Prior to the COVID-19 pandemic there were periods of sustained growth in many low- and middle-income countries (LMICs) that led to some optimism about countries “transitioning” from (i.e. no longer being eligible for) support from the major global health financing mechanisms, such as the Global Fund, Gavi, and the World Bank’s International Development Association (IDA). The COVID pandemic, however, was a huge shock to health systems, economies, and societies, and was rapidly followed by a second shock—an inflation and debt crisis, due partly to the invasion of Ukraine by Russia. In this paper released today, we consider the implications of these challenges for aid transitions.
We update a previous CGD mapping of potential transitions for health aid in the light of updated economic projections and transition policies of the three mechanisms listed above. We found that for 104 LMICs included in our analysis, current eligibility policies, combined with current economic projections, imply three outcomes: the post-COVID shocks have not, in the most part, derailed pre-COVID transition projections; a core of 60 countries are not projected to transition before 2040; and the exact specification of eligibility policies result in markedly different outcomes. We conclude with recommendations to reform and improve eligibility policies for the post-COVID era.
COVID has not derailed transition projections
Overall, our analysis found that the global shocks of the past few years have not significantly compromised the transition prospects for LMICs. In fact, in the aggregate, more countries (45) than previously expected in 2017 (26) are projected to be above the eligibility threshold of at least one mechanism by 2040. This is due to a strong reliance on gross national income (GNI) in eligibility criteria, better-than-expected economic performance just before COVID, and the post-COVID rebound. With a debt crisis and high levels of inflation, it may be argued that countries with the same GNI today do not have the fiscal space for health that they had prior to COVID. They may also have worse health indicators than previous cohorts of transitioning countries. Indeed, this has been explicitly acknowledged by the Gavi Board, who decided in December 2022 to extend the transition period from five to eight years. This will vary by country too—some are more debt distressed than others and some are more reliant on aid or are set to go through multiple simultaneous transitions from aid. Therefore, customised country transition plans are more likely to be necessary now than in previous eras.
There is a large core of countries that may never transition under current policies
60 countries in our analysis are not projected to cross the GNI-based eligibility threshold of any of the three mechanisms by 2040, and for Gavi, most of these are diverging away from the threshold for transition. Indeed, more than 95 percent of the Global Fund’s current portfolio and 60 percent of Gavi’s current portfolio (by disbursement value) will essentially consist of countries that are already eligible today, until 2040 and beyond. The Boards will need to consider if this long-term commitment to these countries well beyond the Sustainable Development Goals era is their intention. These countries, however, are not staying still. Their demographics are changing fast—by 2040 they will host 570 million more people than today, reaching 2.37 billion in 2040. These fast-changing demographics, combined with rapid development of new technologies (for example, the new R21 malaria vaccine), and a risk of falling donor commitment to the financing mechanisms, could result in fewer resources being spread thinly over more people and more technologies. Eligibility policies therefore need to support prioritisation of resources, focusing funding on the countries and populations that need them the most, and on technologies that produce the most health for the money.
Eligibility policies really matter and they power the funds’ ability to prioritise
Countries that are set to begin or be in transition by 2040 account for up to 40 percent of the value of IDA’s country-specific projects, 19 percent of Gavi disbursements, and less than two percent of the Global Fund’s annual disbursements. This is due to each financing mechanism using different criteria and different eligibility thresholds. This means IDA and Gavi will have much more scope in future to focus resources on fewer higher priority countries, whereas the Global Fund remains committed to a broad range of countries for the long term. Therefore, resetting the threshold, or better yet, redefining the criteria to better match the objectives of the financing mechanisms is a powerful way to support prioritisation of resources.
The Boards of all three global health financing institutions, which include representatives of both donors and implementing countries, should begin a strategic review of their eligibility policies. This should be guided by four principles:
Clarity of purpose. It would start with a review of the core principles and criteria for eligibility, which dictate who gets what and for how long: is it primarily around equity and poverty reduction, whichever country someone lives in? Or around support for countries that cannot provide essential services using domestic resources? Or is it about efficiency and maximum health impact? Is time-bounded aid a pragmatic preference that can be set aside for other objectives, or a deeper value about self-sufficiency and ending donor dependency? Is it the role of aid to support the highest priority services? Or should priority services be the domain of domestic resources, with funders supporting additional services at the margin?
Combined “prioritisation, allocation and eligibility” frameworks. Given a volatile future with high risks such as rapidly changing demographics, technologies, and donor commitment, eligibility frameworks and allocation frameworks can no longer be considered separate and should be integrated. This will better enable more explicit trade-offs between which countries to fund, how much each country gets, and which technologies to fund—and enable greater flexibility should donor financing of these mechanisms fall more than expected. With economic and political instability in major donor nations, it is vital that these eventualities are planned for.
Criteria should better reflect objectives and budgetary reality. Where possible, simple GNI based indicators should be supplemented by additional metrics that are closer to both the objectives agreed during a strategic review of the eligibility policies and to the fiscal reality of countries.
Harmonisation and country ownership. Finally, this strategic review of the eligibility policies should be coordinated across the institutions to ensure alignment of policies, provide clarity on the meaning of transition for recipient countries, and enable LMICs to plan their health systems and develop coherent policy responses.
In conclusion, projected eligibility and transition trajectories show the need for a fundamental strategic review of eligibility policies for global health financing to match the current post-COVID context. We call for a Board-level strategic review of eligibility policies of all major financing mechanism to clarify objectives, review criteria, harmonise between agencies, integrate with allocation formulas, and enable better prioritisation if rapid changes in donor funding, demographics or technologies occur.
Acknowledgements: Thanks to Janeen Madan Keller and Javier Guzman for insightful comments on an earlier draft of this blog.
CGD blog posts reflect the views of the authors, drawing on prior research and experience in their areas of expertise. CGD is a nonpartisan, independent organization and does not take institutional positions.