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Info Service on UN Sustainable Development (Jun25/02) Penang, 23 Jun (Kanaga Raja) — The decision by the government of the United States to freeze or discontinue aid programmes, together with several public announcements by European governments to reduce aid, has created a significant disruption in the aid ecosystem as well as the national health systems, the World Health Organization (WHO) has warned. The WHO said health aid is projected to decline by 35-40% in 2025 compared to the 2023 baseline, decreasing by US$10 billion or so from US$25.2 billion in 2023. Speaking at a media briefing at the United Nations Office at Geneva on 20 June, Dr Kalipso Chalkidou, Director for Health Financing and Economics at the World Health Organization, said: “Well, I think it’s fair to say that the world is faced with a health financing emergency.” “The decision by the US government to freeze or discontinue aid programmes, coupled with several public announcements by European governments to drastically reduce aid has created significant disruptions in the aid ecosystem and to national health systems,” she pointed out. She said health aid is projected by WHO’s own assessments to decline by 35% to 40% in 2025 compared to the 2023 baseline, decreasing by US$10 billion or so from US$25.2 billion in 2023, adding that this is in real dollars. Dr Chalkidou said eleven Organization for Economic Cooperation and Development (OECD) member countries have announced in Q1 this year reductions in aid-related budgets for 2025 (Australia, Belgium, Canada, France, Germany, Netherlands, Spain, Sweden, Switzerland, the United Kingdom, and the United States, along with EU institutions). “This matters because in several sub-Saharan African countries, external aid plays a most significant role in the financing of health systems,” she emphasized. In the latest WHO Pulse Survey, countries are reporting disruptions in services at levels not seen since the peak of COVID-19. In most of these countries, the US Development Assistance for Health (DAH) was the main source of external aid, Dr Chalkidou said. US DAH represented up to 30% of current health expenditure in countries like Malawi or 25% in Mozambique or Zimbabwe, she noted. This is “a shock that’s not happening in a vacuum”, but comes after decades of under-investment in health by national governments, especially in low- and lower-middle-income countries, she stressed. “This has made donor funding a critical component of health financing in these countries, and has perpetuated effectively, aid dependency.” The WHO official said that since 2006, per capita external aid in low-income countries (US$12.8 in 2022) has consistently surpassed domestic public spending on health. “And to give you a sense of how much poor countries spend on health through public budgets per year, the per person per year amount is around 8 US dollars on health through public financing,” said Dr Chalkidou. She said only a handful of countries in sub-Saharan Africa have met their commitment (made in Abuja in 2001) to allocate 15% of their national budget to the health sector. “And what makes the situation even more difficult is that in addition to the systems being dependent on external aid, the second most important source of financing is out-of-pocket spending,” she pointed out. According to the WHO, while external aid accounted for 25% of total health spending in sub-Saharan African countries in 2022, out-of-pocket spending accounted for 35% and government spending for 33% on average. At the media briefing, Dr Chalkidou said this is money that poor households have to source and spend, giving up on other needs, including food and schooling in order to finance and access health services. The WHO official said that this is the most inequitable and least efficient way of financing a health care system. At the same time, she said it’s very difficult to suggest that governments in these countries actually pick up and fill the financing gap. “In many cases, this is not desirable either. We know that aid itself has suffered from inefficiencies. We know also that the burden of servicing their debt is huge,” she added. “Right now, we’re looking at about twice as much on average as a proportion of GDP being spent by the sub- Saharan African countries in servicing their debt as compared to health.” At the same time, due to all sorts of issues including illicit financial flows, “Africa is now, on a continental level, the most important, the biggest net creditor to the world,” Dr Chalkidou said, pointing out that Africa is actually exporting capital to other parts of the world, both public and private players. In terms of solutions, she said that what WHO is trying to do is work with countries, and support ministers of health and finance to understand, first of all, where the gaps are. “Because of the way aid has been channelled all these years, a lot of the time it’s not just about the financing gap, it’s about a visibility gap,” Dr Chalkidou explained. “So, governments and national treasuries find it very difficult to understand how the money has been channelled through systems – a lot of the time, parallel systems – and what exactly the money was going towards.” In this regard, she said it is important to try and understand where the gaps are, adding that another important gap is that of capabilities. She said that the systems running supply chains, procurement and information technology, a lot of the time for procuring medicines, have been run from the US or other centres, and it’s very difficult for countries to step in and fill that gap. “Our advice is also very much towards protecting the poorest because we know we have anecdotal evidence that what is happening currently is households are footing the bill.” Effectively, people are going into poverty because they have to contribute out-of-pocket to make up for the lost revenue from aid, said Dr Chalkidou. “We’re making a case for mobilising new revenue, including through better taxation and taxing things such as tobacco, alcohol and sugary drinks,” she added. “We know this is a public health intervention that works and can generate some revenue, but also generating efficiency.” In this context, she mentioned working again with countries to look at procurement approaches at the regional or continental level, and helping ministries of health fully execute the budgets that are allocated to them, reducing overheads and better integration of vertical programmes into government-run programmes. These are difficult things to happen in a very short period of time given how abrupt the aid cuts have been, she pointed out. “We’re also working with multilateral development banks to look at how we can enhance highly concessional lending towards the most cost-effective treatments going towards those people that are most in need.” “And we’re hoping that this bigger financial agenda will be aired and discussed and some actions taken post the Financing for Development Conference coming up in Seville,” said Dr Chalkidou. “We think this is absolutely critical. The universal healthcare coverage (UHC) matters, and ultimately as our DG says: UHC is a political choice,” she concluded.
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