Global Health in the Economic Crisis
The current economic downturn is precipitating a public health funding crisis in many countries. Since the credit crisis of 2008 unfolded, $6.9 trillion has disappeared from the global economy, according to the World Bank's final December estimate. Countries and small companies in the developing world have found it more difficult to obtain loans for programs such as road construction and business development and to offset declining revenue streams to cover the costs of essential public goods.
Will the financial crisis affect foreign aid, which totaled $103.7 billion in 2007? The answer is certainly yes, but how much aid will decrease is harder to predict.
The state of aid even before the onset of the global economic crisis, worldwide foreign assistance had declined, dropping 4.7 percent in 2006 and 8.4 percent in 2007. The G-8's 2005 Gleneagles commitments to African development have slipped; G-8 countries have only delivered one third of the additional $21.8 billion promised by 2010.
Now, decreasing productivity in donor countries, combined with devaluation of the dollar, euro and pound, are causing a further reduction in aid flows in real terms. The Italian parliament responded to the economic crisis by cutting 2009 official development assistance (ODA) by 170 million euros ($237 million), and further reductions projected through 2011 are expected to halve Italy's contributions compared to 2007 levels.
The crisis is expected to increase the disproportionate challenges faced by those most in need-the poor, the young, women and the marginalized. The World Bank estimates that if the economic crisis persists, it could cause an additional 1.4 to 2.8 million infant deaths globally by 2015. Many are concerned that progress toward some of the Millenium Development Goals (MDGs), especially HIV/AIDS and malaria prevention and treatment, could be lost if funding falters. Last week at a U.N. conference on the economic crisis and global health, Secretary-General Ban Ki-moon called for G-8 and G-20 countries to keep their commitments, and renew focus on MDG 5 (maternal health) and building health systems.
Recommendations for Aid in Tough Economic Times
Recent announcements about aid commitments in the U.S. and elsewhere have prompted organizations and advocates to increase calls for maintaining global health funding despite the tough economic times.
- In April, the WHO European Region convened a meeting in Norway to discuss implications of the economic crisis for countries in the European region, as well as their global health commitments. Recommendations from the meeting included continuing or increasing ODA commitments, increasing solidarity and equity in allocating resources for health, and increasing the education of health professionals and ensuring ethical recruitment of foreign workers.
- In May, the Institute of Medicine (IOM) released a report called The U.S. commitment to global health: recommendations for the public and private sectors. This report recommends five specific areas of action, including scaling up successful interventions, generating and sharing knowledge, investing in capacity building, increasing U.S. financial commitments, and engaging in respectful partnerships. Specifically, the report recommends that the U.S. spend $15 billion per year on global health, with $13 billion going to the health MDGs and the rest going to non-communicable diseases.
- Also in May, President Obama announced a Global Health Initiative, including $63 billion over 6 years for HIV/AIDS, malaria, and other global health priorities. While indicating support for health systems strengthening, the dollar amount for PEPFAR ($51 billion, or $8.5 billion per year on average) represents a decrease of at least $9 billion from the reauthorization amount signed into law last year ($50 billion over 5 years). The overall commitment of $10.5 billion per year is almost 30% less than the $15 billion called for in the IOM report.
- Several other reports have been published highlighting key actions to improve aid effectiveness and increase aid levels particularly for global health. Laurie Garrett of the Council on Foreign Relations wrote a paper recommending changes to U.S. aid infrastructure and amounts, including a doubling of U.S. foreign assistance to $72 billion. Action for Global Health came out with a report on Health in Crisis which argues that despite the global economic crisis, the European Union and its member states must do more than ever to recommit to aid effectiveness principles and support the health MDGs.
The Way Forward
"In the twenty-first century, our fates are already intertwined. Now, we need to heed the call of our conscience, recognize that our interests are bound together, and act-united-with the urgency that the times demand." - U.N. Secretary-General Ban Ki-moon, June 15, 2009 at U.N. forum on global health
The economic downturn has changed the global landscape in many ways, including impacting aid for development and health. While recommendations abound for how and how much money is needed to fulfill commitments and meet health targets, it is less clear whether donor countries will follow through. Some 3 billion people living on less than $2 a day can least afford cutbacks in funding, particularly for health and essentials like food and clean water. It's clear that the public sector, now more than ever, is critical to ensuring that health care is accessible to all. We'll have more about the value of the public-sector health system in our next issue.
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