Debt Relief & National Economic Reforms Pitched as ‘Big Picture’ Global Health Solutions Ahead of G-20 Meeting   
WHO Director General Dr Tedros Adhanom Ghebreyesus and Mariana Mazzucato, chair of the new WHO Council on the Economics of Health for All.

An ambitious  wish list of global economic and fiscal  measures that the world should adopt to combat the COVID-19 pandemic has been floated by the World Health Organization- just ahead of a critical G-20 meeting of the world’s most industrialized nations this weekend. 

These include proposals for massive debt relief to debt-ridden countries and a re-direction of the IMF’s new offer of $US650 billion in “special drawing rights” away from richer nations to low- and middle-income countries.

The laundry list of macroeconomic and fiscal measures proposed by the new WHO Council on the Economics of Health for All, was detailed today at one of the final sessions of the World Health Summit.

Drafted by 10 top economists and health policy experts, Financing Health for All  pushes the classic debates over access to medicines and health systems investments  – into the realm of much broader fiscal and economic decisions that nations, both rich and poor need to make, according to the experts. That is, if they really want to beat down COVID-19 as well as prepare for the next pandemic.  

‘Donor mentality’ is part of the problem  

WHO Director General, Dr Tedros Adhanom Ghebreyesus

“It proposes a radical shift in economic thinking for global health,” said WHO Director General Dr Tedros Adhanom Ghebreyesus at the WHS session. He appeared with Mariana Mazzucato, Founding Director of the UCL Institute for Innovation and Public Purpose, and chair of the new health economics Council,  which was launched by WHO in May 2021. 

“Instead of looking at health as a piece of the economy, it’s time to look at how the economy can support the societal goal of health for all,” said the WHO Director General. 

“Neither existing market mechanisms, with their focus on short term returns, nor development funds alone are enough,” he added.

“They do not provide the global public goods on which we all depend, such as vaccines, nor do they address the major inequities, undermining equitable access.

“The council is proposing bold, concrete actions for governments and multilateral organizations in three major areas, creating fiscal space, the direction of investment, and the governance of public and private financing for how this does not just mean more money. It means making the better, smarter and sustained investments that are needed to achieve health for all.”

“We have to realize that this donor mentality is actually part of the problem,”said Mazzucato, “And that lots of the conditionalities that were set in the past on the loans provided to developing countries precisely made them weaker.

The key priorities outlined by the brief, prepared by the ten-member expert group includes proposals that would leverage change from global to national level so as to: 

  • Create more “fiscal space” for countries to invest more in health, including through measures like international debt relief, a global corporate tax rate and a greater allocation to low-income countries of newly available IMF special drawing rights; 
  • Reshape national, tax, regulatory and investment rules to make them more favorable to health-related investments, e.g. in health systems and vaccine and medicines manufacture;
  • Ensure stronger governance for private health markets – notably pharma innovators and manufacturers – using public regulations and investments  to “crowd in and direct private finance towards improving health outcomes globally and equitably.”

Other members of the Council include Vera Songwe, Executive Secetary of the Economic Commission for Africa; economists such as Jayata Ghosh, of the University of Massachusetts and Stephanie Kelton an expert on monetary policy at Stony Brook University;  investment banker Vanessa Huang, and global health professionals such as Ilona Kickbusch, founding director of the Geneva Graduate Institute’s Global Health Centre; Senait Fissehea, of the University of Michigan; and planetary health expert Kate Raworth, of Oxford University’s Environmental Change Institute.

More “quality money” – to fight the next pandemic 

Mariana Mazzucato, chair fo the new WHO Council on the Economics of Health for All

Just “more money” is not enough to drive bigger investments in countries with poor-performing health systems, stressed Mazzucato, it needs to be “quality money” – money that does not translate into more crippling loan repayments once the initial phase of the pandemic crisis has passed. 

“Multilateral organizations should negotiate debt relief for low and middle income countries in such an important moment,…. redirecting [IMF] Special Drawing Rights towards investment in health, and especially vaccines,” she said. IMF special drawing rights are not considered as loans in the traditional sense of the word, but rather bolster countries’ reserves and thus their overall economic stability.

“False constraints have been imposed on government’s fiscal spaces, often by multilateral institutions like the IMF and the World Bank.”   

Crippling debt restrictions and austerity measures traditionally have hit hardest on social welfare nets, including public health systems, meaning that low- and middle-income countries “weren’t allowed to create the kind of fiscal space that we highlight as the first key pillar,” she observed.

“Over time, we have to be better prepared and that preparedness needs to be, in the long run, built on the ability to have a distributed manufacturing and industrial capacity [for health products] globally. 

“Because this will not be the last pandemic, you know. As the permafrost melts, apparently, there’s going to be all sorts of other viruses that come about. Climate change and this health crisis are really interlinked.”

Along with debt relief the G-20 should advance credit rating reforms and “push for the enforcement of a minimum global corporate tax of at least 15%,” she added.  

National investment priorities 

Finance and health authorities need to work together more closely to expand local medicines and vaccine production and improve health systems.

But as the brief underlines, the challenge is not only to reduce international pressures, through measures such as debt relief, but also to “change mindsets within countries that impose internal constraints on spending” – often in the name of false economies and fiscal prudence. That means a better understanding and alignment in Finance Ministries, of the importance of health priorities.  

“The bottom line is that countries must reverse the harmful effects of an austerity approach to public administration and public finance reforms,” said Mazzucato. She pointed to Kerala State, in India, as an example of a region that fared better because it focused investment into public health systems. 

“Internal constraints on government budgets are not insurmountable and governments actually have more room for increasing the fiscal limits on investments for health than  they’re led to believe. 

“And it’s not just a matter of political choice, but also when a political will whether country can mobilize all the resources and levers that can to maximizing financing for health, such as innovative monetary policy, but also…, procurement policies using different levers –  grants, loans, procurement to really catalyze new solutions….

“When we go to war, money is found, and during a health pandemic, money has been found, but that has been too little too late,” she observed. 

Public-Private sector should share ‘risks and rewards’ of innovation  

Finally, public-private sector relationships around critical issues such as vaccines and medicines  innovation and manufacture need a reboot, the brief argues, sharing both the “risks and rewards” of innovation, in the words of Mazzucato – rather than leaving public entities to shoulder the risks while the private sector reaps most of the rewards.  

“We need public actors, we need philanthropies, but they need to work together in a different way,” she said. That means public contracts, loans,  grants and other incentives that are offered to the private sector to develop new and more innovative vaccines, tests and treatments also need to come along with stronger conditions about how the final products they create may be used or distributed. 

“And this can be done by redesigning the terms and the conditions, structuring contracts, grants, transfers loans and partnerships between public and private actors. 

“Precisely because the public sector puts in so much of the money – especially in the early stage when it’s more risky and more capital intensive, and uncertain – these critical market-shaping public investments should ensure conditionalities around pricing  – to make sure that we have access at the core -that we have vaccines that are globally accessible.

Innovation – global, end-to-end and governed collectively

In terms of intellectual property rights, she added that “it’s not about getting rid of patents, but we have to govern innovation and the patent system, with objectives in mind. 

“Making sure that patents are not too wide, too strong, hard to license upstream are core ways to govern the patent system.

“It’s not about getting rid of patents, we have to govern innovation, and the patent system with objectives in mind,” she said. “More broadly, we need to shape a conducive regulatory tax, industrial and economic policy environment to ‘crowd in’ all sorts of different sources of finance at the same time, ensuring that we get the greatest multiplier effect, the greatest impact on health for all. 

Ultimately, however, she stressed that global health innovation platforms need to be “global, end-to-end, and governed collectively –  shifting from a model where innovation is left to the market to a model aimed at delivering global common goods.”

Image Credits: Marco Verch/Flickr.

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