, for example, outside funding payments are not made on time, but mainly because the funds have certain accounting and implementation requirements that have not been met. The real crisis, therefore, is that even if significantly larger amounts of resources were available, the problem would not be ameliorated since the necessary institutional set up is not in place. Regarding the question of capacity in the health sector and nurses in particular, an additional 6,000 nurses are needed, and there is money for nurses and the Fund has encouraged the health sector to move ahead with recruitment. The wage effect would be minimal 1 percent of GDP. Still they need to do a needs assessment before they can make the allocations. It is very important to do mapping and a needs survey especially because one critical problem in Kenya is the heavily urban bias in the distribution of health resources. Drugs are also needed throughout the sector. At least 50 percent of the employed nurses have no drugs to use. Overall the focus of the IMF work in terms of the health sector is on four things: 1) trying to make sure that the resources are raised. 2) improving the predictability of the resource flow, 3) lending support to initiatives aimed at enhancing the sector’s capacity, including restructuring the health ministry, and supporting moves to raise employment and 4) providing an incentive system to organize the sector, because even if there were comparable manpower in the health sector as the education the impact would not be equal since the education sector is better organized. Finally he noted that regarding Mr. Rowden’s concerns about inflation, inflation is not a factor in Kenya. Mr. Shetty started out by agreeing with two points made in both the Christian Aid and ActionAid reports 1) poverty is a major contributor to HIV/AIDS, and 2) HIV/AIDS is a development issue. Therefore, he said, the focus must be on helping countries with high or rising prevalence to do two things, 1) reduce poverty in a sustainable fashion over time and 2) fight the epidemic directly. He said that he would talk about the first issue and his colleague Mr. Brown would talk about the latter. The ActionAid paper concludes that the Bank and the Fund insist in their programs with low-income countries on the compression of expenditures, which implies that these countries can not use concessional loans and particularly grants that have been committed to the fight against HIV/AIDS. He said he disagrees with this contention and explained why: The first pillar of the Bank’s approach to development is helping countries reduce poverty sustainably. At the heart of this is the PRSP approach. Five years into it, the Bank still believes the PRSP is the way to go. This does not mean that everything is going completely well with the PRSPs but at bottom the Bank thinks that supporting this process in low-income countries is a key priority and should remain the priority. This is the message he said that Mr. Rowden and his colleagues should be carrying to Parliaments and Treasury officials. Certainly, there are challenges in the PRS approach and he noted three. One challenge is finding ways to reinforce the country-driven approach--it is clear, he said, that still in many countries it is not perceived as a process driven by the countries themselves. A second challenge is that there is a need for better analytics in a range of areas, and finally, there clearly is the need for the Bank and the Fund and other donors to change the way they engage with countries. They need to align support much more closely with country strategies. There has been progress, and one area of progress is poverty-reducing spending. In the 20 or so PRS countries, on average pro-poor spending went up by about 2 percent of GDP between 2000 and 2004. That’s actual spending which not only demonstrates that trends are going in the right direction, but indicates that there is some action in improving public expenditure systems and addressing capacity issues such as Mr. Rowden and Mr. Kalinga were referring to. Mr. Shetty then took four specific issues that had come up in these papers: first, improving prioritization of HIV/AIDS in the PRSs. How does the international community get away from long laundry lists of priorities where everything is important, he asked, because everything is important in low income countries. In setting priorities, the Medium Term Expenditure Framework (MTEF) plays a critical role. MTEF is a process that a lot of OECD countries use. It helps to plan for the future and cost out what the implications of current decisions are in terms of policies and programs and current spending. While the quality of this process may vary and any process is only as good as the inputs into them, the Bank and other donors need to support countries and support their budgetary processes. The value of the MTEF is that it links prioritization to budget allocation and it shows transparently the medium commitments that are associated with actions today. So in that sense it is also a tool for political accountability, which along with participation, is at the heart of the PRS process. The second issue is the predictability of external resources. It is not enough to commit to spending. What is as important is that the money arrives on time, and especially that it arrives when countries are actually preparing budgets. That is not happening and there is a great deal of frustration about it. In this regard, Mr. Shetty recommended that ActionAid and other advocate organizations make the point to government officials that they, the Bank and regional development banks should all be finding more predictable financing for countries and doing it in ways that are easier to incorporate into the budget. Third, as the World Development Report 2004 (WDR) indicates, the links between more spending and better outcomes is not as clear cut as one would like to believe. The WDR does not say that additional spending is bad, it says that additional spending is not automatically good. There are all kinds of other things that need to be looked at in terms of effectiveness of spending. It’s about accountability of providers. Final point, on the PSIA, Mr. Shetty said he agreed with the reports in general terms. The Bank and the Fund should be doing much more with countries to try and improve the analysis of various reforms of spending and help countries look at the poverty and social impact. But where that is especially hard is imbedding it within country systems and making sure that it actually then has an impact on what countries do. It is not clear, however, that going the extra step in tracing through the impact of HIV/AIDS is cost effective, because it is “fairly obvious” that with HIV/AIDS you get more poverty. What is important to know is how much policy changes might ameliorate the negative impacts, so the point may be about PSIAs and about the instrument itself rather than about AIDS more broadly. Opening the discussion period, Mr. Hay asked about a point that was front and center in the ActionAid’s report, about the MTEF actually preventing sorely needed money from getting through. Mr. Shetty, referring to a particular illustration that had been given in the report from Uganda, said that it is necessary to talk with the country authorities and try to understand what actually happened to the money. He said that the MTEF is actually a Ugandan process, that it is not a process that is driven by the Bank’s or Fund’s offices, and that part of the issue in Uganda is the point about when in the budget year the money comes in and how you change budgets that have been already approved by parliament. Mr. Rowden countered, referring back to Mr. Shetty’s earlier remarks, saying that the MTEFs are being criticized by lots of organizations, not just ActionAid and are highlighted in the UNAIDS report released in Bangkok. Part of the problem is that while certain IMF and Bank loan conditions used to be explicit, they are no longer explicit but still exist de facto in many countries as a by-product of the MTEFs. Countries are caught with conflicting pressures as they are exhorted to limit social spending in order to avoid damaging inflationary consequences, and yet are expected to ignore such pressures in the case of the Global Fund and other earmarked money. Mr. Shetty said it wasn’t so much the MTEFs as it was the Global Fund coming in and “dumping the money and saying use it.” Mr. Rowden clarified that ActionAid was not saying the MTEF is an “insidious” tool, bur rather that the MTEF is quite a reasonable planning tool, but money is being constrained by low inflation targets. Mr. Shetty said more work needs to be done and part of that work is to help countries formulate alternative macro-scenarios. Countries should be asking, what if we got 30 percent more money how would we allocate it? But that still doesn’t solve the predictability point, which AIDS activists need to press. Mr. Rowden stated that he completely agrees that there needs to be more streamlined and predictable funding, but results-based Country Assistance Strategies (CASs) demonstrate that there is a tension and contradiction between the need to streamline the money, make it predictable over several years, and guarantee performance that money will flow if certain conditions are met. The second question came from the audience regarding HIV/AIDS and education. Using an example of Zambia and teachers, the speaker asked whether the Bank and the Fund take into account the long-term economic impact of having a generation that is uneducated or a generation of a workforce that is dying or ill because of HIV/AIDS. How do the Bank and the Fund make decisions on these trade offs? Mr. Shetty answered, saying that this is exactly the kind of thing that should be taken into account in the context of something like the MTEF but there also needs to be more data and macro-economic analysis. In most low-income countries, including Zambia, there are not enough analytics and this is a key weakness of the PRSPs. Mr. Kalinga said that it was his understanding that in Zambia it is not so much a question of whether the expenditures should take place or not, but rather there is a structural problem with the structure which is leading to a misalignment between the inputs the teachers need and what was being given in the form of wages. Mr. Shetty said that more, specific country examples were needed regarding the question.
At this point Ms. Ear-Dupuy, stepped in to make her remarks, supporting more case-by-case country analyses. In a paper that World Vision had presented at the Annual Meetings in Dubai, in 2003, they examined the PRSPs, she said, and saw that in a number of countries where HIV/AIDS should be included it either wasn’t or was inadequately addressed. It is also clear that very little work had been done at that time on the linkage between HIV/AIDS and economic performance. Another issue that still needs to be analyzed looked at is that of structural adjustments and how they have weakened various sectors, including public sector health education. The AIDS crisis, she said, is coming at a time when key sectors are really weak and this puts more stress on each sectors. She said that at a Save the Children presentation the day before, they had listed childhood nutrition, health and education as things that, once missed, cannot be recovered in that generation. So it is very important to undertake more analysis of what will be the effect of missing one generation of education or one generation of health services on the country’s economy. It was a welcome announcement by the Fund, she said, that it will have a PSIA group and that World Vision would like to see HIV/AIDS being part of the PSIA for pertinent countries. CSOs recognize that the Bank has a Multi-Country Aids Program (MAP) and the global community has responded with funding and that there are different things being done but, she asked, how are international finance institutions, CSOs and others going to do it together as a community in a very cohesive manner, so that everything is taken into consideration? One aspect that needs to be looked at in AIDS-affected countries, is cash budget flexibility and the tradeoffs involved. Another is how the World Bank and IMF can work together with these countries with respect to streamlining conditionalities so the countries can mobilize resources for the fight against HIV/AIDS. A third issue is trade access and trade related aspects of intellectual property rights and funding for AIDS. These are elements of a comprehensive package. It is also important, using the PRSP framework, to see how a special AIDS category would fit in. One idea is to have a special country category like AIDS Affected Low-Income Countries, as this would be a championing tool which could be sued to mobilize resources. Mr. Brown, the final panelist to speak, began his remarks by explaining that the four greatest challenges the Bank views are: 1) implementation, 2) harmonization of policies in order to insure that all of the donors work in a disciplined and effective way to benefit the country and its people, 3) mobilization, or providing frameworks for countries in which all the actors, and especially civil society, can work towards the shared goals of preventing infection, prolonging the life of those infected. and mitigating the impact of the epidemic, and 4) analysis (PSIAs). First, regarding implementation: There have been substantial increases in funding for HIV/AIDS from the Global Fund, bilaterals and the World Bank, and one of the main reasons Bank funds are disbursing so well, is because implementing organizations in Africa -- whether they be public sector, private sector or civil society – they have discretionary power over the use of that money through special programs like MAP. They are “empowered” which in this case means three things: 1) they decide what activities they are going to implement across a broad range, from prevention to treatment. 2) they get the money directly and 3) there is fiduciary architecture of financial management, disbursement and procurement that is flexible and appropriate to the implementing agency. While there is always need for more money, the central issue now is using the money that is already committed and that means that not only do countries need to act quickly, but donors need to act quickly as well. If the Bank were using traditional World Bank procedures for this, it would not have been possible to reach such high levels of disbursement. This indicates that donors need to jointly examine what sort of barriers their own policies and procedures are erecting to actually implementing programs. Take, for example, the question of capacity building: Everyone is for capacity building particularly in HIV/AIDS. What people don’t realize is that existing capacity even in the poorest countries is perfectly appropriate for implementing many HIV/AIDS programs particularly in prevention and mitigation. The problem is that the donors do not finance existing capacity. They won’t finance salaries, they won’t finance other operating costs like transportation, logistics, administration as they prefer to just pay for direct program costs. The MAP program is financing investments costs and operating costs, and within operating costs they are financing everything: salaries utilities, logistics, administration, etc. On harmonization, countries are frustrated and tired of having to deal separately with 10 to 15 different donors, each of whom has different policies, procedures, and practices. The major donors are signing off on the three ones: one national authority, one national program of actions, and one national monitoring and evaluation system. Yet, acting on this commitment is difficult. Harmonization is really important for efficiency, for effectiveness and for transparency, and while some progress is being made in some countries (Rwanda and Malawi for example) donors, including the World Bank, need to ask if they are doing enough, if they are changing policies, procedures, and practices enough. On mobilization, what the Bank has found in the PRSPs is that if HIV/AIDS is included as an issue in high-prevalence countries, it is not in low-prevalence countries, so in other words, no one is worried about the future. If AIDS in included in PRSPs it is usually considered a health issue, and even where it is treated more appropriately as a development issue, it doesn’t get the budgets and real prioritization that is required. This could partly be that there is simply not the advocacy at the country level to make sure that HIV/AIDS is taken as seriously as it should be. There was a larger point made in the reports about HIV/AIDS being a special case, and the World Bank agrees strongly with this. It is for this reason that the MAP program has changed most procurement / contracting rules. It is the only sector where the Bank has an institution-wide implementation and acceleration team, so that if there is a problem with Bank procedures or practices the group can go right to the top and fix it. Finally on the PSIAs, there is a lot of agreement that PSIAs are not spending enough time on HIV/AIDS. It is really at the sectoral level and the disaggregate level that one sees the real impact of HIV/AIDS. Everyone admits at the macroeconomic level it is a problem but at the disaggregated level it is not a problem, it’s a crisis, and focusing on that is certainly one of the ways the Bank is changing its approach. Before wrapping up Mr. Hay asked if there were any other questions from the audience: Mr. Rowden said that in HIPC countries where resources have been freed up there is more spending on HIV/AIDS, but CSOs are concerned about possible requirements with debt cancellation that the money would have to be put into reserves. Ms. Thomas added that while debt cancellation for financing HIV responses is important, a lot of highly affected HIV countries are not HIPC countries. In final comments Ms. Ear-Dupuy stressed the importance of the role the Bank plays at the World Trade Organization (WTO) meetings and suggested that the Bank should use its access also to fight for a comprehensive approach to helping HIV-affected countries specifically with respect to trade and getting them access to rich country markets. And she suggested, as she had done earlier, that the Bank work out a comprehensive package under a special category pulling together the MAP, debt relief and trade to mobilize resources. These comments triggered more exchange on trade in which Bank representative, Carolyn Reynolds noted that the Bank is among the most outspoken institutions, pressing for poor countries access to markets. And Mr. Rowden noted that the Operations Evaluations Division of the Bank is doing a study on the impact of trade liberalization for the first time in 25 years.
Mr. Hay then began the wrap up asking panelists if the discussion had done at least a little of what was hoped for at the beginning of the session. Mr. Rowden repeated that he would like to engage the IMF in further debate, but that US citizens really needed to bring this debate to US government officials and start holding them accountable for their positions and decisions taken on the IMF board. Mr. Hay then asked Mr. Rowden if he would also be taking the fight to them on donor flows and he said absolutely. Ms. Thomas said she thought that the debate had been rich and that there was a lot of agreement that HIV needs to be integrated more broadly in development, but that there is still a lot of debate about what actions need to take place. Ms. Ear-Dupuy spoke again about the need for more research as well as more funding and said she hoped that the discussion in this session would open the door for further discussion. Mr. Kalinga noted that the work is really highly country-based and the Bank and the IMF need to do much more in terms of interacting with various stakeholders including NGOs and CSOs at a national level and then broaden out. Mr. Brown said that he wanted to underline the whole question of the PRSP, and said that there appears to be a lot of agreement that it is a key document at the country level that is suppose to mobilize all the elements of society, and that HIV/AIDS is not given the visibility it deserves within PRSPs. He said that while the Bank and the Fund should work to give HIV/AIDS more visibility in PRSPs, civil society should be demanding a seat at the table at the country level, demanding that special PRSP HIV/AIDS working groups be established, as is the case with transport , trade, and other areas. Mr. Hay then thanked the panelists and the audience and closed the session. top Back to 2004 Annual Meetings Dialogues page |
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