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Working Paper 148 - Role of Fiscal Policy in Tackling the HIV/AIDS Epidemic in Southern Africa


Southern Africa is the worst impacted by AIDS; in three countries in this sub-region, the national adult HIV prevalence rate now exceeds 20%. These countries, which have the highest adult HIV prevalence in the world, are Swaziland (25.9%), Botswana (24.8%), and Lesotho (23.6%) (UNAIDS, 2010). The HIV/AIDS epidemic, a major development threat, is responsible for slowing the rate of growth of the gross national product of many heavily affected countries and increases overall health expenditures for both medical care and social support at the same time that it is claiming the lives of doctors and nurses in the those countries2 . HIV/AIDS is not only expensive to treat but also disproportionately affects poorer populations, causing impoverishment through disability. In addition, it not only impairs government capacities, it also makes additional demands on governments to address pressing health and other social issues. This scourge of our time takes the lives of children and young adults, especially women, and leads to dramatic declines in life expectancy.3 Especially in the short-term, the loss of a large segment of prime-age adults, particularly women, devastates households while in the long-term, it creates macroeconomic threats just as losses in human capital formation pose a further risk by influencing the intergenerational transfer of knowledge.

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