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WHICH COUNTRIES SHOULD GIVE HOW MUCH TO THE GLOBAL FUND?
GFO Issue 117

WHICH COUNTRIES SHOULD GIVE HOW MUCH TO THE GLOBAL FUND?

Author:

Bernard Rivers

Article Type:
Analysis

Article Number: 2

ABSTRACT Various scenarios for donor contributions are presented.

Donor countries will meet in The Hague, Netherlands, next week for the first of two replenishment meetings to discuss how much they might give to the Global Fund for the three years 2011-2013. (The second meeting will take place in October 2010, in New York.)

Over the years, several formulae have been advanced for calculating what might constitute each country’s “fair share” of the Global Fund’s financial needs. The first widely-discussed such formula was the Equitable Contributions Framework, advanced in 2002 within the NGO sector and then further developed by Aidspan, publisher of GFO. The basis of that formula was that countries should contribute in proportion to the size of their respective economies.

In preparation for next week’s meeting in The Hague, the Global Fund has released a Technical Note in which it outlines four possible formulae, or “contribution scenarios,” for obtaining the money that the Fund needs for 2011-2013. (See “Technical Note 1: Illustrative Contribution Tables,” at www.theglobalfund.org/en/replenishment/hague/documents.) The scenarios are as follows:

  • Scenario 1 (the “Pro-Rata” scenario): Each country contributes a share of the need that is equal to its share of all contributions given to the Fund during 2007-2009. (Thus, if a country has previously given relatively generously, or otherwise, it is assumed that the country will continue similarly.)
  • Scenario 2 is based on each country’s share of contributions made to the International Development Association (i.e., traditional foreign aid), and is not pursued further here.
  • Scenario 3 (the “Adjusted GNI” scenario): Each country contributes a share of the need that is equal to its share of global Gross National Income (GNI), adjusted by GNI per capita. (The adjustment is made so that if two countries have the same GNI, but one has a much larger population and hence a lower GNI per capita, the country with the smaller population contributes more, because it has a greater ability to give.) The Adjusted GNI scenario is very similar to the Equitable Contributions Framework; it is assumed that each country gives according to its economic ability, however much or little it has given in the past.
  • Scenario 4 (the “0.7” scenario): This is a hybrid between Scenarios 1 and 3, in which the contributions of those countries whose “Scenario 1 contribution” is less than 0.7 (i.e., 70%) of their “Scenario 3 contribution” are increased to the 0.7 level. The contributions of the other countries are then reduced to “offset” these additional contributions. (Thus, those countries that have previously been not very generous in relation to their economic ability are assumed to move somewhat nearer to what they are capable of, with the contributions of the more generous countries being reduced correspondingly.)

In an introduction to the Technical Note, the Global Fund says that the scenarios were prepared at the request of donors. However, it also says that the development of the scenarios was a “purely mechanical exercise,” done for “illustrative purposes,” and not done in an “attempt to assign shares to donors.”

The Technical Note contains a series of tables outlining what the contribution of each donor country would be under each of the scenarios. The tables include contributions from private foundations, the private sector and innovative financing schemes.

To supplement the scenarios developed by the Fund, GFO has developed two “bad scenarios” to illustrate the possible thinking of some donors:

  • Scenario 0 (the “No Increase” scenario): Each country contributes the same dollar amount per year that it has averaged in recent years, even though the need has increased significantly.
  • Scenario 5 (the “Least Pain” scenario): Each country contributes the least amount of what it should contribute according to Scenarios 1, 3 and 4. (This is because there is a real possibility that many countries will choose whichever scenario is the least painful.)

To complicate matters somewhat, there is no agreement yet on what the total amount is that should be provided to the Global Fund. As discussed in the previous article, the Fund has put forward three resource needs scenarios, ranging from $13 billion to $20 billion. In the two tables below, we show different ways of dividing up contributions to meet the targets for two of the three resource needs scenarios. Table 2 shows contribution levels for Resource Needs Scenario 2 ($17 billion), which would allow for the continuation of funding for existing programmes, and funding for new programmes at a level that comes close to that of recent years. Table 3 shows contribution levels for Resource Needs Scenario 3 ($20 billion), which would allow for the continuation of funding for existing programmes, and also allow well-performing programmes to be scaled up significantly.

(Unfortunately, the Global Fund has elected to use numbers [1, 2 etc.] to describe two different types of scenario – [a] the resource needs scenarios, discussed in the previous article, and [b] the contribution scenarios, discussed in this article. To minimise confusion, each time GFO refers to the resource needs scenarios in this article, it uses the label “resource needs.”)

Findings:

  • Table 2 (based on Resource Needs Scenario 2) reveals that if all countries follow Scenario 0, the Global Fund will only receive $9.2 billion of the $17 billion three-year need, $7.8 billion less than necessary. And if all countries follow Scenario 5, in which each one chooses the least painful of Scenarios 1, 3 and 4, the Fund will only receive $13.5 billion, $3.5 billion less than is necessary.
  • Table 3 (based on Resource Needs Scenario 3) reveals that if all countries follow Scenario 0, the Global Fund will only receive $9.2 billion of the $20 billion three-year need, $10.8 billion less than necessary. And if all countries follow Scenario 5, in which each one chooses the least painful of Scenarios 1, 3 and 4, the Fund will only receive $15.9 billion, $4.1 billion less than is necessary.

Notes for both tables:

  1. As previously discussed, data for the shaded columns (i.e., all columns except Scenarios 0 and 5) was developed by the Global Fund. Data for Scenarios 0 and 5 was developed by GFO, based on data in the other scenarios.
  2. For each of Scenarios 1, 3 and 4, the contributions by the European Commission, private foundations, the private sector and innovative finance sources are flat-lined because indicators of capacity to contribute (such as Adjusted GNI) are not relevant to these donors. It is assumed that contributions from the European Commission and private foundations will equal their current shares of total contributions to the Global Fund, and that the contributions from the private sector and innovative finance sources will increase (as a share of total contributions to the Global Fund).
  3. For Scenario 5, which shows the smallest amount from Scenarios 1, 3 and 4, if there is an “n/a” in Scenario 1, it is excluded from the calculations.

Table 2: Amounts that countries might contribute to the Global Fund to meet

the Resource Needs Scenario 2 target of $17 billion, according to five scenarios

Donor Average Annual Contribution 2007-09, $m. Total contribution over the three years 2011-2013, $m.
Scenario 0:
No Increase
Scenario 1:
Pro-Rata
Scenario 3:

Adjusted GNI

Scenario 4:

0.7

Scenario 5:
Least Pain
Australia 29.0 87 160 291 204 160
Austria n/a n/a n/a 138 97 97
Belgium 18.6 56 103 176 123 103
Brazil 0.1 0 0 70 49 0
Canada 127.1 381 703 485 657 485
China 2.0 6 11 96 67 11
Denmark 29.1 87 161 161 150 150
European Commission 143.7 431 795 795 795 795
Finland 4.1 12 22 103 72 22
France 429.1 1,287 2,374 955 2,217 955
Germany 233.4 700 1,291 1,237 1,206 1,206
Greece 0.9 3 5 77 54 5
India 2.0 6 11 11 10 10
Ireland 26.1 78 144 92 135 92
Italy 184.5 554 1,021 622 954 622
Japan 188.1 564 1,040 1,559 1,092 1,040
Korea (Rep. of) 3.3 10 18 188 132 18
Kuwait 0.8 2 4 26 18 4
Luxembourg 3.4 10 19 29 21 19
Mexico n/a n/a n/a 74 52 52
Netherlands 93.5 281 517 346 483 346
New Zealand n/a n/a n/a 29 20 20
Norway 56.7 170 314 302 293 293
Portugal 2.8 8 16 38 26 16
Russia 68.3 205 378 110 353 110
Saudi Arabia 6.0 18 33 49 34 33
South Africa 1.1 3 6 14 10 6
Spain 151.3 454 837 389 782 389
Gen. Cat. (Spain) 2.3 7 13 13 13 13
Sweden 84.9 255 470 200 439 200
Switzerland 6.2 19 35 272 191 35
Thailand 1.0 3 6 5 5 5
Turkey n/a n/a n/a 54 38 38
United Kingdom 150.5 452 833 1,058 778 778
United States 829.7 2,489 4,589 5,757 4,287 4,287
Other countries 0.9 3 5 111 78 5
Sub-total: Countries 2,880.0 8,640 15,933 15,933 15,933 12,420
Private Foundations 100.7 302 557 557 557 557
Private Sector 56.2 169 340 340 340 340
Innovative Financing 20.3 61 170 170 170 170
Total 3,057.2 9,172 17,000 17,000 17,000 13,487
Total need n/a 17,000 17,000 17,000 17,000 17,000
Shortfall n/a 7,828 NIL NIL NIL 3,513

 

Table 3: Amounts that countries might contribute to the Global Fund to meet

the Resource Needs Scenario 3 target of $20 billion, according to five scenarios

Donor Average Annual Contribution 2007-09, $m. Total contribution over the three years 2011-2013, $m.
Scenario 0:
No Increase
Scenario 1:
Pro-Rata
Scenario 3:

Adjusted GNI

Scenario 4:

0.7

Scenario 5:
Least Pain
Australia 29.0 87 189 342 240 189
Austria n/a n/a n/a 162 114 114
Belgium 18.6 56 121 207 145 121
Brazil 0.1 0 0 82 57 0
Canada 127.1 381 827 571 773 571
China 2.0 6 13 113 79 13
Denmark 29.1 87 189 189 177 177
European Commission 143.7 431 935 935 935 935
Finland 4.1 12 26 121 85 26
France 429.1 1,287 2,793 1,123 2,609 1,123
Germany 233.4 700 1,519 1,456 1,419 1,419
Greece 0.9 3 6 91 64 6
India 2.0 6 13 13 12 12
Ireland 26.1 78 170 108 159 108
Italy 184.5 554 1,201 731 1,122 731
Japan 188.1 564 1,224 1,835 1,284 1,224
Korea (Rep. of) 3.3 10 22 222 155 22
Kuwait 0.8 2 5 31 22 5
Luxembourg 3.4 10 22 35 24 22
Mexico n/a n/a n/a 87 61 61
Netherlands 93.5 281 608 407 568 407
New Zealand n/a n/a n/a 34 24 24
Norway 56.7 170 369 356 345 345
Portugal 2.8 8 18 44 31 18
Russia 68.3 205 445 129 415 129
Saudi Arabia 6.0 18 39 57 40 39
South Africa 1.1 3 7 16 11 7
Spain 151.3 454 984 458 920 458
Gen. Cat. (Spain) 2.3 7 15 15 15 15
Sweden 84.9 255 552 235 516 235
Switzerland 6.2 19 41 320 224 41
Thailand 1.0 3 7 6 6 6
Turkey n/a n/a n/a 63 44 44
United Kingdom 150.5 452 980 1245 915 915
United States 829.7 2,489 5,399 6,773 5,044 5,044
Other countries 0.9 3 6 131 92 6
Sub-total: Countries 2880.0 8,640 18,745 18,745 18,745 14,612
Private Foundations 100.7 302 655 655 655 655
Private Sector 56.2 169 400 400 400 400
Innovative Financing 20.3 61 200 200 200 200
Total 3057.2 9,172 20,000 20,000 20,000 15,867
Total need n/a 20,000 20,000 20,000 20,000 20,000
Shortfall n/a 10,828 NIL NIL NIL 4,133

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