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Debt Relief Can Help Fight HIV/AIDS, Tuberculosis and Malaria

Debt Relief Can Help Fight HIV/AIDS, Tuberculosis and Malaria. Presenter Robert R. Filipp Head of Innovative Financing The Global Fund, Geneva Tel.: +41 (22) 791 robert.filipp@theglobalfund.org.

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Debt Relief Can Help Fight HIV/AIDS, Tuberculosis and Malaria

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  1. Brookings Institution, 28.02. 2007 Debt Relief Can Help Fight HIV/AIDS, Tuberculosis and Malaria

  2. Brookings Institution, 28.02. 2007 Presenter Robert R. Filipp Head of Innovative Financing The Global Fund, Geneva Tel.: +41 (22) 791 robert.filipp@theglobalfund.org Special thanks to Christoph Benn, David Bryden, Jürgen Kaiser, Susanne Luithlen, Liza Munira, Lorrayne Ward, Rosemarie Philips, Xay Xayakhom, Paul Zeitz. 2/18

  3. Brookings Institution, 28.02. 2007 Content • New Approaches to Funding Global Health • The Case for Debt Conversion • The “Debt2Health” Model • “Debt2Health” as a Win-Win Scenario • Status of Implementation 3/18

  4. Brookings Institution, 28.02. 2007 Funding Global Health through the Global Fund • USD 6.8 billion raised between 2002-2006, disbursed USD 1.3 billion in 2006 • “Innovative Financing” (private & public sectors) 3.5% of total disbursed in 2006 but growing rapidly (7% in 2007, 10% in 2008) (Product) REDTM 4/18

  5. Brookings Institution, 28.02. 2007 The Case for Debt Conversion* • developing country debt is USD 2.6 trillion • LIC debt has declined slightly as a result of HIPC and MDRI initiatives but overall debt has increased due to rise in LMICs • some small multilateral financial institutions still hold debt in HIPCs Medium & Long-term Debt of Developing Countries * Based on data from the Global Development Finance Report (GDF), 2005

  6. Brookings Institution, 28.02. 2007 The Case for Debt Conversion* Public & Publicly Guaranteed Medium & Long-term Debt of Developing Countries * Based on data from the Global Development Finance Report (GDF), 2005

  7. Brookings Institution, 28.02. 2007 The Case for Debt Conversion* • 24 countries are indebted above the HIPC threshold but are not included in HIPCs or MDRI • 15 countries spend more than 20% of export earnings on debt servicing • 14 countries show high disease burden with regards to HIV/AIDS, Tuberculosis or Malaria • HIPC countries can benefit from D2H through inclusion of debts from small multilateral financial institutions • Policy benefits from global alliance between debt campaigners and health advocates. http://www.theglobalfund.org/en/files/GFDC_REPORT.pdf * Based on Global Development Finance Report data from 2002-2004

  8. Brookings Institution, 28.02. 2007 is a Global Fund-facilitated debt swap agreement. In it, a group of creditors agrees to cancel a portion of ODA or ECA claims on the condition that the beneficiary invests an agreed upon counterpart amount in a Global Fund approved programme to fight HIV/AIDS, tuberculosis and malaria. 9/18

  9. Brookings Institution, 28.02. 2007 The Case for Debt Conversion: Indonesia Example • 40.0% of budget spent on debt servicing • 26.0% of export earnings spent on debt servicing • 8.7% of GDP used for debt service • 1.2% went to health and education • Source: UNDP Human Development Report, 2005 and Global Development Finance Report GDF, 2006. 7/18

  10. Brookings Institution, 28.02. 2007 The Case for Debt Conversion:Indonesia Example 50 million Euro debt cancellation through „Debt2Health“ would increase the current Global Fund portfolio (Rounds 1-6) by 25%, affording: • bed nets to fight malaria • treatments for malaria • HIV tests • patients on ARV treatment and • patients on TB treatment 200,000 50,000 120,000 3,600 2,550 8/18

  11. Brookings Institution, 28.02. 2007 Expected Resources Flow through Global Fund (Cumulative 2007-2011) Target Committed Cost 6/18

  12. Brookings Institution, 28.02. 2007 The Model (1) cancels agreed amount of debt CREDITOR BENEFICIARY COUNTRY Counter-part Fund (2) pays at agreed discount Entry Points for health programme in Global Fund cycle: “Phase 2” or Round or RCC PrincipalRecipient GLOBAL FUND PROGRAMME Legend: RCC - Rolling Continuation Chanel Board -Approval by Global Fund Board 13/18

  13. Brookings Institution, 28.02. 2007 Uses Existing Structures • submission through “Phase 2 Review”, regular Round or RCC • technical review (TRP) • approval (Board) • disbursement on • “performance-based funding” • monitoring & evaluation 14/18

  14. Brookings Institution, 28.02. 2007 Exceptions • source and location of funds • treatment of funds in case of non-performance 14/18

  15. Brookings Institution, 28.02. 2007 A Win-Win Scenario for Creditors • resolution of old loans • claimable towards ODA according to OECD-DAC rules • claimabletowards Global Fund contribution • high chance of programmatic success using proven “performance-based funding” 10/18

  16. Brookings Institution, 28.02. 2007 A Win-Win Scenario for Beneficiaries • partial relief of debt burden • increase in health spending • high level of country ownership as counterpart funds come from domestic budget • performance through existing and proven grant management system based on “performance- based funding” • net contributor to the Global Fund

  17. Brookings Institution, 28.02. 2007 A Win-Win Scenario for the Global Fund • scaled-up health targets reached faster • use of Global Fund “performance-based” systems for domestic funds • net contributors from the Global South 12/18

  18. Brookings Institution, 28.02. 2007 Status of Implementation • countries selected: Indonesia, Pakistan, Peru, Kenya • criteria: non-HIPC, non-MDRI, disease burden, solvency, Global Fund grant performance • negotiations on first pilot about to commence between Germany and Indonesia in March 07 • possible expansion to additional countries through participation by small multilateral financial institutions 15/18

  19. Brookings Institution, 28.02. 2007 Status of Implementation: Steps and Timeline for First Pilot Feb 07 Mar 07 May 07 Sep 07 Oct 07 Term Sheet Draft (KfW) Negations International Meeting on Debt for Health Additional Creditors International Launch of D2H in Berlin Signature of First D2H Agreement Implementation and Debt Cancellation 16/18

  20. Brookings Institution, 28.02. 2007 is supported by: (1) 17/18 (1) Subject to formal approval by VENRO Board

  21. Brookings Institution, 28.02. 2007 Thank you!

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