How do pledges become real?
Payments to the Global Fund for pledges are usually determined through a negotiation process that results in a signed contribution agreement (there are a few exceptions). These contribution agreements are negotiated directly between the Global Fund Secretariat and each country – they can be quite different from country to country. Contribution agreements are not published but the Global Fund Secretariat regularly indicates how many have been signed and contributions are tracked on the Global Fund website and updated at least quarterly.
Could the value of the pledges increase in USD (because of foreign exchange trends)?
Yes – the pledges have been calculated with a “spot” foreign exchange rate from September 21st 2022 (the date of replenishment). Much of the funding based on the pledges will come in at various dates between now and December 2025 and so as foreign exchange rates fluctuate, the USD value of the pledges could change – they can increase, but they could also potentially decrease.
The Global Fund Secretariat takes various actions to secure and lower the risk from foreign exchange changes. More about how they are doing this is expected in the committee and board meetings this fall (October and November respectively).
How long does the United States’ 2:1 stay “valid” for?
The US announced that it would pledge up to $6 billion for the 7th Replenishment. This commitment is contingent on $12 billion raised from all other sources – i.e. $18 billion must be raised in order to leverage the full $6 billion from the US government.
The budget and appropriations processes in the US mean that each year, the contribution of the USA has to pass those processes.
For this replenishment, the first budget that will have the 7th Replenishment pledge in it is Fiscal Year 2023 – and this has passed with 2 billion for the Global Fund. This means that the final contribution from the US will be delivered in the 2025 fiscal year.
So any funding announced from now to 2025 will be able to still leverage the US intended pledge. But if even with these contributions the resources pledged to the Global Fund do not add up to a total of $18 billion for this cycle, it will reduce the total US contribution.
How will allocations be decided from here?
The GF Secretariat will be looking at all the many different factors – pledges, foreign exchange rates, portfolio optimization (unspent funds) – and determining a final amount that is available for allocations. The allocation formulas will then be run, qualitative adjustments applied and countries should begin to receive their allocation letters for the 2024-2026 implementation period in January 2023.
When is “too late” for new pledges?
It’s never too late for a new pledge! That said, the Board will meet in November to finalize the “Sources of Funds” for 2023-2025. The Sources of Funds will determine what country allocations are and will determine what the Catalytic Initiative level of funding will be as a starting point.
Efforts to get additional, new pledges will be most useful by no later than early November. As discussed above, pledges up until 2025 will still count towards unlocking the full US pledge.