Resource allocation and health financing

As part of government's initiatives to help manage the severe tuberculosis strains identified in KwaZulu-Natal, the provincial Health Department has set aside about R506 million writes Nozipho Dlamini. The extremely drug resistant tuberculosis (XDR-TB) strain resists all first level drugs (ordinary treatment given to TB patients) and two of the five major classes of the second-level drugs used to treat patients with multi-drug resistant TB (MDR TB). "For the MDR and XDR TB strains specifically, we are allocating R80 million, which forms part of our TB Crises management Plan," MEC Peggy Nkonyeni said, tabling her department's budget for this financial year.

This paper discusses the best monetary policy to manage the macroeconomic effects of an MDG-related scaling up of aid inflows to address the HIV/AIDS pandemic. Many economists have expressed concern that a substantial scaling up of aid inflows would lead to greater inflation and real exchange rate overvaluation. Thus, in such a context, they often advocate that central banks adopt restrictive monetary policies. However, such policies often make overvaluation worse by driving up the interest rate and reducing domestic liquidity. This paper suggests that the evidence on the overvaluation effects of aid inflows is thin, at best. Instead of advocating restrictive policies, this paper maintains that monetary policies should maintain low rates of interest, increase overall liquidity in the economy and maintain a relatively depreciated currency. Such policies will help support the expansion of fiscal space that will be necessary for reaching the MDG target of halting and reversing the HIV/AIDS pandemic. A substantial increase in ODA directed towards combating HIV/AIDS will lead to an expansion of government spending on domestic goods and services. But the impact of such spending will not necessarily be inflationary in economies, such as those of many low-income countries, which have significant excess capacity, i.e., underemployed labour and other productive factors.

Price is one of the major barriers to reliable access to medicines while availability of medicines is also a major determinant of access. The Ministry of Health of Kenya and conducts surveys on a quarterly basis to monitor medicine prices in the countries. In these surveys information is collected on availability, affordability and price variation on a basket of medicines in the public private and mission sectors.

In a contradiction between its grants and its endowment holdings, Corporate Watch reports that Gates Foundation provides 5% of its worth annually as grants for health initiatives, public education and social welfare and invests the other 95% of its worth. The investigation found investments in companies that have failed tests of social responsibility because of environmental lapses, employment discrimination, disregard for worker rights, or unethical practices. Corporate Watch outlines those investments that appear to contradict the foundations grant support goals and the feedback obtained from the Gates Foundation on the findings.