Foreign aid not reaching HIV/AIDS programmes
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World Bank and IMF Preventing Transfer of Foreign Aid to
HIV/AIDS Programmes
The Lancet, 20 May 2005
Multilateral financial organisations that aim to reduce poverty
are preventing foreign aid from reaching HIV/AIDS programs in
developing countries, states an article in this week's issue of
The Lancet.
Ted Schrecker (University of Ottawa, Ontario, Canada) and Gorik
Ooms (Medecins Sans Frontiers, Brussels, Belgium), state that
expenditure ceilings for public health, created by the World
Bank and the International Monetary Fund (IMF), stop countries
from benefiting from outside investment in their health pro-
grammes. To receive debt relief countries must provide the IMF
and World Bank with a poverty reduction strategy. Most strate-
gies include spending targets or ceilings for various sectors of
government activity. These ceilings exist because of concerns
that rapid inflows of foreign exchange associated with increased
aid can drive up the value of the recipient country's currency.
The result would be to increase the price of exports, thereby
undermining competitiveness. However, ceilings create a clear
disincentive for external donors to offer desperately needed fi-
nancing, state the authors. This is because the IMF requires
that countries include the value of all new donor funding re-
ceived for initiatives, such as scaling up antiretroviral treat-
ment, in their health budgets. If a sector receives any new
funds that were not initially budgeted for, a comparable amount
must be cut from the budget.
The authors use the situation in Uganda as an example of the ef-
fect of expenditure ceilings. In September 2004, the IMF claimed
no funds for HIV/AIDS projects had been rejected by Uganda be-
cause of expenditure limitations, while conceding that only US$
186 million of the $201 million approved for Uganda by the
Global Fund to Fight AIDS, Tuberculosis and Malaria had been
disbursed.
The authors comment: [The existence of public health expenditure
ceilings] reveals the dark underside of the industrialised
world's grand rhetoric about improving the health of the poor.
At the very least, the World Bank and the IMF owe the developing
world an unequivocal commitment that they will be part of a so-
lution to the health funding problem, instead of perpetuating
it.
--
Leela McCullough, Ed.D.
Director of Information Services
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