What about debt cancellation to help prevent future pandemics?  - Health policy watch

What about debt cancellation to help prevent future pandemics? – Health policy watch

Negotiations on a “pandemic treaty” begin in earnest in a few weeks as the World Health Organization (WHO) distributes the zero-sum conceptual first draft of the deal to member states on Friday – but one of the biggest conundrums is how to pay to mitigate the next pandemic.

The COVID-19 pandemic has had a significant impact on economies, and 143 of WHO’s 192 member states are to adopt “austerity measures”, including public spending cuts next year, while the Russia’s war in Ukraine and the climate crises further strain countries’ budgets.

The Pandemic fundrecently set by the World Bank, has an annual “funding gap” of $10 billion, the G20 leaders recognized following their meeting in Bali on Wednesday.

But this week, the Geneva Global Health Hub (G2H2) described the Fund as an “obsolete funding model dependent on colonial charity” when launching its report, “Financial Justice for Pandemic Prevention, Preparedness and Response”.

“There is certainly no shortage of money in this world, but redirecting it to advance health after the pandemic requires bold action. Instead, the international community continues to pursue outdated and opaque models, such as the recent Pandemic fundsaid Mariska Meurs of Wemos, co-author of the report.

The G2H2 report offers a number of options for funding stronger health systems to fight pandemics, one being debt cancellation.

Several emerging and developing countries were in a severe debt crisis long before the COVID-19 pandemic, while many other countries emerged from the pandemic with higher and more unsustainable debts.

“In low-income countries, debt increased from 58% to 65% between 2019 and 2021. Thirty countries in sub-Saharan Africa saw a debt-to-GDP ratio above 50% in 2021,” according to the report.

“Research from 41 countries shows that those with the highest debt payments will spend on average 3% less on essential public services in 2023 than in 2019,” according to the G2H2 report.

In addition, between 75 million and 95 million people would be pushed into extreme poverty by the end of 2022, according to the World Bank.

Debt cancellation and climate reparations

Nicoletta Dentico, co-chair of G2H2 and co-author of the report.

“If the G20 had canceled all payments due in 2020 from the 76 most indebted countries, it would have freed up $40 billion for a pandemic response. If the cancellation had included 2021, the amount would have been $300 billion. Debt is a virus, and debt cancellation is the vaccine the world needs before the debt crisis explodes,” said Nicoletta Dentico, co-chair of G2H2 and co-author of the report.

Debt cancellation is not such a far-fetched idea in light of the ‘loss and damage’ that rich industrialized countries owe to developing countries for the devastation caused by their greenhouse gas emissions, the report argues .

While the World Bank keeps talking about a “debt crisis”, it is the countries of the North that are in debt because “it is their ecological debt that must be paid”, Dentico said.

Global warming caused $6 trillion in global economic losses between 1990 and 2014, and it was time for “financial justice”, she added.

Health cuts in the name of “austerity”

Isabel Ortiz, director of the global social justice program at the Joseph Stiglitz Initiative for Policy Dialogue at Columbia Universitysaid there was a “tsunami of austerity cuts” ahead – yet these have always led to health sector cuts that have set countries back.

Prior to the Ebola outbreaks in West Africa in 2014, the International Monetary Fund (IMF) forced Guinea, Liberia and Sierra Leone to adopt austerity measures, including limiting the number of security guards. they could hire and capping the salaries of health workers, which affected their response to Ebola, according to the report.

G2H2 co-chair Baba Aye of Public Services International said austerity measures as part of fiscal consolidation had mainly led to “a massive deterioration in health conditions for entire populations”.

“This economic model has enslaved the countries of the South to multiple financial dependencies, restricted their fiscal space, distorted their economic and human development and impoverished them,” Aye said.

Austerity was usually accompanied by the commercialization and privatization of public health services – yet “people have suffered the most during COVID-19, where there has been privatized health care or funding cuts” , added Aye.

Despite this, the World Bank has deployed its “private first” approach – including in health – through its “strategy of maximizing financing for development”, added the G2H2.

Meanwhile, the IMF, after a brief increase in spending during the Covid-19 pandemic, has resumed pushing for “fiscal consolidation” in country programs and lending, the report said.

But there are better alternatives to austerity-related public spending cuts, Ortiz said, including raising taxes on businesses and wealthy individuals.

“For example, we can raise taxes on corporate profits, financial activities, wealth, property, natural resources, and digital services like Amazon,” Ortiz said.

Argentina, Iceland, Spain have announced special taxation of windfall profits in the energy sector, she added.

“All human suffering caused by austerity cuts can be avoided. There are alternatives. Even in the poorest countries, governments can increase their budgets to ensure quality public services and universal social protection by examining financing options such as fairer taxation, debt reduction and illicit financial flows. said Ortiz.

Isabel Ortiz, director of the global social justice program at the Joseph Stiglitz Initiative for Policy Dialogue at Columbia University

Illicit financial flows to tax havens

According to the G2H2, illicit financial flows (IFFs) are another drain on public resources that can only be tackled through radical action.

Many of these flows involved the expatriation of profits from the countries where they were generated to tax havens.

The Eastern and Southern Africa region lost $7.6 billion in tax revenue in 2017 alone, due to “tax base erosion and profit shifting to tax havens”, according to the report.

At the UN General Assembly in 2022, the Africa Group tabled a draft resolution calling for negotiations towards a UN convention on tax cooperation, building on the longstanding call of the G77 and China to establish an intergovernmental process at the UN to combat global tax abuses. .

“This initiative should at least receive a strong indication of support under the Intergovernmental Negotiating Body (INB) for the pandemic agreement at the WHO,” G2H2 said.

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