GENEVA, Nov 21 (IPS) – At a time of great challenges in international relations, it was understandable that the conclusion of the G20 meeting left leaders feeling relieved that the meeting went without interruption. Leaders were also justifiably proud of the significant steps they have taken, including the launch of the new Pandemic Fund.
But G20 leaders failed to resolve the fiscal crisis that threatens many low- and middle-income countries and threatens to undermine global health security as it pushes countries to reduce investment in essential health services.
As the world approaches the end of 2022, no resolution mechanism has been put in place to properly resolve the debt crisis, either by the IMF or the G20. In 24 months, the “G20 Common Framework” has delivered a debt relief deal for just one country, Chad.
UNAIDS report “A Pandemic Triad” shows how growing debt in developing countries is eroding their ability to fight and end AIDS and COVID, and their preparedness for future pandemics. Half of Africa’s low-income countries are already in debt or at high risk of becoming so.
Around the world, the 73 countries eligible for the Debt Service Suspension Initiative spend on average four times as much on debt service as they have been able to invest in the health of their people. Only 43 of those countries have even seen a temporary suspension – a total of less than 10% of the money they continued to pay back.
Two-thirds of people living with HIV are in countries that received no support at all from the Debt Suspension Initiative during the critical period 2020-2021. The seven countries eligible for the Debt Service Suspension Initiative with the largest populations of people living with HIV – Kenya, Malawi, Mozambique, Uganda, Tanzania and Zambia – saw their government debt rise from 29% in 2011 to 74% in 2020.
According to the World Bank, “by 2027, interest payments will reduce the capacity of low-income countries to spend on health care by an average of 7%, and in low-middle-income countries by 10%.”
110 of the 177 countries will see a decline or stagnation in their healthcare spending capacity and will not be able to reach pre-COVID levels by 2027.
During the COVID-19 pandemic, global deficits increased and debt piled up much faster than in the early years of other recessions, including the Great Depression and the global financial crisis. The scale is comparable only to the two world wars in the twentieth century.
Government spending cuts are expected to take place in 139 countries in the coming years. In the case of the 73 countries eligible for the Debt Service Suspension Initiative, primary expenditures are expected to fall by an average of 2.8% of GDP between 2020 and 2026.
This comes at a time when economic forecasts have been revised down by the IMF for the fourth time in a year. Budget cuts mean dangerous cuts in health spending. To even limit the damage, a systematic reprioritisation of public funds to health systems is needed.
There is a direct link between increasing tax problems and deteriorating health outcomes.
The COVID-19 crisis continues. The effects of the war in Ukraine on the global economy are only making matters worse. The HIV response is in jeopardy, jeopardizing the promise to end AIDS by 2030.
The world today is not prepared for the upcoming pandemics. The international response to solve the healthcare financing crisis is nowhere near close enough. As developing countries grapple with the debt crisis, the war in Ukraine has caused several donors to cut off aid.
But there is a way out. With bold action, the health and development funding crisis can be overcome. Prime Minister Mia Mottley of Barbados’ Bridgetown agenda for action on debt, expansion of multilateral financing and effective SDR redistribution sets out the order of magnitude of the response required.
There is an urgent need for debt cancellation for countries in financial distress and an effective and swift mechanism to address debt restructuring on a large scale. Health and education should be central considerations in debt negotiations.
It is also essential to expand the use of existing Special Drawing Rights (SDRs) from high-income countries for investments in lower-income countries of at least twice the pledged EUR 100 billion.
The work of the G20 leaders in Bali is not over yet. 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 adviser on economics, finance and policy.
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© Inter Press Service (2022) — All rights reservedOriginal source: Inter Press Service