Cablegate: Report of 20th Global Fund Board Meeting Nov 9-11, 2009

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1. The Global Fund to Fight AIDS, Tuberculosis (TB), and Malaria
(Global Fund) held its 20th Board meeting on November 9-11, 2009, in
Addis Ababa, Ethiopia. The U.S. government (USG) holds a permanent
seat on the Global Fund Board and works through the Board to make
funding decisions and provide strategic direction to the Global
Fund. With USG support, the Global Fund Board approved $2.38
billion of new grants to fight AIDS, TB, and malaria; took steps to
enhance the engagement of implementing countries in Global Fund
governance; approved changes in the Global Fund grant architecture
designed to simplify the grant architecture and encourage a more
holistic, program-based approach at the country level; and agreed to
explore the possibility of a joint funding platform for health
systems strengthening (HSS) with the Global Alliance for Vaccines
and Immunizations (GAVI) and the World Bank. The U.S. was
represented by an interagency delegation led by the USG Board Member
Ambassador Eric Goosby (U.S. Global AIDS Coordinator, Department of
State), Alternate Board Member John Monahan (Interim Director,
Office of Global Health Affairs, Department of Health and Human
Services), and Adm. Tim Ziemer (Coordinator, President's Malaria
Initiative, USAID). End summary.

2. Background. The Global Fund is a public-private financing
mechanism established to mobilize and distribute resources to combat
AIDS, TB, and malaria worldwide. The USG strongly supports the
Global Fund as an essential component of our overall response to
these three diseases. The USG is the largest single donor to the
Global Fund, having contributed approximately $3.5 billion since
2002 and pledged an additional contribution of $1 billion in FY
2009. To date, the Global Fund Board has approved $18.4 billion in
grants to 144 countries, supporting country-led efforts to provide
HIV/AIDS treatment for over 2.3 million people, provide TB treatment
for 5.4 million people, and distribute 88 million bednets for
malaria prevention.

Board Dynamics

3. The 20th Board meeting was chaired by the Ethiopian Minister of
Health Tedros Adhanom Ghebreyesus and vice-chaired by Canadian
International Development Agency (CIDA) Health and Education
Director-General Ernest Loevinsohn. Both were elected to these
positions in mid-2009 for two-year terms; this was their first Board
meeting serving as Board Chair and Vice-Chair. Minister Tedros has
proved a capable chair in other international settings and, while
new to the Global Fund Board, has a strong interest in the Global
Fund's success. Ethiopia is the largest recipient of Global Fund
grant resources, with $1.335 billion in approved funding to date.

4. The 20th Board meeting ran smoothly, with delegations from both
the donor and implementing blocs working together constructively on
key governance and funding decisions. Nevertheless, there was a
general sense, particularly among the donor bloc, that the Board did
not fully address increasingly critical strategic issues around
resource mobilization, allocation of resources, and grant
performance and management. The Board decided to hold a retreat in
January or February 2010 to address these issues in more depth. The
donor bloc also agreed to reinvigorate an informal, intersessional
donor consultation process. Mr. Loevinsohn offered to continue
coordinating the donor consultation process in the near term.

Funding Decisions

5. The Global Fund operates under a demand-driven model and the
Board approves grants based on technical merit, as assessed by an
independent Technical Review Panel (TRP). To date, the Board has
approved every technically sound grant recommended for funding by
the TRP. However, for the second funding cycle in a row, the Board
was faced with a significant gap between the TRP-recommended ceiling
and available resources. In preparation for the 20th Board meeting,
the USG worked through a Working Group of the Board to identify ways
to manage this tension between supply and demand. The Working Group
developed a number of cost-savings recommendations, including an
across-the-board budget cut of 10% for all Round 9 and NSA
proposals, discontinuation of the Rolling Continuation Funding
channel, and adoption of two-phase funding decisions for approved
grants such that the financial impact of the grant approvals is
spread more evenly across the grant lifecycle. The Global Fund
Board approved all of these cost-saving measures, allowing it to
approve, in principle, all TRP-recommended grant proposals. The
Board also endorsed the broad lines of thinking contained in the
Working Group's report around resource mobilization and managing
demand over the longer term. The Board agreed to continue

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discussions on these topics on an urgent basis, including through a
Board retreat to be held in early 2011.

6. The Board approved $2.38 billion in new grants under Round 9 and
two pilot initiatives - the National Strategy Application (NSA)
funding channel and the Affordable Medicines Facility for malaria
(AMFm). The full list of approved and rejected grants is available
online at /en/funding decisions.
7. The Board approved funding for 90 Round 9 grant proposals in 69
countries, including two countries that had not previously received
Global Fund grants (Mexico and Turkmenistan), five NSA proposals,
and ten AMFm proposals.

8. The Board approved funding for five of seven NSA proposals:
China (malaria), Madagascar (malaria), Nepal (tuberculosis), and
Rwanda (HIV/AIDS and tuberculosis). The NSA funding channel is a
pilot initiative that allows countries to use their existing
national disease strategy as the basis of a funding request. The
TRP did not recommend, and thus the Board did not approve, the two
remaining NSA proposals (Kenya and Malawi, both for HIV/AIDS). Both
Kenya and Malawi have been afforded the opportunity to appeal the
TRP recommendation through the usual appeals process, which requires
applicants to demonstrate the TRP made a "significant and obvious
error" in its technical review.

9. The Board also approved AMFm proposals in nine African countries
and Cambodia. The AMFm funding channel is a pilot initiative aimed
at expanding access to, and affordability and use of,
artemisinin-based combination therapies (ACTs). In approving the
AMFm proposals, the Board also clarified its intent that the Global
Fund will only expand beyond a pilot program based on evidence that
the initiative is likely to achieve its stated goals. The Board
requested the AMFm Ad Hoc Committee to make a recommendation, based
on an independent evaluation of the pilot phase, to the Board at its
first meeting in 2012 on whether to expand, accelerate, modify, or
terminate the AMFm business line.

10. The Board also approved, on an exceptional basis, the extension
of a Global Fund Round 3 grant in Russia focused on HIV/AIDS
prevention among highly vulnerable groups, including intravenous
drug users, sex workers, men who have sex with men, street children,
migrants, and prisoners; the decision approved $24 million over two
years for this work. The Board stressed the extraordinary nature of
this decision, noting that while Russia is not currently eligible
for Global Fund funding under its income eligibility criteria, these
eligibility criteria are under review and may be revised in 2010 to
allow the Global Fund to continue support for particularly
vulnerable populations in countries that might otherwise be
ineligible for funding based on income levels. In approving the
extension of the prevention program, the Global Fund Board urged the
government of the Russian Federation to expand investment in
life-saving, evidence-based prevention services for vulnerable
populations. (Comment: The Government of the Russian Federation is
transitioning from Global Fund recipient to donor and has
contributed more than $225 million to the Global Fund. The Russian
Federation has accepted financial responsibility for most of the
HIV/AIDS programs previously supported by Global Fund financing, but
has chosen not to provide continued funding for Round 3 prevention
program. The Global Fund Secretariat and international partners
have tried without success to persuade the Russian government to
provide financial support for this program. The key stumbling block
appears to be lack of political will within the Russian government,
rather than resource constraints. At the same time, key bilateral
donors including the USG are scaling back their HIV/AIDS programs in
Russia and do not currently have sufficient resources to pick up
these services in the near term. End Comment.)

Launch of Round 10

11. The decision around the timing and scope of Round 10 was one of
the most heavily negotiated decisions at the 20th Board meeting.
Given the large unmet need for services in all three disease areas,
there was broad support among all delegations for ensuring continued
access to Global Fund financing through new grant rounds and for
transitioning to the new grant architecture as quickly as possible.
However, there were different perspectives on how quickly to move
forward with launching a new call for proposals given the time
needed to operationalize the new grant architecture and current
resource constraints. Ultimately, the Board agreed to hold a
retreat in January or early February 2010 to address key strategic
issues such as prioritization of funding amongst grant proposals,
the Global Fund's operating model, and implementation of the new
grant architecture. The Board further agreed to launch Round 10 on
or about May 1, 2010, with funding decisions to be made between
November 2010 and January 2011, with the launch of Round 10 to be
confirmed at its 21st Board meeting, based primarily on progress in

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incorporating the new grant architecture.

Support for Implementing Partners

12. In recognition of the critical role of implementing countries
and partners in the Global Fund governance processes, the Board
approved two decisions aimed at enhancing their participation. The
Board approved financial support of up to $800,000 annually for
intra-constituency communications, coordination and participation in
Global Fund meetings. The Board also approved increased translation
and interpretation services, limited initially to two languages in
addition to English.

Grant Architecture Reform

13. The Board approved changes to its grant architecture designed
to simplify management of Global Fund financing and encourage
greater alignment between grant proposals and national disease
strategies. The new grant architecture is based on "one stream of
funding per Principal Recipient per disease" and aims to reduce the
reporting burden on implementing countries by consolidating grant
proposals and reporting cycles. The Board and its committees will
continue to provide oversight and direction to the Global Fund
Secretariat as it refines and rolls out the new grant architecture.

Health Systems Strengthening (HSS)

14. The Board approved a decision point requesting the Secretariat
to explore the operational, financial, and policy implications of a
potential joint HSS funding and programming platform with GAVI and
the World Bank. The Board emphasized the importance of close
consultation with the Board's Policy and Strategy Committee and
requested the Secretariat to present a proposal to this committee on
how a joint HSS platform could be operationalized and funded, for
consideration and recommendation to the Board at its 21st Meeting in
early 2010.

Other Decisions

15. The Board adopted a number of additional decisions on issues
such as the 2010 Operating Expenses budget, quality assurance for
pharmaceutical products, the Global Fund's partnership strategy,
risk management framework, and support for the Office of the
Inspector General. The full text of all decisions taken at the 20th
Board meeting is available online at
/documents/board/20 /GF-BM20-DecisionPoints_en.pdf. A report
containing USG positions on each Board decision will be posted on

Next Meeting

16. The Global Fund Board will hold a retreat in early 2010 to
discuss key strategic issues. Global Fund Board retreats are
typically restricted to Board Members and Alternates in order to
facilitate open, frank discussions. The Board will hold its 21st
regular meeting in April/May 2010 in Geneva. The Governments of
Brazil and Yemen both offered to host the 22nd Board meeting in
November 2011.

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