Reuters AlertNet Lite - FACTBOX-Bond initiative to fund vaccine programmes

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FACTBOX-Bond initiative to fund vaccine programmes

07 Nov 2006 13:33:23 GMT
Source: Reuters

Nov 7 (Reuters) - A bond to raise $1 billion for life-saving vaccines in the world's poorest countries is being launched on Tuesday, heralding a potential step-change in the way rich countries fund aid.

The scheme, championed by British finance minister Gordon Brown, begins with a high-profile reception in London where representatives of the world's leading religions will be the first buyers of the bond.

Here are some key facts about the International Finance Facility for Immunisation (IFFIm), which plans to raise the money through its maiden bond issue.

THE SCHEME

IFFIm takes long-term legally binding financial commitments from donors and uses these as collateral against which to issue bonds in the financial markets. They can be purchased by anyone from investment companies and banks to private institutions and individuals.

The money can then be released immediately to front-load the spending.

WHO BACKS IT

The idea was initially championed by Brown and the UK has contributed 1.38 billion pounds ($2.63 billion).

France has committed 372.8 million euros ($475.7 million) and pledged a further 920 million euros.

Italy has committed 473.5 million euros, Spain 189.5 million euros and Sweden 276.15 million Swedish crowns ($38.50 million).

Brazil and South Africa plan to join at a later data have each pledged $20 million.

INVESTMENT VALUE

The bonds issued under IFFIm have been rated "triple A" and will be Treasury-managed by the World Bank. The bonds can be re-sold on secondary markets.

AIMS

The scheme hopes to provide funding for immunising more than 500 million children in 70 of the poorest countries by 2015, potentially saving 10 million lives.

It aims to eradicate polio completely and strengthen health systems and introduce new technologies for disease prevention.

It is a pilot for a wider International Finance Facility programme which could double rich countries' aid to $100 billion a year.

CONCERNS

Aid agencies and lobby groups say that as the scheme raises money by issuing bonds that rely on the aid commitments of rich countries as collateral, it may store up problems for the future. The aid money may be used up to pay off the interest to financiers rather than help the poor countries.

WHAT IS IMMUNISATION?

Immunisation strengthens the immune system to fight diseases like measles, polio and tetanus. It is a proven and effective way to increase the health of children and families. Immunisation programmes are easy to administer and the cost of fully immunising a child is about $30.

CHILDREN AND VACCINATION

Roughly one child in four does not receive any vaccination. Of the 130 million children born each year, two to three million die from vaccine-preventable diseases. The biggest number of unvaccinated children remain in Sub-Saharan Africa followed by South Asia.

Sources: Reuters, International Finance Facility for Immunisation (www.iff-immunisation.org)

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Last updated:Tue Nov 7 13:34:07 2006