Global Fund says it needs $5 billion during 2004-2005
Global Fund Observer
The Global Fund to Fight AIDS, TB and Malaria projects that it will need to receive $5 billion during 2004 and 2005.
This is based on two major assumptions. First, that Rounds four, five and six grants will be launched and approved during these two years, and that the cost of the first two years of the grants approved in each of these Rounds will be $1,000 million. (The first two years of Rounds one, two and three cost $613 million, $884 million and $623 million respectively.) Second, that money for years three to five of all Round one and two grants and a few Round three grants will also need to be received during those years.
The breakdown of the $5 billion needed is that $1,560 million will be needed in 2004 and $3,580 million will be needed in 2005.
If the United States gives the full $547 million that it has conditionally approved for 2004, the Fund expects to receive at least $1,532 million during 2004, based on current pledges. This is only $28 million short of the Fund’s goal for 2004, and makes it likely that there will be sufficient funding for Round four. However, US legislation says that its $547 million pledge for 2004 is not a guarantee, but is a maximum donation. Specifically, the US says it will give one third of the total amount received in cash (or, possibly, promissory notes) by the Fund between 1 January and 31 July 2004, up to a maximum of $547 million (the US has one third of the world’s GDP.) This places considerable pressure on other donors not only to increase their total pledges for the year by about $110 million, but also to pay all their 2004 pledges by 31 July.
That will be challenging enough for the Fund, but the greater challenge will be to raise the needed $3,580 million during 2005.
Timing of Round five
Round five will, in theory, be launched some time between October 2004 and January 2005, but the financial situation puts this timing in doubt.
The secretariat’s budgetary projections are based on the assumption that one Round will be approved every second board meeting in the board’s three-meetings-per-year schedule. (This means that Rounds five and six would be launched in about October 2004 and June 2005, and approved at the March 2005 and November 2005 board meetings.) And the board has resolved to have at least one Round per year (meaning that Round five should be launched by January 2005, one year after the launch of Round four).
However, the board has also resolved that paying for new grants will take second place behind paying for renewal of existing grants. Thus, Round five cannot take place until pledges have been received sufficient to pay for renewal of many Round one, two and three grants, as well as for new grants from Round five. It is believed that some countries are racing to complete a Round four application because if they wait until Round five, they might have to wait longer than expected.
Countries that as of 24 February 2004 had not paid their pledges for 2003 are Barbados ($100,000), Belgium ($7.5 million), Cameroon ($100,000), Iceland ($216,000), Mexico ($100,000), Nigeria ($1 million), South Africa ($2.9 million), and Zimbabwe ($842,000).
The Global Fund has only received $163 million in firm new pledges during the eight months since just before the “International Meeting to Support the Global Fund” held in Paris on 16 July 2003. Those new pledges represent just 10% of the amount required during 2004, or 5% of the amount required during 2005.
This weak performance is slightly offset by the fact that currency fluctuations caused the value of existing pledges to increase by $107 million during this period.
Beyond this, the USA has increased its existing $200 million pledge for 2004 by up to an additional $347 million, but as discussed above, it will limit its 2004 payment to one third of the total money received from all sources during the first seven months of 2004. Thus, the increase cannot be regarded as a firm pledge.
During this period, the new pledges by foundations total a mere $11,600 (barely more than the pledge from the Treatment Action Campaign in South Africa), and the pledges by corporations have actually decreased by nearly $100,000, due to the non-payment of a $100,000 pledge from Statoil, a Norwegian oil and gas company. Foundations and corporations each have one seat on the Global Fund’s board.
Australia has announced its first pledge to the Global Fund. This is for US$18.9 million, spread out over three years. The Australian foreign minister stated that Australia had delayed contributing to the Global Fund because it wanted to “wait and see how the Global Fund would work out.” He added: “In those two years, we have been pretty impressed with the Global Fund. I think it’s done an excellent job.”
Relative to the sizes of their economies, every developed country in the world that has made a pledge to the Fund for 2004 has pledged more than Australia – from 1.5 times as much by each of Germany, Japan and Spain, to 11 times as much by Sweden. Oxfam and Medecins Sans Frontieres in Australia issued a statement saying that based on the size of its economy, Australia should be contributing US$25 million for 2004 alone, rather than US$19 million over three years.
Reproduced from the Global Fund Observer Newsletter (www.aidspan.org/gfo), a service of Aidspan. To receive the GFO newsletter send an email to firstname.lastname@example.org