- A new report accuses the International Monetary Fund (IMF) and the World Bank of undermining the fight against AIDS in Africa through their rigid financial policy recipes that are to fight inflation. The government of Uganda nearly rejected a US$ 52 million donation to fight AIDS "in order to please the IMF," the report documents.
The report by four humanitarian agencies is presented in advance of the annual autumn meetings of the IMF and the World Bank, as an attempt to influence the two powerful institutions. The US-based Global AIDS Alliance is heading the lobbying efforts. The report's lead author is Rick Rowden, ActionAid International USA.
The report concludes that "despite the severity of the AIDS crisis, IMF restrictions on public spending in poor countries are making it difficult for countries to fight the disease." UNAIDS, the UN's agency to fight the pandemic, had also identified these policies as "a significant problem" in its 2004 'Report on the Global AIDS Epidemic'.
- The IMF's spending constraints may block poor countries from accepting desperately-needed outside help, even as the UN is calling for a massive increase to countries fighting AIDS, the humanitarian groups say. The UN has called for an extra US$ 20 billion to fight AIDS by 2007. Current economic policy prescriptions by the IMF however will not allow African countries receive these funds, even if made available.
In 2002-2003, for example, Uganda nearly rejected US$ 52 million in assistance in order to please the IMF. One of the reasons offered by the Ugandan finance ministry for attempting to turn down the awarded funds was that the health sector budget ceiling for the current three-year period was already set in agreement with the IMF, and they were committed to strictly adhering to the current budget expenditure plans as laid out.
Uganda's finance ministry at first stated that it could only accept the funds offered if Uganda cut out US$ 52 million from the existing health budget. The donors objected to this, since any grant "must be in addition to current government spending." Thus set in motion a controversy which flared until December 2003, when under public pressure, the finance ministry relented and finally agreed to let the first US$ 18 million instalment of the grant enter Uganda as additional monies to the existing health sector budget.
According to the report, UNAIDS is increasingly noting this problem in its efforts to fight AIDS in Africa. Speaking at the World Bank in November 2003, UNAIDS Director Peter Piot stated, "When I hear that countries are choosing to comply with the ... [budget] ceilings at the expense of adequately funding AIDS programmes, it strikes me that someone isn't looking hard enough for sound alternatives."
The four groups behind the report hope it will be an eye-opener for IMF staff. "This report should be a real wake-up call to people concerned about the alarming impact of AIDS on prospects for development and stability," stated Paul Zeitz of the Global AIDS Alliance. "It shows the terrible price we could pay if a rigid adherence to economic orthodoxy wins out over common sense."
IMF policies seek to keep inflation at very low levels. But, the report notes, many economists think inflation and public spending could go higher without harming development. Former IMF advisor and economist, Jeffrey Sachs, in an open letter however commented that "I don't know of a single country case where increased donor-financed health spending to respond to epidemics such as HIV/AIDS has been a trigger for macroeconomic instability."
The report further argues that IMF policies make it "more difficult for countries to retain critically-important health care workers," as a result of the IMF's caps on the amount of money countries can spend for public health sector employees. The so-called "brain drain" is known to be a serious problem in all African countries where AIDS is widespread.
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