Article Appeared in Croakey on 8 October 2017
Editor: Melissa Sweet Author: Leila Stennett
Many low-income countries face significant challenges to their capacity to fund priority health areas in the next five years, according to a new report.
The report, Progress in Peril? The changing landscape of global health financing, says in the next five years at least 24 low-income countries are facing a “transition” period when they will lose external financing, often from multiple sources, because their economies have grown.
Transition can pose serious risks to national budgets, health systems, and ultimately health outcomes, according to the report.
Leila Stennett, Campaigns Manager for RESULTS International Australia, and a contributor to the report, writes below that financing agencies need more extensive and flexible assessment criteria for when countries make a transition.
These should take into account factors such as health inequalities, the capacity of individual governments to raise additional revenue and operate effective health systems, and governments’ willingness and capacity to engage with and serve the interests of vulnerable or disadvantaged groups.
Leila Stennett writes:
A term getting increased attention in the development sector at the moment is “transition”. In this context, it refers to countries experiencing a phase-out of bilateral and multilateral support from agencies including Gavi, the Vaccine Alliance and The Global Fund to Fight HIV, Malaria and Tuberculosis and concessional support from The World Bank.
All of these agencies use a country’s Gross National Income (GNI) as a key criterion to determine whether or not the country is eligible for funding. When the GNI per capita exceeds a certain level, the donors begin to withdraw or transition aid out of the country.
As all of the agencies use similar criteria, this can mean that they lose a high proportion of aid funding within a few years. On paper, middle income countries may be able to replace aid funding with their own resources; however, what happens on paper and what happens in practice doesn’t always match up.
A transitioning country is similar to a person who receives a social security benefit – such as a single mother with two children who also works part-time – and then receives small pay rise from her employer. The pay rise is good news and she has worked hard for the increase but it affects her income just enough that she loses several means-tested benefits – her pension is cut, she also loses her subsidised travel card and receives reduced Family Benefit Part A.
On paper, her family should be better off but in reality their net income and standard of living will barely change. In domestic policy discussions, this is called the low-income trap. In our example, the family loses assistance from all these sources simultaneously and perhaps without time to prepare. This leaves the family at risk of falling backwards into, as the bus fare to work and medications are now less affordable.
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