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Debating the World Bank Report on Fiscal Constraints – A return of the 90’s?

A recent World Bank report on the fiscal dimensions of HIV and AIDS in a selection of sub-Saharan African countries has stirred significant debate. Here, Professor Brook Baker argues the report is ‘seriously out-of-date’ and ignores important new evidence on treatment-as-prevention.  Dr Markus Haacker, co-author of the report, responds…

Professor Brook K. Baker (professor of Law at Northeastern University School of Law and Policy Analyst for Health GAP (Global Access Project).

The World Bank has just recently issued a “new” report: “The fiscal dimension of HIV/AIDS in Botswana, South Africa, Swaziland, and Uganda.”  The Report doesn’t really feel “new” because it represents a recurrent theme in the World Bank approach from the earliest days of the global AIDS pandemic – it’s not fiscally sustainable to treat people living with HIV in high impact, low-resource countries – instead the world must focus on “prevention.”  The World Bank is seriously out-of-date, or conversely, perversely pig-headed, for four main reasons:

First, it’s report now issued in March of 2012 is already seriously out of date since it relies almost exclusively on pre-2009 data.  Despite opportunities to do so in the editing process and in its media work, the World Bank has chosen to totally ignore the exciting new science concerning treatment-as-prevention – research that shows that suppressive anti-retroviral therapy reduces the risk of onward transmission of HIV by at least 96%!  This gold-standard research is now being confirmed by ecological data showing actual declines of new infections in places where anti-retroviral scale-up has reached a “tipping point.”  Some of the most exciting findings come from KwaZulu Natal province in South Africa, the epicentre of the pandemic, where community infections are dropping precipitously now that a deadly delay in treatment rollout has been reversed.

The Report is also seriously out of date because it fails to take into account recent evidence of greatly enhanced efficiencies in AIDS programming.  The US PEPFAR program has evidence that its treatment costs have decreased by over 2/3 in just the past few years.  Doctors without Borders is achieving stunning efficiencies by task-shifting treatment initiation and monitoring to nurses and community health workers respectively, by moving services to the community level, and by involving patients in groups support and adherence activities.  Both of these dramatic developments call most of the World Bank’s calculations into question.

Second, there is growing evidence, again ignored by the World Bank, that even a moderate expansion of investments now in treatment scale-up and in diffusion of scaleable prevention methods like male circumcision, condoms, and needle-exchange can have significant impacts on new infections and thus future treatment costs.  One would think that a premiere economic think-tank like the World Bank could more strongly champion the idea that spend-a-dime-today instead of a dollar-tomorrow makes good economic sense.  The Bank has certainly strengthened its understanding of the fiscal impacts of HIV/AIDS by taking into account the predictable future costs of continuing and new infections, but it has failed to appreciate the Big Bang benefits of early investments.

Third, the World Bank uses magical thinking rather than evidence to rally support for unspecified “prevention” activities.  The Bank was one of the main proponents of prevention-only throughout the 1990s.  Treatment was too expensive, it wasn’t cost effective to treat poor people living with HIV, expenditures couldn’t exceed revenues, donors are fickle so don’t count on them, etc. Although the Bank’s language has become less coarse and callous, many of the same “truisms” are repeated in the current report.  Using the neutral language of quasi-liability (instead of what other pundits call a treatment mortgage), the Bank argues that the costs of treating people infected now and of those newly infected (discounted to present value) show that treatment expansion is “unsustainable.”  The Bank treats each and every country in its study solely within the context of its own economic resources showing severe domestic fiscal constraints, when it could in fact call for innovative global financing – like a financial transaction tax – and more predictable and long-lasting pooled global resources – like at the Global Fund.  It emphasizes – indeed almost excuses – donor defunding because of a global financial crisis that is too precipitous to permit a ramp-up in global health spending, but apparently a crisis that is not so serious so as to preclude a multi-trillion dollar bailout for banks and to continue numerous military follies.  The truth of the matter is that principles of global solidarity for global health should be promoted by the Bank as the real solution to short– and mid–term fiscal pessimism.

Fourth, the World Bank appears to neglect the economic and social benefits of a healthier population and to ignore some of the costs of premature deaths.  Focusing on fiscal costs of treatment, while ignoring the huge social and economic benefits of the survival of the vital age 25-45 cohort is just plain strange.  Young and middle age adults are economically productive, they raise and help education children, and they care for elders.  In a pure economic sense, they build economies, promote economic development, pay taxes, provide care labour, and innovate.  Earlier deaths decrease the value of investments in education and impede social reproduction.   Likewise, the Report makes some reference to macroeconomic impacts of HIV on macroeconomic growth, but it seems to discount the long-wave impacts of successive losses of the middle-generation.  Focusing primarily on fiscal costs while forgetting economic benefits is an unbalanced way to inform policy choices.

Countries need advice on future costs, but they need it based on current facts.  They need advice not just about how selfishly the world economy and governance is currently constructed, but how they might be revised to make the right to health and Universal Access real.  The failure of the Report is not a failure of the collective researchers or the individual authors, but rather of the rigid and dogmatic ideology of the World Bank that consider “fiscal space” a law of nature, while ignoring newly discovered evidence that treatment is now one of the most promising tools for prevention.  Let’s hope the Bank issues a new, more hopeful report, responsive to recent development and cognizant of the power of new investments to end AIDS.

Response from Dr.  Markus Haacker (co-author “The fiscal dimension of HIV/AIDS in Botswana, South Africa, Swaziland, and Uganda”)

Dear Prof. Baker,

I have read your comments on the recent book on the “The Fiscal Dimension of HIV/AIDS in Botswana, South Africa, Swaziland, and Uganda.” As one of the authors, let me offer you a few notes on your comments.

The sustainability of HIV/AIDS programs is a matter of serious concern to governments and the leadership of national HIV/AIDS programs across sub-Saharan Africa and beyond. The book is a contribution to address these concerns, by providing an analysis of HIV programs from a fiscal perspective, to inform policymakers and donors on the extent of the challenge of financing the current HIV/AIDS program, and a springboard for addressing the dialogue about the funding of the programs as well as thinking about new approaches to improve the effectiveness of HIV program, including many of the approaches that you are describing.

The following comments are broadly aligned with the three points you make.

(1) The drafting of the report was completed in late 2010, and incorporates a large number of references published in 2010. Additonally, I have incorporated  during the editing process the data which were released in end-2010 by UNAIDS in the context of the Report on the Global AIDS Epidemic. Your comment that the report “relies almost exclusively on pre-2009 data” is clearly wrong, and I am puzzled as to what might have given rise to this misconception. I also disagree on your claim that the report disregards “greatly enhanced efficiencies in AIDS programming.” For example, the unit cost of treatment in South Africa were based on a very elaborate analysis of providing ART through the public health system as of 2010 conducted on behalf of the Department of Health.
Two more points on your comments regarding the latest evidence in the analysis:
(a) One of the challenges in incorporating the latest evidence from empirical research is the fact that costs differ substantially across countries – superimposing empirical findings from recent research, which are to some extent country-specific, over current or recent national data is a source of great errors. Using the best available data shared by the national HIV/AIDS programs therefore is legitimate and useful, and helps anchoring the analysis with the ongoing policy dialogue.
(b) At this time (and especially a year ago when the book was written), the evidence on “treatment-as-prevention” is not advanced enough to support the epidemiological modeling the fiscal analysis in the book is based on. I know of substantial current efforts to take this further, to translate the evidence into population-level modeling, but expecting that this fiscal analysis should outsmart and upstage the very complex epidemiological modeling efforts that are going on now specifically in this direction is unfair and inappropriate.

(2) I largely agree with your comments regarding “investments now in treatment scale-up and in diffusion of scaleable prevention methods.” This is exactly the reason why the book places so much emphasis on the costs of meeting the demand for HIV/AIDS-related services caused by new infections. Quantifying these costs is a tool for motivating investments in prevention methods such as the one you mention – to convince a Minster of Finance or donor to provide funding, e.g. for “male circumcision, condoms, and needle-exchange,” it is useful to have estimates of the resulting financial savings (and, of course, of the obvious health benefits) at hand.

(3) The four reports combined in this book take a country-specific perspective, and was written to inform specific governments. Irrespectively of donor commitments, these governments are accountable to their citizens to meet the demand for public services. Assuming that “innovative global financing” or the Global Fund (which itself is in a financial crisis) would pick up the bill would be irresponsible from the perspective of the national HIV/AIDS program. However, I would hope that the analysis of the situation in countries like Swaziland and Uganda (where the estimated costs of the response to HIV/AIDS exceed any debt relief received) will help securing global HIV/AIDS funding.
The report does not argue “that the costs of treating people infected now and of those newly infected (discounted to present value) show that treatment expansion is ‘unsustainable.'” It uses a comparison with debt sustainability analyses conducted by the IMF and the World Bank to highlight the financial burden countries like Swaziland and Uganda are facing. But this burden needs to be interpreted against the extraordinary health challenges facing these countries, which means that simply looking at the costs of the HIV program would be grossly inappropriate. Moreover, by linking the scale of the financial costs to criteria which have been used in the past for allocating debt relief, the analysis offers concrete tools for soliciting external funding that can be used for negotiating external support.

Finally, I am – as you hope – confident that “the Bank (will issue) a more hopeful report, responsive to recent development and cognizant of the power of new investments to end AIDS.” However, I am not so optimistic regarding the immediate gains from the innovations you are describing. In the countries the report looks at, about one-half of the estimated burden of financing the HIV/AIDS program addresses the needs of people already living with HIV/AIDS (and the other half the costs of projected infections), and even a steep decline in HIV incidence would have very little impact on the funding needs of the HIV/AIDS program over the next decade. With all the “exciting new science” you quote, it would nevertheless be irresponsible to lose sight of the need to secure the funding of the existing HIV/AIDS programs.


Response from Professor Brook K. Baker to Dr. Markus Haacker

Thanks for your public response.

I agree with your point 1 that there are some references to 2010 publications, but the bulk  are earlier.  Adding 2010 UNAIDS data is certainly useful, but from the vantage point of 2012, 2011 was a very big year.

I don’t agree with your point 1(b) that it was unfair or inappropriate to suggest that the paper could have at least mentioned the emerging evidence on treatment as prevention.  Although it may not have been possible to redo the analysis in light of the complicated recalculations you describe, the idea that treatment as prevention might impact the fiscal analysis you offer is something that paper must address, especially since the paper seems to place treatment and prevention in opposition, once again.

With respect to your point 3, it’s a little hard to interpret your report, the World Bank press release, and all the mainstream press about the paper as not suggesting that treatment scale-up is unsustainable.  That conclusion is stated in summary terms, although I agree that there is also much more detailed and sophisticated analysis in the four country studies.

I certainly understand the importance of the Report’s focus on HIV prevention – it is something that AIDS activists have fought for for generations.  The problem is that “prevention” has often been presented as an oppositional concept to treatment – very directly during the 1990s and even thereafter.  Likewise, the Report’s discussion of treatment scale-up really presented treatment, now in March 2012 when published, as a separate category from prevention.  Given stunning developments in the scientific validation of treatment-as-prevention over the past two years (Haiti study and then HPTN 052 and frankly observationally even earlier than that), it certainly would have been appropriate to mention treatment as now being even more synergistic and intertwined with prevention.  That is not to say that the paper couldn’t have urged countries to know their pandemic (as it did) nor that it shouldn’t have urged countries to be alert for further developments on the prevention front (something that could have been clearer).  However, by leaving your recommendation for prevention open-ended – without any real specification of evidence-based prevention successes like male circumcision, treatment-as-prevention, etc. – the paper risked being interpreted according to the old behavior-change prevention/treatment binary.

Admittedly, the Report did encourage both more investments – by donors and by countries – and greater efficiencies.  But the headline conclusion of the Report, as I said above, was fiscal unsustainability.  It may have been your intention to ensure country self-reliance on domestic resources (after all you say below that countries shouldn’t count on innovative financing or the Global Fund), but cautious ministries of finance, already acculturated to an ideology of macroeconomic fundamentalism, will read the Report very pessimistically.  In my estimation, they are likely therefore to encourage less rather than more scale-up, especially since treatment will be understood according to the Report as being oppositional to prevention in terms of resources.  Anything the authors and the Bank could do to clarify and prevent this kind of interpretation would be helpful.

Professor Brook K. Baker is a professor of Law at Northeastern University School of Law.  He is also a policy analyst for Health GAP (Global Access Project).

Dr. Markus Haacker is co-author of  “The Fiscal Dimension of HIV/AIDS in Botswana, South Africa, Swaziland, and Uganda”. Dr Haacker is a growth and development economist,  and  currently an Honorary Lecturer at the London School of Hygiene and Tropical Medicine. He also works as a consultant to the World Bank and UNAIDS.

This article was originally posted on the European Aids Treatment Group website (posted on 22/03/2012).  It has been adapted and reproduced here with permission from Professor Brook K. Baker and Dr. Markus Haacker.


2 Responses to “Debating the World Bank Report on Fiscal Constraints – A return of the 90’s?”

  1. kwame says:

    This is an excellent debate. I am always suspicious of the World Bank in this area for another reason. They manifestly failed to tackle HIV/AIDS and were completely usurped by the Global Fund. The Global Fund has demonstrated what a non-ideologically driven and genuinely progressive multilateral institution can do to help the health of the world’s poorest people. This has been and always will be a major threat to the World Bank, and with declining aid flows and an IDA replenishment coming in 2013, I imagine considerable more ‘research’ will be published which seeks to enhance the position of the World Bank vis a vis the Global Fund.

  2. Ralph Sniff says:

    Knowledge rests not upon truth alone, but upon error also.

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