Commonly called aid, this is the international transfer of public funds in the form of loans or grants, either directly from one government to another (bilateral aid), or indirectly through nongovernmental organizations or a multilateral agency (multilateral aid) such as the World Bank or WHO.
The last decade has seen aid agencies embrace poverty reduction more strongly. Some agencies have focused on swift and practical measures geared towards tackling the worst manifestations of poverty, while others have taken a more strategic approach, seeking to create an enabling environment for the poor. Overall, however, aid levels have fallen in the past 10 years and are widely recognized as being too low. Development assistance for health has remained somewhat more stable and is currently around US$6 billion a year.
Health budgets in low-income countries are very dependent on aid, often by more than 50%. Such dependence raises important questions of sustainability, particularly given static or falling aid levels. The Commission on Macroeconomics and Health argues the health sector will need an additional US$27 billion a year by 2007 and US$38 billion by 2015 to provide essential interventions in low income countries and greater investment in research and development into diseases predominately affecting the poor.
Following the recommendations of the Organisation for Economic Co-operation and Development (OECD)/Development Assistance Committee (DAC), there is general agreement within the donor community that untying aid (from acquisition or usage agreements) is a way to improve its efficiency and effectiveness. For example, the European Union is set to explore options for further untying its development aid and has initiated this process in relation to services and commodities essential to the fight against HIV/AIDS, TB, and malaria.