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What about debt cancellation to help prevent future pandemics?

‘Debt is a virus.’

debt cancellation pandemic

Debt cancellation and financial reforms – not “colonial charity” – should unlock billions in pandemic preparedness funding, says a health governance watchdog, which warns that a looming wave of spending cuts will damage frontline health systems.

Negotiations on a global pandemic treaty will start within weeks. But one of the biggest conundrums is how to pay to prepare for the next pandemic.

Global health authorities estimate that funding for pandemic preparedness and response falls short by $10 billion each year. The World Bank recently created a pandemic fund geared toward low- and middle-income countries. But critics describe it as a continuation of an “outdated funding model dependent on colonial charity”.

“This cannot be the world’s solution,” the Geneva Global Health Hub (G2H2), an association of civil society groups, warned in a recently released report.

Instead, debt cancellation should be one of the levers to fund stronger health systems and fend off pandemics, the report’s authors say.

Many developing countries were already facing dire debt crises before COVID-19, and the pandemic has pushed many economies – particularly small island states – further into debt distress. By next year, some 143 countries could adopt austerity measures, which could include public spending cuts to healthcare, according to a recent report by Oxfam.

Countries with the highest debt payments are projected to spend 3% less on essential public services next year compared to 2019, the G2H2 report says.

“Debt is a virus, and debt cancellation is the vaccine the world needs before the debt crisis explodes,” said Nicoletta Dentico, G2H2 co-chair and the report’s co-author.

Calls for debt cancellation have hit mainstream policy discussions in recent months, thanks in part to the focus on “loss and damage” funding and the economic impacts of the climate crisis. The recently concluded COP27 climate summit included a heavy emphasis on debt relief and calls to reform the global financial system – led by frontline countries least responsible for climate change, such as Barbados.

Just as vulnerable countries are pushing for climate justice, financial justice for pandemic preparedness is also key, the report says.

Health cuts in the name of austerity

There’s a long history of austerity cuts hurting health systems before public health emergencies, the G2H2 report warns.

Before the Ebola outbreak in West Africa in 2013-2016, the International Monetary Fund pushed Guinea, Liberia, and Sierra Leone to adopt austerity measures in part to pay off debt, including capping health workers’ wages and limiting new hires, the report argues. 

G2H2 co-chair Baba Aye, who also works with Public Services International, a global trade union federation, said austerity measures have mostly led to “a massive deterioration of health conditions for entire populations”. 

Isabel Ortiz, director of the Global Social Justice Program at the Initiative for Policy Dialogue at Columbia University, warned of a “tsunami of austerity cuts” ahead. But there are better alternatives, she said, speaking at the launch of the G2H2 report.

“Governments can increase their budgets to ensure quality public services and universal social protection by looking at financing options such as fairer taxation, reducing debt, and [money lost to] illicit financial flows,” Ortiz said.

This article was adapted from reporting published by Health Policy Watch. Edited by Irwin Loy.

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