Impact of Covid-19 on fiscal space for HIV in three countries

To assess the magnitude of the impact of the Covid-19 pandemic on health and HIV expenditure, UNAIDS carried out fiscal-space analyses in the Democratic Republic of Congo, Jamaica, and Lesotho.

These countries were selected to capture the largest possible variation across differentiated burden of disease (HIV prevalence), income level and geographic location in a sample of 28 countries.

The fiscal-space analyses assess the impact of Covid-19 on available HIV and health expenditure to inform the policy positions UNAIDS should take to minimise the impact on the HIV response. While the analysis captures some variation, the sample is too small for the results to be generalisable beyond the three countries. The methods of analysis allow to approximate the magnitude of the shock only.

The results of the analysis show that in each economic shock and fiscal response scenario, the impact of Covid-19 on GDP per capita is severe, and health and HIV expenditure is expected to be reduced significantly.

Nevertheless, the severity of the shock to health and HIV expenditure varies widely across these three countries. In a better-case scenario, the impact of Covid-19 amounts to a setback with recovery to pre-Covid spending levels within one to five years’ time. In a worse-case scenario, there is no recovery within five years’ time and a structural adjustment in fiscal revenue and expenditure allocation between sectors appears inevitable.

For the DRC, both the worse and the better-case Covid scenarios present an aggravated risk to the economy and the health and HIV sectors. In Jamaica, the economy is more resilient, and it would take a relatively small reprioritisation of public expenditure to maintain historic spending levels. In Lesotho, the government allocates enough to health and HIV but is at risk if international HIV resources do not maintain levels in line with historical trends.

In both better and worse-case scenarios, health and HIV per capita spending is at risk and therefore the emphasis of UNAIDS’ work with governments should be the same: to increase the proportion of government expenditure allocated to health and HIV. This can be done using an investment case logic, demonstrating the intrinsic value of investing in health and HIV, as well as the relative merit compared with public investments in other sectors.

In all countries, the short-term impact of Covid-19 on GDP per capita is severe and UNAIDS should back efforts from national governments and the international community to provide poorer households with unconditional cash support as this will support their continued access to health and HIV services. UNAIDS can also advocate for aggressive programmes to improve health and HIV spending efficiency. In the global arena, UNAIDS can advocate to target ODA at those countries that do not have alternative fiscal response options, and support calls for debt forgiveness or restructuring for countries in debt distress.