Global Fund mulls loans to fight AIDS

By James Kilner

MOSCOW (Reuters) - The Global Fund to fight AIDS, Tuberculosis and Malaria may loan cash to developing countries when they grow too wealthy to qualify for grants, the fund's director, Michel Kazatchkine, said on Sunday.

Including loans in its remit would allow The Global Fund -- which has raised about $10.8 billion for donations since 2002 -- to extend help to governments and civic groups in heavily infected but increasingly wealthy countries.

"To us it's important that when the world's money for aid is being distributed it not only takes into account economic factors but also, for example, burden of disease," Kazatchkine told Reuters in an interview at an HIV/AIDS conference in Moscow.

The Global Fund, which was launched by Group of Eight industrialized nations and is financed largely by the U.S. and European governments, estimates that around 6 million people die every year from either AIDS, tuberculosis or malaria.

By the end of next year 10 countries from the Eastern Europe and Central Asia region -- including Turkey, Kazakhstan and Russia -- will no longer qualify for Global Fund grants as they will be considered upper income countries.

But some of these countries have only just built up the mechanisms to battle AIDS, tuberculosis or malaria and Kazatchkine cited Kazakhstan as an example of a country which may benefit from a loan and extended help from The Global Fund.

Former Soviet Kazakhstan in Central Asia has grown richer over the last decade from high energy and commodity prices but faces an accelerating number of people with the HIV virus.

"The challenge for Kazakhstan is how to manage in the future," Kazatchkine said.

"I wonder whether we couldn't consider, as an international community, whether Kazakhstan instead of not being eligible at all in the future could potentially be eligible but then commit to reimburse by 2015 or 2020 or whatever."

The Global fund has previously pledged over $67 million in grants to Kazakhstan to fight AIDS and tuberculosis.

It was Russia which set the precedent for potentially extending The Global Fund's work into loans, Kazatchkine said.

Huge wealth from energy and commodity exports have also enriched Russia and in 2006 it pledged to repay 80 percent of The Global Fund's $320 million grant.

"What I'm saying is that with the Russian example we may find ways of basically a free loan that would allow these countries to access resources now but also behave as a donor," Kazatchkine said.

Africa receives almost 60 percent of The Global Fund's cash -- whose main donors are taxpayers in the United States, Japan and Europe -- followed by East Asia with about 13 percent of the total raised.

The Global Fund has pledged nearly $1.2 billion to Eastern Europe and Central Asia through to 2010, about 55 percent into targeting HIV, and Kazatchkine said there has already been much progress -- especially in developing civic groups.

But as countries become richer and move away from grants, civil society groups worry without The Global Fund cash they will be marginalized by big government.

"These are societies the relationship between public sector and the non-governmental sectors haven't been established and do not run as smoothly as western societies," Kazatchkine said.

The annual rate of new infections in the Eastern Europe and Central Asia region has fallen in the last few years to about 150,000 last year from 210,000 in 2001.