New debt relief project for health programmes launched by UN-backed fund

Germany and Indonesia signed a debt conversion accord today, breaking new ground in financing the war on the world’s three most dangerous infectious diseases by tying 50 million Euros of debt relief to Indonesia’s investment of half of that money into health programmes through the United Nations-backed Global Fund to Fight AIDS, Tuberculosis and Malaria.

Germany is the first donor to support the debt conversion programme of the Global Fund, launched at the G8 summit of industrialized nations in 2001 at the urging of then UN Secretary-General Kofi Annan, and has worked alongside the Fund to develop the concept and modalities of the Debt2Health Initiative. Indonesia is a pilot country of the initiative.

“Debt2Health is a win-win situation for all: it increases predictability for the Global Fund to do its important work, Indonesia strengthens the health system in the country and Germany lives up to its responsibility in the fight against AIDS, tuberculosis and malaria,” German Development Minister Heidemarie Wieczorek-Zeul said.

The idea behind Debt2Health is to apply the well-established instrument of debt swaps to financing public health programmes, Global Fund Executive Director Michel Kazatchkine said. “A significant number of countries which do not qualify for debt relief through existing multilateral initiatives still spend as much as a fifth of their export earnings on servicing debt while at the same time struggling with high disease burdens.

“Debt2Health makes it possible for a country to receive economic relief while its citizens benefit from health services. This type of investment in health promises tremendous benefits for all,” he added.

In April, the Fund’s Board approved a two-year pilot phase for Debt2Health in up to four countries. While Indonesia is the first to have completed a deal, Kenya, Pakistan and Peru are lined up to benefit from this new financing initiative during its pilot phase.