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 (Médecins Sans Frontières, 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 programmes. To receive debt relief countries must provide the IMF and World Bank with a poverty reduction strategy. Most strategies 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 financing, state the authors. This is because the IMF requires that countries include the value of all new donor funding received for initiatives, such as scaling up antiretroviral treatment, 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.