Working Paper 148 - Role of Fiscal Policy in Tackling the HIV/AIDS Epidemic in Southern Africa
Three countries in Southern Africa have the highest adult HIV prevalence in the world: Swaziland (25.9%), Botswana (24.8%), and Lesotho (23.6%). Fiscal policy is crucial for addressing this HIV/AIDS crisis. Utilizing a calibrated model, this paper investigates the impact of fiscal policy on reducing the HIV/AIDS incidence rates in these countries. In particular, we studied the welfare impact of different taxation and debt paths in these countries in reducing the HIV/AIDS prevalence rates. This is particularly important given the current concerns about dwindling foreign aid (especially the global AIDS fund), and the fiscal deterioration and sustainability in these countries. Our results show that, acting optimally has not only positive societal welfare effect but also positive fiscal effects. For example, it will alleviate the debt burden by 5%, 1% and 13% of the GDP, respectively for Botswana, Lesotho and Swaziland by the year 2020. Thus, at a time of fiscal crisis in developed countries and dwindling international HIV/AIDS resources, the future of effective and efficient HIV/AIDS intervention in Africa is clearly domestic.
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- Johansson, Lars M., 2007. "Fiscal implications of AIDS in South Africa," European Economic Review, Elsevier, vol. 51(7), pages 1614-1640, October.
- Markus Haacker, 2002. "The Economic Consequences of HIV/AIDS in Southern Africa," IMF Working Papers 02/38, International Monetary Fund.
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- Silvia Sgherri & Maitland MacFarlan, 2001. "The Macroeconomic Impact of HIV/AIDS in Botswana," IMF Working Papers 01/80, International Monetary Fund.
- Elizabeth Lule & Markus Haacker, 2012. "The Fiscal Dimension of HIV/AIDS in Botswana, South Africa, Swaziland, and Uganda," World Bank Publications, The World Bank, number 2382, June.
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