Past events

World Aids Day 1 December: Background note for campaigners

AIDS and Third World Debt - the vicious circle

Despite world leader's promises to end the debt crisis, Developing Countries are still handing over millions of pounds each year in debt interest repayments, leaving many of them spending more on debt payments to the rich than on health care for their own people.

Meanwhile Sub-Saharan Africa is suffering under another crisis. 25 of the world's 36 million people living with HIV/AIDS are in this region. In 2000, 2.4 million people died from AIDS in Sub-Saharan Africa alone 8.8% of 15-49 year olds there are suffering from HIV/AIDS.

The debt and the AIDS crisis are inextricably linked. Debt payments are diverting funds from health and education services, assisting the spread of HIV/AIDS. In addition to the devastating impact the epidemic is having on people and their families, AIDS is reducing countries' work force, productivity and economic growth rates, making the debt burden even heavier to bear.

More and faster debt relief and cancellation are needed if Developing Countries are to combat AIDS.

Debt exacerbates AIDS in 2 ways:

1.Annual debt service payments

Each year indebted governments in Sub-Sahara Africa spend a significant proportion of their national budget servicing their debts. For years the diversion of resources to service debt has drained funds from all aspects of health and education services, such as training staff and investing in infrastructure. The cumulative impact has been a severe deterioration in services in Sub-Saharan countries.

2. Debt relief conditions

For over fifteen years the IMF and World Bank have imposed conditions to the granting of loans and, more recently, debt relief. In the past, these conditions consisted of packages of reforms known as Structural Adjustment Packages (SAPs), which required countries to focus on reducing government spending and increasing export earnings. Since December 1999, SAPs were unpopular and have been replaced by conditions drawn from Poverty Reduction strategy Papers (PRSPs). Under the HIPC initiative, indebted country governments must draw up PRSPs and get them endorsed by the World Bank and IMF.

Although more resources are now being channelled into spending in health and education, in other respects PRSPs look very similar to the old SAPs. The model of economic growth being promoted in PRSPs continues to rely on export-orientated industrialisation. Consequently, large numbers of people continue to migrate from their rural home communities to urban areas, export processing zones, and other commercial sites in order to find work. This migration fuels the spread of HIV/AIDS.

Reduced public expenditure, as required by the SAPs/PRSPs, has several knock-on effects. The introduction of user fees for health services leads to reduced access to health services because poor people have to pay for medical care, all drugs, investigations, AIDS testing, treatment for sexually transmitted diseases etc. Most cannot afford to do so and therefore receive little medical help. Many are dying without simple drugs for pain or infection.

Similarly, user fees for education lead to children, particularly girls, being removed from school. It has been shown in many studies that illiteracy means poorer child care and health care for a family. If a woman cannot read or write she has difficulty accessing information about health and child care. This also produces an increase in illiteracy within the population, who are less able to learn about HIV/AIDS. The resulting low status of women increases their vulnerability to poverty and infection.
Some mothers and girls turn to prostitution to cover extra schooling costs, increasing their risk of contracting HIV/AIDS

Decreased spending on health and education leads to a reduction in the quality and quantity of facilities e.g. a lack of equipment and fewer and less well-trained staff. Lack of treatment for STIs increases susceptibility to HIV infection. While lack of TB prevention and treatment means many people with AIDS die quickly.

Finally, cuts in the quality and the amount of food after withdrawal of food subsidies means more people are malnourished, which increases their risk of infection.

The effects of health cuts in Zambia
- Steep increases in user fees
- poor maintenance of hospitals and rural health centres
- a reduction in outreach programmes (with rising fuel costs)
- a scarcity of even cheap and simple drugs
- a scarcity of paper to keep health records including child growth monitoring
- health personnel without pay for several months
- nurses, doctors and technicians have to find extra employment, or emigrate.
- staff morale at an all-time low and absenteeism high.
- private health clinics flourish in mainly urban areas.

AIDS exacerbates the debt crisis:

HIV/AIDS weakens economies by striking a number of key areas at once. As the number of workers effected with HIV/AIDS increases, this results in;
- Reduced labour productivity and efficiency,
- Reduced profitability, due to company health payments and reduced efficiency and productivity.
- Reduced national savings, as a result of less income, means less capital available for government investment, leading to lower growth rates.
- Fewer workers able to pay tax so less money for governments to invest or spend on social services.
Whilst governments try to spend more on combating AIDS, they have less resources to invest in the productive economy, thus reducing growth rates.

New Trust Fund for AIDS

World leaders have announced a new Global Trust Fund for AIDS and other killer diseases, meaning that AIDS is finally receiving attention. However, the fund, although welcome, is unlikely to reach the $7-10 billion a year that UN Secretary General Kofi Annan says is needed. Just $1.3 billion is in place - about as much as Africa spends on debt repayments every six weeks.

Countries struggling with a debt crisis and an AIDS crisis, will only see an improvement if the two are tackled simultaneously. They need substantial new resources and new thinking. Debt relief and cancellation are a vital and effective way to deliver resources to Developing countries for the fight against HIV/AIDS.

The Way Forward

Multi-lateral agencies (e.g. the World Bank and IMF) should increase and speed up debt cancellation for the worlds most Heavily Indebted Poor Countries.

The World Bank and IMF should immediately assess the impact of the conditions attached to debt relief. Where recommended policy reforms (e.g. reduced government expenditure) exacerbate the HIV/AIDS crisis, these recommendations should be rethought.

WDM Scotland November 2001