“[F]or many developing countries and countries with economies in transition, excessive debt servicing has severely constrained their capacity to promote social development and to provide basic services to create the conditions for the realization of economic, social and cultural rights.’’
This blog series has offered an insight into the situation in four African countries where the level of public indebtedness is hampering States’ abilities to meet their legal obligations to fulfil their people’s right to health. As the series shows, there can be a range of causes for high levels of debt but regardless, the resulting debt service costs often restrict funding to healthcare. What is clear from the series, though, is that the global financial mechanisms in place for addressing unsustainable debt levels in developing countries are not fit for purpose.
As we saw in the case of Zambia, the conditionalities attached to the loan agreement with the IMF are placing additional burdens on people’s incomes. Furthermore, even though the agreement is for a loan amount of USD 1.3 billion, the IMF only released USD 188 million once the review was approved. One of the hurdles to this has been the requirement Zambia reach agreement with all official creditors concerning debt treatment and restructuring. A deal to restructure USD 6.3 billion was finally reached in June 2023 – 18 months after the country defaulted. Zambia is likely to have a 3-year grace period on debt repayments, with outstanding debt rescheduled over the next 20 years – continuing to limit the country’s long term ability to fulfil obligations to provide quality healthcare, goods and services without discrimination.
In Burundi, increasing internal and external pressures have weakened the government’s ability to provide adequate primary healthcare for the population. The situation is compounded by corruption and political uncertainty which threaten the stability of society and the economy. While there are positive developments such as prioritized social spending, improved tax administration and reform, Burundi is largely dependent on the easing of sanctions, increased donor support and debt relief to weather global crises, while addressing pressing socio-economic rights issues. In July 2023 the IMF approved a loan as part of an economic reform agenda. Time will tell if these conditions enhance or inhibit Burundi’s economy, and more importantly, the government’s resources and ability to address healthcare deficits.
In Malawi, the government has been relatively proactive in reaching out to creditors and negotiating relief. The IMF has also supported the economy by providing USD 88.3 million to supplement food security resources. The loan is currently interest free and the country is still required to pay it back within 10 years. Given the history of budget support to Malawi, further funding from the IMF is conditional on economic reform. Debt is compounded by challenges of corruption, rapid inflation, high donor dependence, limited revenue-raising opportunities, exposure to climate shocks and poor spending implementation. This means Malawi still falls short in their constitutional promise of ensuring funds are not diverted from providing available, accessible, acceptable, and quality healthcare.
In Uganda, the economy and citizens have been hit by the knock-on effects of global economic issues, the war in Ukraine and the Ebola outbreak in 2022. The rise in debt repayments and revisions to the budget, have meant health sector financing has suffered. In October 2023, the World Bank announced it would resume new funding to Uganda (halted in August 2023, after the Anti-Homosexuality Act was passed in May 2023). The World Bank has been a driver in financing health infrastructure in the country. A continued rise in debt, tax evasion and avoidance, and potential spillovers from the civil war in Sudan mean Uganda is unlikely to address primary healthcare needs in the short-term and fulfil its obligations to provide health services for all.
In all cases investigated, governments were optimistic about their commitment to healthcare financing, despite poor track records on budget credibility and implementation. In many instances, spending performance and delivery are related to the strength of institutions, the effectiveness of systems and possibly even capacity. Whatever the issue, the blog series analysis confirms these countries have insufficient resources to address the levels of need in the healthcare sector – never mind other budget priorities. In this context debt financing is one of the only avenues for improving resource levels. The conditionality, interest rate and terms of these agreements, however, are not always in the long-term interest of the people.
The diversity of creditors to African countries, lack of reform to the global financial architecture, and the case-by-case approach to debt treatment negotiations have undermined the development of a meaningful and comprehensive approach to Africa’s debt crisis. The HIPC initiative, MDRI, the Debt Service Suspension Initiative and now the Common Framework have only partly addressed the issue. Amnesty International therefore recommends:
- Timely debt relief for all countries in and at risk of debt distress and consideration of all options for such relief including debt restructuring and relief.
- Better coordination between multilateral, bilateral and private creditors to offer debt relief to all countries in or at risk of debt distress, including:
- Reform of the Common Framework for Debt Treatments – making the process more efficient, transparent, inclusive, and timely.
- More creditors participate in debt restructuring and relief efforts.
- Loan agreements provide for the suspension of payments in times of crises.
- Debt agreements do not include conditions that may undermine governments’ ability to meet their economic, social, and cultural rights obligations, including the right to health.
- The terms of bilateral, multilateral, and private sovereign lending are transparent and available for, and subject to, public scrutiny.
- Creditors should encourage and support borrowers’ efforts to enhance governance, promote transparency, increase domestic resource mobilisation, combat corruption, and improve budget credibility and implementation, as these factors significantly impact debt management and utilization of funds.