Post by Admin on Jan 28, 2024 22:45:36 GMT
Economic storms threaten to cast health adrift
The Lancet
Published:January 27, 2024DOI:https://doi.org/10.1016/S0140-6736(24)00131-4
www.thelancet.com/journals/lancet/article/PIIS0140-6736(24)00131-4/fulltext
Is anyone listening to the World Bank's Chief Economist? Many countries, says Indermit Gill, are “on a path to crisis”. The poorest countries are “stuck in a trap” that threatens to “obstruct progress on many global priorities”. “Without a major course correction, the 2020s will go down as a decade of wasted opportunity.” Gill's main concern, as outlined in a series of World Bank reports, is the paralysing amount of debt, exacerbated by soaring interest rates, faced by many low-income and middle-income countries (LMICs). As governments struggle to service their debt obligations, spending on public services, such as health and education, is likely to be slashed. Gill's comments are a dire warning of difficulties ahead for the global health community. How should countries respond?
First, they should understand the scale of the problem. The statistics are stark. Debt is increasing and outpacing economic growth in many LMICs. According to the Centre for Global Development, LMIC governments spent 2·21% of gross domestic product on health in 2020, not much more than the 1·97% spent on interest payments. Development assistance for health, on which many of the poorest countries rely, reached unprecedented levels during COVID-19, up to an estimated US$37·8 billion in 2021 and 2022. Yet, according to the World Bank, LMICs paid a record $443·5 billion to service their debts in 2022 alone. Debt repayments are projected to grow by 10% for 2023–24, and by nearly 40% for low-income countries. The poorest are being hit the hardest.
Second, they must understand that widespread cuts to public sector spending would be a disastrous misstep—on both moral and economic grounds. Investment in health is an investment in people, and with it, development, prosperity, and societal resilience and security. A report released at the World Economic Forum concludes that addressing the women's health gap could boost the global economy by at least $1 trillion annually by 2040. Now is not the time for finance ministers to sideline health.
Third, they need to recognise that dangers to health from a new era of austerity go far beyond health programmes. As Terje Eikemo and colleagues report in The Lancet Public Health this week, health is intimately dependent on education. The quantity of education received shows a dose–response relationship with all-cause adult mortality. Each year of additional education reduces mortality risk by, on average, 1·9%—and by as much as 2·9% for younger age groups. The authors conclude that their study “supports calls for increased investment in education as a crucial pathway for reducing global inequalities in mortality”. Instead of cutting public sector budgets, this is a moment to increase investments in a broad range of social programmes that protect and advance health.
Yet many countries have finite budgets and creditors are coming knocking. What else can they do? There are domestic measures that can bolster public sector spending. As reported in a World Report, Tanzania has a range of options to finance its plans to achieve universal health coverage, including progressive taxation, widening the tax base, and introducing levies on soft drinks, alcohol, and cigarettes. But most countries under financial strain turn to belt-tightening policies that see social protections suffer. 11 countries that are eligible to borrow from the World Bank's International Development Association are in debt distress, with another 28 at high risk. For countries at risk of default, bailouts by international institutions are notorious for imposing stringent austerity conditions. Economic growth can lessen the risk of debt, not to mention alleviate poverty and support development. But how do governments balance an aggressive economic growth agenda with probable damage to the natural systems that underpin planetary and human health? This tension has yet to be fully resolved by the health community.
The obvious international response is debt relief. The Bridgetown Initiative is a proposal by Mia Mottley, Prime Minister of Barbados, to reform the international financial system. Mottley recommends giving countries immediate liquidity support, low-interest debt restructuring, drastically increased development lending, and private sector green investment. She also called for more representative and equitable financial governance and a more just trade system. Her ideas will feed into this year's Summit of the Future in September and next year's Finance for Development Conference. However, the acute threat facing countries cannot await this pedestrian timetable. With wars and imminent elections distracting many world leaders, prospects for action seem bleak. But countries need to invest in their people, and many require debt relief to do so effectively. To ignore Gill's warnings risks devastating human consequences.
The Lancet
Published:January 27, 2024DOI:https://doi.org/10.1016/S0140-6736(24)00131-4
www.thelancet.com/journals/lancet/article/PIIS0140-6736(24)00131-4/fulltext
Is anyone listening to the World Bank's Chief Economist? Many countries, says Indermit Gill, are “on a path to crisis”. The poorest countries are “stuck in a trap” that threatens to “obstruct progress on many global priorities”. “Without a major course correction, the 2020s will go down as a decade of wasted opportunity.” Gill's main concern, as outlined in a series of World Bank reports, is the paralysing amount of debt, exacerbated by soaring interest rates, faced by many low-income and middle-income countries (LMICs). As governments struggle to service their debt obligations, spending on public services, such as health and education, is likely to be slashed. Gill's comments are a dire warning of difficulties ahead for the global health community. How should countries respond?
First, they should understand the scale of the problem. The statistics are stark. Debt is increasing and outpacing economic growth in many LMICs. According to the Centre for Global Development, LMIC governments spent 2·21% of gross domestic product on health in 2020, not much more than the 1·97% spent on interest payments. Development assistance for health, on which many of the poorest countries rely, reached unprecedented levels during COVID-19, up to an estimated US$37·8 billion in 2021 and 2022. Yet, according to the World Bank, LMICs paid a record $443·5 billion to service their debts in 2022 alone. Debt repayments are projected to grow by 10% for 2023–24, and by nearly 40% for low-income countries. The poorest are being hit the hardest.
Second, they must understand that widespread cuts to public sector spending would be a disastrous misstep—on both moral and economic grounds. Investment in health is an investment in people, and with it, development, prosperity, and societal resilience and security. A report released at the World Economic Forum concludes that addressing the women's health gap could boost the global economy by at least $1 trillion annually by 2040. Now is not the time for finance ministers to sideline health.
Third, they need to recognise that dangers to health from a new era of austerity go far beyond health programmes. As Terje Eikemo and colleagues report in The Lancet Public Health this week, health is intimately dependent on education. The quantity of education received shows a dose–response relationship with all-cause adult mortality. Each year of additional education reduces mortality risk by, on average, 1·9%—and by as much as 2·9% for younger age groups. The authors conclude that their study “supports calls for increased investment in education as a crucial pathway for reducing global inequalities in mortality”. Instead of cutting public sector budgets, this is a moment to increase investments in a broad range of social programmes that protect and advance health.
Yet many countries have finite budgets and creditors are coming knocking. What else can they do? There are domestic measures that can bolster public sector spending. As reported in a World Report, Tanzania has a range of options to finance its plans to achieve universal health coverage, including progressive taxation, widening the tax base, and introducing levies on soft drinks, alcohol, and cigarettes. But most countries under financial strain turn to belt-tightening policies that see social protections suffer. 11 countries that are eligible to borrow from the World Bank's International Development Association are in debt distress, with another 28 at high risk. For countries at risk of default, bailouts by international institutions are notorious for imposing stringent austerity conditions. Economic growth can lessen the risk of debt, not to mention alleviate poverty and support development. But how do governments balance an aggressive economic growth agenda with probable damage to the natural systems that underpin planetary and human health? This tension has yet to be fully resolved by the health community.
The obvious international response is debt relief. The Bridgetown Initiative is a proposal by Mia Mottley, Prime Minister of Barbados, to reform the international financial system. Mottley recommends giving countries immediate liquidity support, low-interest debt restructuring, drastically increased development lending, and private sector green investment. She also called for more representative and equitable financial governance and a more just trade system. Her ideas will feed into this year's Summit of the Future in September and next year's Finance for Development Conference. However, the acute threat facing countries cannot await this pedestrian timetable. With wars and imminent elections distracting many world leaders, prospects for action seem bleak. But countries need to invest in their people, and many require debt relief to do so effectively. To ignore Gill's warnings risks devastating human consequences.