A quarterly magazine of the IMF

March 2002, Volume 39, Number 1

AIDS is not just a health issue but a development problem that must be addressed at the global level. As countries increasingly recognize the need to incorporate strategies for tackling AIDS in their national policy frameworks, they are discovering important new weapons—notably national poverty reduction plans—that were not available even two years ago.

In the past two years, development thinking has undergone a major shift, from viewing AIDS as purely a health issue to acknowledging that it must be tackled as part of a broader development agenda. There is evidence of this new approach, referred to as "mainstreaming," at the highest levels of development policy and assistance. At a meeting of the Development Committee of the World Bank and the IMF in April 2001, ministers called for focusing on HIV/AIDS in development policies and increasing assistance to affected countries. Developing countries themselves have announced their intention of making AIDS a mainstream issue, most visibly in June 2001 during the United Nations General Assembly Special Session on HIV/AIDS.

Why is this shift in thinking so important? HIV/AIDS takes a heavy toll, both economic and human, as it undermines productivity, security, education, health care, civil service systems, social cohesion, and political stability. It is shortening the life expectancy of working-age adults, dramatically increasing the numbers of infant and child deaths, shrinking the workforce, creating tens of millions of orphans, widening the gap between rich and poor, and reversing development gains. Since the onset of the epidemic, almost 22 million people worldwide have died of AIDS, and another 36 million people are living with the HIV virus. In Africa alone, 12 million men, women, and children—more than the entire population of Belgium—have died to date.

Developing countries that do not, or cannot, protect human capital—the education and skills embodied in people that enable them to increase their future incomes—will not be able to participate fully in the global economy, much less take advantage of the opportunities it affords. Smallholder farm families in Zimbabwe experience a 40-60 percent fall in the production of maize, peanuts, and cotton after suffering an AIDS death. Children who lose a parent to AIDS in rural Tanzania are about 50 percent more likely to be malnourished than children from families with both parents living. Data from over 15 African and Latin American countries also show that children who lose both parents to AIDS are much less likely to continue attending school. A recent World Bank study estimates that Africa's income growth per capita is being reduced by about 0.7 percent a year because of HIV/AIDS.

Moreover, although AIDS is not exclusively a disease of the poor, much evidence suggests that certain poor groups run a disproportionately greater risk of becoming infected with the HIV virus. In many countries, infections are heavily concentrated among injecting drug users and their partners and among commercial sex workers, most of whom are poor. Even in Africa, where the epidemic is now widespread, it appears that HIV infection rates are starting to fall among more educated women while continuing to rise among those with little or no schooling.

Fortunately, policymakers now have at their disposal a new tool—the Poverty Reduction Strategy Paper (PRSP)—that greatly facilitates mainstreaming the fight against HIV/AIDS. The PRSP, which sets out a country's approach to poverty reduction, can be used by the donor community as a framework for technical and financial support. Moreover, its usefulness has been dramatically enhanced in recent years by the availability of debt relief for the world's poorest countries.

Poverty reduction tool

What exactly are PRSPs? They are documents in which low-income countries describe the policies and programs they expect to put in place to promote growth and reduce poverty, the associated external financing needs, and major sources of financing. Each country prepares its own PRSP with input from domestic stakeholders and external development partners.

To be effective, a country's poverty reduction strategy should be led by the country itself; aim for faster economic growth that specifically addresses the needs of the poor; reflect a comprehensive understanding of poverty and its determinants; help identify the public actions that have the greatest impact on poverty; and establish outcome indicators that are set and monitored by the government, with domestic and external input.

Partly to qualify for debt relief under the Heavily Indebted Poor Countries (HIPC) Initiative, launched by the IMF and the World Bank in 1996, about 40 low-income countries took the first steps toward elaborating a full PRSP during 2000-01 by preparing an interim PRSP in which they began to analyze the extent and causes of poverty and the main actions needed to combat it, and outlined the process for producing a full strategy. By the end of 2001, 8 countries had completed and published full PRSPs, and many others were working to complete their full PRSPs.

Recently, the UNAIDS Secretariat reviewed the first generation of 25 full and interim PRSPs prepared by sub-Saharan African countries to get a sense of how well they are dealing with HIV/AIDS. The review was based on four criteria: (1) analysis of the relationship between AIDS and poverty; (2) inclusion of the main strategies from the country's national AIDS plan; (3) use of medium-term AIDS prevention and care goals and indicators for monitoring poverty; and (4) incorporation of monitorable short-term actions to fight HIV/AIDS (see chart).

What was the verdict? The initial signs were promising, but far more could be done to fully exploit the potential of PRSPs. The countries rated highest on inclusion in the PRSPs of approaches for fighting AIDS drawn from their national AIDS plans. Their analysis of the relationship between AIDS and poverty was generally weak, however, even in countries where research has been done on the social and economic impact of the epidemic. The elaboration of short-term actions and medium-term goals on AIDS was also generally weak or even nonexistent. The review did not examine the quality of national and local participation.

Clearly, future PRSPs can provide a sounder basis for making decisions about AIDS funding if they pay more attention to the links between AIDS and poverty. Poverty strategies can draw on the growing evidence of the impact of HIV illness and AIDS deaths on household production and incomes, school attendance, and child nutrition. In addition, the main AIDS prevention and care strategies need to be more clearly defined, for example, working through schools and peer counselors to change the sexual behaviors of young people and using nongovernmental organizations (NGOs) to reach commercial sex workers and their clients with information, condoms, and care for other sexually transmitted infections. The identification of medium-term AIDS goals and indicators in each country should build on the targets already agreed upon as part of the Millennium Development Goals, including reducing the incidence of new HIV infections among 15-24-year-olds and of infections transmitted from pregnant women to their unborn children.

Uganda, one of Africa's worst-affected countries, has become the continent's success story and can serve as a model for others. It has succeeded in reducing the HIV prevalence rate in young women from 25 percent in 1992 to 8 percent today. Uganda's PRSP describes the impoverishing effects of AIDS on women, orphans, and households. It highlights strategies for reducing new HIV infections, mitigating the health and socioeconomic effects of the epidemic, and improving Uganda's capacity to respond to the problem. The PRSP then sets an overall target for reducing HIV prevalence in the adult population, as well as more detailed objectives and targets, such as reducing violence against women and improving access to AIDS counseling, care, and social support.

Mozambique's PRSP is also worthy of emulation. The paper explicitly links AIDS to growth prospects and household poverty. It then lays out strategies to combat the epidemic in education, agriculture, and health; sets short-term targets for program implementation that can be assessed over the next four years; and estimates the costs of these actions.

Resources from debt relief

Another major development in the last few years has been the availability of—and potential to marshal—new resources in the fight against AIDS through the HIPC Initiative. This Initiative was enhanced in 2000 to make more funds available to more countries more quickly. As of early 2002, 24 countries had concluded debt-relief agreements under the Initiative, with substantial debt-service savings. On an annual basis, these countries will pay about $0.8 billion less in 2001-03 than they did in 1998-99.

How much of these savings are going toward health care—keeping in mind that all eligible HIPCs must prepare PRSPs to ensure that savings go toward poverty reduction? Early indications suggest that, on average, HIPCs will spend about 25 percent of their annual interim debt relief on health care. As for AIDS, data from 10 low-income African countries from this group (Benin, Burkina Faso, Cameroon, Madagascar, Mali, Mauritania, Mozambique, Tanzania, Uganda, and Zambia) suggest that, together, they are budgeting some $32 million for AIDS activities, or about 5 percent of their HIPC savings, in 2001. In some other HIPCs, however, little or no money from debt-relief proceeds has been specifically allocated to HIV/AIDS.

Perhaps the most promising development is that, in many of the HIPC agreements, governments have committed themselves to key actions against AIDS (see table). Global NGOs have played an important role in providing impetus to this movement. Two examples are Jubilee 2000, which advocated debt relief that countries could earmark for AIDS; and ActionAid, which supported an emphasis on AIDS in PRSPs.

Using debt relief to fight AIDS
Country	AIDS-related actions in HIPC documents
Benin	Increase budget for improved reproductive health and HIV/AIDS Present HIV/AIDS strategy to National Assembly
Cameroon	Curb infection rates through increased use of condoms by port workers, truckers, soldiers, and commercial sex workers Expand HIV testing and counseling services Introduce AIDS education in secondary schools
Guinea-Bissau	Adopt strategic framework to fight HIV/AIDS Inform high-risk population (ages 14-29) of transmission and prevention methods
Malawi	Establish fully staffed, autonomous National AIDS Control Secretariat Ensure that 75 percent of all condom outlet points are stocked with condoms Make testing kits available at all blood transfusion sites Implement behavior change communication strategy Manage sexually transmitted infections in all hospitals
Mauritania	Maintain HIV prevalence rate at the 1998 level of less than 1.2 percent maximum of blood donors
Mozambique	Implement the National Multisectoral Plan on HIV/AIDS
Rwanda	Adopt new strategy and action plan for HIV/AIDS control
Tanzania	Implement national spearhead campaign against HIV/AIDS, including visits to 75 percent of all districts
Zambia	Fully staff National HIV/AIDS Council secretariat Introduce AIDS awareness and prevention programs in at least 10 government ministries
Source: World Bank website on HIPC, http://www.worldbank.org/hipc/country-cases/country-cases.html

What else can be done?

Looking ahead, the international community needs to focus on five areas:

First, policymakers should improve the quality and presentation of HIV/AIDS prevention and care efforts in poverty reduction strategies. Guidelines and examples of good practice are available and should be updated as more is learned. The standard AIDS outcome indicators, such as the rate of new infections in young women, already endorsed by developing countries at the UN special session on AIDS in June 2001 could be usefully adopted in the PRSP. National AIDS commissions and their various partners, including the World Bank, UN agencies, local research institutions, and NGOs, can bring these guidelines and indicators to the attention of ministries of finance, which typically lead the PRSP process at the country level.

Second, international development institutions should vigorously support the development of national capacities to design, implement, and monitor AIDS strategies as part of the PRSP and debt-relief processes. Early work by UNAIDS and its partners to create networks of English-speaking and French-speaking specialists is starting to bear fruit. These capacity-building initiatives need to be sustained and extended beyond Africa.

Third, despite the many legitimate competing claims on their budgets for primary education, basic water supplies, and other areas, countries should devote a larger percentage of debt-relief savings to HIV/AIDS than the typical 3-10 percent observed to date in countries with very high levels of HIV infection. To avoid a social and economic catastrophe from AIDS in Africa, for example, it is estimated that $3-4 billion a year will have to be spent to mount a major counterattack on the pandemic. If 20 percent of debt-relief savings were allocated to HIV/AIDS in the first 18 African countries to reach HIPC agreements, the total amount would be nearly $200 million—not enough but still an important contribution to the several billion dollars required.

Fourth, countries should strive to cost their national AIDS plans fully, develop realistic financing schemes to back these plans, and ensure that this financing is reflected in annual national budgets and in medium-term public expenditure frameworks. Few countries have costed their national AIDS plans, and those that have done so have not incorporated them in their national budgeting systems. Some positive signs have begun to emerge in, for example, Burkina Faso and Mozambique, where some AIDS activities have been included in PRSP budget tables. Further steps in this direction will help make senior public officials fully aware of the HIV/AIDS problem, increase accountability for spending and results in fighting the pandemic, and improve the chances that national AIDS programs will receive funding from national governments and donors on a sustained basis.

Fifth, the international community will need to increase its financial support for AIDS programs in the poorest countries to complement domestic spending through debt relief and other sources. The costs of an adequate response to the pandemic globally are so vast—around $10 billion a year—that neither additional resources generated through debt relief nor reallocations from existing government spending programs will suffice in most developing countries.

Ongoing initiatives to put HIV/AIDS squarely at the center of the world's development agenda have enormous potential for mobilizing the vastly increased political and financial resources required to bring the epidemic under control and to care for affected individuals and communities. PRSPs and debt relief are two such initiatives that offer hope. These, combined with other new mechanisms—such as the Global Fund for AIDS, Tuberculosis, and Malaria, which is expected to begin its operations in the first half of 2002—must be understood and exploited if the international community is to build and sustain an adequate response to AIDS.