Donors continue to hold back support from Global Fund
Authors: Ann Danaiya Usher
Journal: The Lancet (2011)

The Global Fund remains millions of dollars short of what it needs to operate as governments continue to withhold donations over in-country corruption allegations. Ann Danaiya Usher reports. Several donors to the Global Fund to Fight AIDS, Tuberculosis and Malaria continue to hold back their contributions for this year. Some have yet to make pledges; others have frozen disbursements pending the outcomes of two ongoing reviews of corruption. The result is that resources available to the Global Fund for 2011 remain US$0·5 billion short of what the Fund was expecting for this year. While the GAVI Alliance celebrates the results of a recent pledging conference that exceeded expectations, the Global Fund is operating with a budget that is well below that for 2010. Between 2008 and 2010, resources available to the Global Fund grew by about 8% a year, reaching almost $3·6 billion in 2010. But at the tenth pledging round of the fund for 2011–13, donors promised to give substantially less than what the Fund had hoped for; the Global Fund received $11·7 billion for the 3 years. Although this was 20% more than the fund received for 2008–10, it fell well short of what the Fund said it needed to maintain progress. In January, the Global Fund was already preparing to scale back on its planned new activities when a spate of negative articles, triggered by a story by the Associated Press (AP) about misuse of Global Fund money, caused three major donors to get cold feet. The coverage was based on a report from the Office of the Inspector General to the Global Fund Board, dated December, 2010, and made public in January. According to the report, a total of $34 million in Global Fund grants were not accounted for and are to be refunded by recipient countries. Although substantial, most of these figures had been in the public domain since autumn 2010. Indeed, the Inspector General's findings had caused Sweden to withhold its pledge for Round Ten in November, 2010. But following the media coverage in January, three other donors reacted swiftly. Germany, the Global Fund's fourth largest donor after the USA, France, and the UK, immediately froze its disbursement of $285 million that had been allocated for 2011. Publicly, the German move was linked to concerns about corruption, though the German Development Minister Dirk Niebel has been sceptical of collective international efforts like the Global Fund, preferring bilateral projects. Sebastian Lesch, press secretary at the German Development Ministry (BMZ), said the AP story showed that the dimensions of the corruption in the Global Fund were much bigger than what the Fund had reported earlier. “Once there are allegations in the air we have to follow them”, he said. Denmark followed suit. It was a good occasion to take a deep hard look at what is going on, since we had also heard of some problems within the Global Fund, said Danish Development Minister Søren Pind. “We will not pay more money as long as it is unclear what has been going on.” The European Commission (EC), another important Global Fund donor, also froze its disbursement for 2011 in January following the widespread publicity about misuse of funds (table 1).Table 1Donors that have frozen funds to the Global Fund in 2011Donor2011 pledge US$ millionsGermany142·9*Germany has released 50% of its US$285·7 million pledge for 2011, frozen in January, following publication of the interim report of the independent panel.European Commission185·7Denmark33·5* Germany has released 50% of its US$285·7 million pledge for 2011, frozen in January, following publication of the interim report of the independent panel. Open table in a new tab Catherine Ray, spokesperson at the European Union's (EU) Development Directorate–General, which initiates and formulates the EU's development policy for all developing countries, underlined that the problems identified have not been committed by the Global Fund itself, but in individual countries by people contracted to implement the programmes. The fact that the Global Fund's Inspector General identified the misuses and corruption is a good example of aid transparency both for the countries and the organisations, she said. The decision on resumption of funding will be made as soon as possible pending evidence that additional reforms are in place to guarantee safe disbursement of grants. In addition to Germany, Denmark, and the EC, two other key donors—Sweden and Spain—have still not announced their pledges for 2011–13 (table 2). Taken together, missing Swedish and Spanish funds probably represent around $200 million in resources that the Global Fund had expected to have on the books for this year.Table 2Countries that have not committed funds to the Global Fund in 2011Country2010 pledge US$ millionsSpain250·0Italy185·7Sweden74·0Ireland48·5 Open table in a new tab Under pressure from Germany, an independent international panel was set up to assess the risk of fraud and misappropriation in the Global Fund portfolio, and the robustness of the Global Fund's existing systems of control. The panel is being headed by former President of Botswana Festus Mogae and former US Secretary for Health and Human Services Michael Leavitt. Its remit was to deliver an interim report this summer and a final report in September this year. The interim report was released June 30, and Germany announced the following day that it was releasing half of its funds for 2011—€100 million ($142 million). According to a press release from the German Development Ministry BMZ, the independent commission of experts states that there is a great and urgent need for reforms at the Global Fund. Development Minister Niebel said: “There is a need for better accountability, as well as potential for an increase in the effectiveness of the Fund's work.” The release of this first portion of funding is subject to the condition that German funds can only be used in those countries where the Global Fund mainly relies on implementing agencies such as the UN Development Programme or the Deutsche Gesellschaft für internationale Zusammenarbeit. “It is clear that corruption kills because embezzled funds are no longer available for the treatment of people suffering from disease”, Niebel said. “Only in this way can we prevent that people will not receive treatment due to corruption and misappropriation.” Germany will consider releasing the other half of this year's allocation to the Global Fund after the commission's final report is completed. Denmark has also indicated that the release of its funds will depend on the outcomes in the final report. All in all, unannounced pledges and frozen disbursements from these five donors add up to more than $500 million that the Global Fund had been counting on for this year out of a total budget of about $3 billion. In a parallel process, the EC launched an institutional audit of the Global Fund in January to look more deeply into the situation in the four countries that were highlighted by the Inspector General where fraud and irregularities were identified. A draft audit report has been completed and is currently being discussed by the EC and the Global Fund. While the independent commission's final report will be made public, the EC audit will remain a confidential document. Meanwhile Sweden wants to be sure that the Global Fund Secretariat is implementing the reform agenda according to the instructions of the Board. Positive outcomes in the two reviews will probably lead the Swedes to release their funds as well. Many have wondered whether the donors sudden decisions to withhold hundreds of millions of dollars from the Global Fund carries the risk of endangering the lives of patients. The Global Fund Secretariat insists that, despite the shortage of funds, no planned activities under ongoing programmes, including distribution of drugs, have been affected so far. The Global Fund can say this with certainty because it only enters into legally binding contracts to fund activities such as the supply drugs when sufficient donor contributions have been received. The signing of such contracts usually occurs 8–10 months after the Board has approved project proposals from countries. New contracts based on programme proposals approved by the Global Fund's Board in December, 2010, will be ready for signing this autumn. In other words, the crunch comes in a couple of months. At that point, if the Global Fund is still short of resources, “we may have to look at the sequencing of signings and whether to delay the implementation of life-saving activities or hold off on some of them until the funds are unfrozen”, says Stefan Emblad, head of resource mobilisation at the Global Fund. Nora Volkow—challenging the myths about drug addiction“I hate popcorn, but I'm conditioned to eat it when I go to the movies. It's not even pleasurable, but I just cannot stop it”, says Nora Volkow. This tug of war between desire and willpower is something that Volkow knows all about. As Director of the National Institute on Drug Abuse (NIDA) of the US National Institutes of Health (NIH) she has studied the neurobiological underpinnings of addiction for decades, and believes it is the key to rehabilitation. Full-Text PDF Department of ErrorUsher AD. Donors continue to hold back support from the Global Fund. Lancet 2011; 378: 471–72—In this World Report (Aug 6), the first line of the seventh paragraph should have read “Germany, the Global Fund's fourth largest donor after the USA, France, and the UK, immediately froze its disbursement of $285 million that had been allocated for 2011”. The correction has been made to the online version as of Nov 18, 2011. Full-Text PDF