The annual World Bank-IMF Spring meetings will take place April 17-19 in Washington DC.

By Jaime Atienza
WASHINGTON DC, Apr 15 2024 (IPS)

As leaders gather for the Spring Meetings of the IMF and World Bank amid the cherry blossom trees of Washington, DC, there is some good news to celebrate.

After three years of difficult negotiations within the G20 Common Framework on Debt, with the support of the IMF, Zambia has finally secured serious debt relief and restructuring with both government and private creditors, which will help enable vital and urgent investments in health, education, and social protection.

For too long, Zambia’s plans for ending AIDS as a public health threat by 2030, and for realising crucial development needs, have been held back by constraints in investment caused by the debt crisis. The debt relief and restructuring that has been agreed at last gives the country a fighting chance. All those who have facilitated this agreement have saved and transformed lives.

The leaders gathering in Washington DC, including G20 Finance Ministers and international financial officials, can and should do much more, however. They can secure a much greater legacy than helping one country begin to untie itself from debt distress whilst leaving many other countries choking.

The agreement with Zambia has shown that the debt crisis is not fate but is a man-made situation which people can unmake. But so far, Zambia has been the only country which has benefitted from the new debt framework.

Slow and opaque international negotiations have not resolved the crisis that is leaving half of African economies either facing debt distress or at high risk of doing so.

Sub-Saharan African countries’ debt repayments have unaffordably high interest rates: for years they have been paying rates that are between four to eight times the rates that high income countries pay.

Sub-Saharan African countries are spending far more on debt servicing than on health – indeed, half are paying three times more. Last year, in Angola, Kenya, Malawi, Rwanda and Uganda, debt service obligations exceeded 50% of government revenues.

The damage that fiscal constraints are causing to health security is not only a moral outrage, but also dangerous for the whole world. In contrast, coordinated significant debt restructuring and relief by leading creditor countries, and by the investment firms based in those countries, will be good for the whole world – facilitating health security, stability and sustained prosperity.

Fiscal modelling demonstrates that the costs of inaction would be much larger than the costs of action.It is deeply concerning, therefore, that even at this time of polycrisis, some officials are continuing to pressure countries to maintain fiscal restraints, or even to tie them tighter. Continuing with austerity would be a grave mistake.

As United Nations Secretary-General António Guterres has highlighted, the global financial system is perpetuating and exacerbating inequalities, and is failing to provide a global safety net for developing countries.

Reform of the global financial architecture is urgent. This includes the need for a stable and timely debt restructuring mechanism, and for increased aid and sustainable and affordable concessional financing for low and low-middle income countries. It includes also the need for global coordinated action, and global rules, which will help advance fair taxation and the tackling of tax evasion.

There is, rightly, a consensus that low- and middle-income countries need to become increasingly fiscally self-reliant. The evidence is clear: achieving this requires growing new avenues for countries’ domestic revenue collection.

Brazil, host of November’s G20 meeting in Rio de Janeiro, has placed the establishment of new taxes on the agenda as a way for countries to source revenue that can be invested in health and other social priorities.

Needs include taxes on the wealth and on the capital gains of individuals and companies to ensure a reduction in inequality, with revenues collected redeployed for social priorities such as health, HIV, child welfare, gender equality, and social protection.

Investing in health works. The extraordinary advances secured by the global HIV response have proven what can be achieved. Since 2010, AIDS-related deaths have declined by 51% worldwide. New HIV infections have fallen by 38%. And three quarters of the 39 million people living with HIV are on antiretroviral treatment.

But right now, there is significant shortfall in the global investments required to end AIDS as a global health threat by 2030. The US$ 20.8 billion available for HIV programmes in low- and middle-income countries in 2022 was 2.6% less than in 2021, and well short of the US$ 29.3 billion needed by 2025. The final miles are the hardest, and need more investment, not less.

The world can end AIDS as a public health threat by 2030, be well-prepared for the next pandemic, and overcome the world’s dangerous health inequalities. But to ensure sufficient and sustainable resources requires leaders meeting in Washington DC need to be bold.

Now is the moment to frontload investment in health, education, and social protection. Economic stability and health security depend on multilateral coordinated action to drop debt, increase aid and concessional financing, and facilitate progressive taxation.

Decisions that leaders take this year will help determine whether the world successfully navigates the challenges of this decade and beyond. For the health security of everyone, leaders need to break the chokehold of debt and austerity, now.

Jaime Atienza is UNAIDS Director of Equitable Financing

IPS UN Bureau

Follow @IPSNewsUNBureau
  

Ann Potokri, a nurse and service provider working with ICW, and Queen Kennedy, a community pharmacist and mentor mother. Maararaba, Nasarawa State, North Central Nigeria, June 2020. Photo courtesy of International Community of Women Living with HIV West Africa.

By Jaime Atienza and Charles Birungi
GENEVA, Nov 21 2022 (IPS)

In this moment of profound challenge in international relations, it was understandable that the conclusion of the G20 meeting left leaders feeling relieved that the meeting took place without a breakdown. Leaders were justifiably proud too of important steps forward they made including the launch of the new pandemics fund.

But G20 leaders did not manage to resolve the fiscal crisis that threatens many low-and middle-income countries, and which risks undermining global health security because it is driving countries to slash investments in essential health services.

As the world approaches the end of 2022, no resolution mechanism to properly resolve the debt crisis has been established by either the IMF or the G20. In 24 months, the “G20 common framework” has delivered a debt relief agreement for just one country, Chad.

UNAIDS report “A pandemic triad” shows how growing debt burdens across developing countries are impairing their ability to fight and end AIDS and COVID, and their readiness for future pandemics. Half of the low-income countries in Africa are already in debt distress or at high risk of being so.

Across the world, the 73 countries which are eligible for the Debt Service Suspension Initiative have been recorded as spending on average four times as much on debt servicing as they have been able to invest in the health of their people. Only 43 of those countries have seen even a temporary suspension – totalling less than 10% the money they continued to pay back.

Two thirds of people living with HIV are in countries that received absolutely no support from the Debt Service Suspension Initiative at all during the critical 2020-2021 period. The seven Debt Service Suspension Initiative eligible countries with the largest population of people living with HIV – Kenya, Malawi, Mozambique, Uganda, Tanzania and Zambia – saw their public debt levels grow from 29% in 2011 to 74% in 2020.

According to the World Bank, “interest payments will constrain the capacity of low-income countries to spend on health, on average by 7%, and in lower middle-income countries by 10%, in 2027.”

110 out of 177 countries will see a drop or stagnation in their health spending capacity and are not set to be able to achieve pre-COVID spending levels by 2027.

During the COVID-19 pandemic, deficits increased worldwide, and debt accumulated much faster than they did in the early years of other recessions including the Great Depression and the Global Financial Crisis. The scale is comparable only to the twentieth century’s two world wars.

Government expenditure cuts are expected to take place across 139 countries in the coming years. In the case of the 73 countries that were eligible to the Debt Service Suspension Initiative, primary expenditures are expected to decline an average of 2.8% of GDP between 2020 and 2026.

This comes at a moment when economic forecasts have been downgraded by the IMF for a fourth time in a year. Austerity will mean dangerous reductions in health expenditure. To even restrain the damage will require a systemic reprioritization of public resources towards health systems.

There is a direct correlation between deepening fiscal problems and worsening health outcomes.

The COVID-19 crisis is dragging on. The impacts of the war in Ukraine on the global economy are making things worse. The HIV response is in danger, with the promise to end AIDS by 2030 under threat.

The world is not prepared today for the pandemics of to come. The international response to resolve the health financing crisis is nowhere close enough. Even as developing countries struggle with the debt crisis, the Ukraine war has led several donors to cut aid.

But there is a way out. With bold action, the health and development financing crisis can be overcome. Barbados Prime Minister Mia Mottley’s Bridgetown Agenda for action on debt, expansion of multilateral finance and effective SDR reallocation sets out the order of magnitude of response required.

There is an urgent need for debt cancellation for countries in fiscal distress, and for an effective and fast mechanism to deal with debt restructuring at scale. Health and education must be central considerations in debt negotiations.

Vital too is an expansion of the use of existing Special Drawing Rights (SDRs) from high income countries for investments in lower income countries of at least twice the 100 billion committed.

The G20 leaders’ work has not ended in Bali. The consequences of an unresolved debt crisis, and the lack of additional resources, would be disastrous for lives, livelihoods and health security. We don’t have time. No one is safe until everyone is safe.

Jaime Atienza is the Director of Equitable Financing at UNAIDS. Charles Birungi is the Senior HIV Economics, Finance and Policy Advisor.

IPS UN Bureau

Follow @IPSNewsUNBureau