Time for a Global Fund for Health? The IMF will have to get out of the way first.

Tue, 11/03/2009 - 00:00 -- content_manager03

On 19-21 October 2009, the Belgium-based Helene De Beir Foundation hosted an international conference in Brussels - "Global Responsibilities for Global Health Rights" – to discuss the concept of moving beyond the fund for AIDS, tuberculosis and malaria and separate donor initiatives for health systems. In addition to dozens of global health advocates from international civil society organizations and governments, the conference was also addressed by Professor Jeffery Sachs of Columbia University and former Prime Minister of Ireland Mary Robinson. A shift towards a more rationalized global health architecture, alignment with recipient country systems and priorities, and moving forward the aid effectiveness principles in the Paris Declaration could all help improve global health systems. However, to make aid more effective and predictable in the future, the IMF will have to stop imposing restrictive deficit and inflation targets in their loans that prevent the full use of aid resources for essential services, such as health, and which prevent countries from raising more of their own resources domestically.

The meeting addressed the need for global leaders to move forward with a new solution modelled on a “World Social Health Insurance” initiative that would seek to redesign the “global health architecture” so as to protect the health of the world’s most vulnerable people. Recently, the donor-led High Level Taskforce on Innovative International Financing for Health Systems noted that much more resources would be needed for many countries to be able to reach the Millennium Development Goals (MDGs) by 2015.Improving the aid architecture would help increase the effectiveness of aid and free much needed resources for the poorest countries.

A briefing by the Reality of Aid coalition “Global vertical programmes: a tale of too many funds”, prepared by Eurodad in July 2008, echoed critical NGO voices which argue that the proliferation of vertical funds, such as the multiple existing health funds, can “contribute to the fracturing of aid, a lack of donor harmonization on the ground and the weakening of in-country systems.” Despite acknowledging that such funds could have some benefits for the provision of global public goods and in mobilizing unprecedented amounts of aid, the briefing recommended that “for every new initiative, two existing, malfunctioning initiatives must be shut down.” The discussions at the conference have the potential to move towards this direction by rationalizing the global health architecture.

The proposed solution builds on innovative ideas about “health security” (understood as the health components of “human security”), the right to health, and efforts to include a truly universal package of guaranteed benefits or entitlements, comprising a set of essential services applied to everyone around the world. The conference considered demanding that the current G8 commitment on strengthening health systems worldwide to be expanded to include “an explicit commitment to health budgets in the developing world” and structural reform.

While much of the conference focused on efforts to increase health-related ODA and make it more steady and predictable in the future, some participants raised the problem of extremely restrictive deficit and inflation targets in IMF loans preventing countries from raising more of their own resources domestically. NGO research published in the recent years has proved that overly restrictive IMF macroeconomic frameworks seriously constrain poor countries’ ability to increase their spending on essential services, such as health and education.[1]

According to Rick Rowden, author of "The Deadly Ideas of Neoliberalism: How the IMF Has Undermined Public Health and the Fight Against AIDS" (forthcoming from Zed books, 2009), who also attended the conference, most of the aid donors involved with health systems strengthening have completely neglected to address the problem of the IMF's restrictive policies. "Many donor initiatives on global health are calling on developing countries to also increase their own domestic expenditure on health budgets, yet they are doing nothing about the IMF loan programs that are regularly being approved by the same donor country governments at the IMF Executive Board. As long as countries are subject to unnecessarily restrictive fiscal and monetary policy targets in their IMF loans, they will remain stuck in the low-growth, low-employment and low-spending mode that has characterized much of the last 30 years, and there is no way they will be able to generate significantly more domestic resources to devote to health." Rowden added, "One wonders if the health donors in rich countries ever talk to their finance ministries about this problem of incoherence regarding what is being approved at the IMF board. If developing countries are expected to generate more resources domestically, the IMF policies need to be loosened somewhat."

According to projections, many developing countries are expected to also increasingly contribute to the financing of their health system strengthening efforts. But when asked if the World Bank believed countries would really be able to significantly scaling up their public investment as a percentage of GDP for strengthening their health systems without changing the current restrictive IMF policies, the World Bank representative, Julian Schweitzer, refused to answer the question, yet the Bank apparently wants to be a leader among donors in health systems strengthening. When asked the same question, Jeffrey Sachs agreed that it would be necessary for IMF policies to change. While Sachs greatly prioritises getting more ODA inflows, he said that as a longer-term development economics issue, it would be necessary for countries to be able to adopt more expansionary fiscal and monetary policy targets than the IMF currently permits.

If the attempts of the conference to move beyond separate donor initiatives for health systems towards greater rationalisation, we could witness one of the unique decisions in the direction pointed by Eurodad that “for every new initiative two, malfunctioning, existing ones should be shut down.” But this measure alone won’t suffice to unleash the full potential to make aid more effective and allow developing countries mobilise more domestic resources for social protection spending. For this to happen, the IMF will have to flexibilise its stringent macroeconomic frameworks first. As pointed out in a recent Eurodad research on IMF emergency loans to low income countries and their impact on social protection spending, “ Doing a decent job,” the IMF will have to allow governments to adopt expansionary fiscal and monetary policies which provide them with the necessary fiscal space to invest in social protection.