The challenge of the global financial crisis
As the High Level Task Force on Innovative International Financing for Health Systems (HLTF) commence their work in Doha at the end of November, they do so within a worsening global financial crisis. History shows that finding new sources of funding and increasing aid levels is difficult when donors face financial constraints at home.
The HLTF was announced at the UN High Level Event in New York in September. It is co-chaired by UKs Prime Minister Gordon Brown and World Bank President Robert Zoellick and consists of several high-ranking officials, among them Norwegian Prime Minister Jens Stoltenberg. The Task Force's mandate is to "contribute to filling national financing gaps to reach the health MDGs through mobilizing additional resources; increasing the financial efficiency of health financing; and enhancing the effective use of funds."
That mission now turns out to be even more challenging than anticipated and might also lead to a stronger focus on priority-setting of existing resources.
Six-fold increase in health aid since 2000
After stagnating in the 1980s and 1990s, aid to health has risen sharply from the early 2000s and onwards - spurred by a period of solid global financial growth and possibly also by the urgency brought on by the Millennium Development Goals. In 2006, DAC countries' bilateral aid to health amounted to USD 8.6 billion. Multilateral aid rose to USD 4 billion, an increase largely due to the creation of the Global Fund to Fight AIDS, Tuberculosis and Malaria (GFATM).
Global philanthropy is also remaking the relationship between the world's rich and poor. Overall aid provided by foundations, corporations, non-governmental organisations, and individuals, some going towards health, has doubled over the past decade and may soon overtake "official" foreign aid.
Overall aid might be reduced
As a recent article in the Washington Post points out:
"If history is any guide, poor nations could be hit hard as wealthy countries cope with financial bailouts and potential downturns. Stung by a stock market and real estate crash, Japan slashed aid by some 44 percent between 1990 and 1996. Although Tokyo ramped up assistance in subsequent years, it still is spending less on foreign aid now than it did in 1990, according to David Roodman, a researcher at the Washington-based Center for Global Development."
The Nordic countries also serve as an example in Roodman's paper, as these underwent financial difficulties in the early 1990s. Norway slashed foreign aid by 10 percent and Sweden by 17 percent. Finland, which underwent a harsher economic contraction than its neighbours, cut foreign aid about 62 percent.
The role of innovative financing
As noted by researchers at the Washington-based Brookings Institution, innovative financing means different things to different people. For some, it is about raising new monies for global health work, while others consider the new mechanisms as a way to make existing aid spending more effective. Several models and experiences are now being analysed, such as "front-loading" disbursements to accelerate health results like the International Finance Facility for Immunization; increasing certainty in order to bring down prices of commonly-purchased medicines and goods such as the Advance Market Commitment; and establishing incentives through results-based aid such as the Global Fund and GAVI. A key task will be to define the exact problem or barrier to be solved and identify the most appropriate mechanisms.
Undoubtedly these topics will be elements in the discussions when the Task Force meets in Doha at the Follow-up International Conference on Financing for Development later this month. Not only will they need to clarify what role innovative financing can play to reach the health MDGs. They will also have to look at possible implications the global financial crisis might have for health aid in the years to come. Safeguarding the poor and striving for efficiency gains at all levels should remain central principles.