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The Macroeconomic Framework and the fight against HIV/AIDS in Africa:
The cases of Ghana and Malawi


Policy Brief no. 3/2007

African Forum and Network on Debt and Development (AFRODAD)

SARPN acknowledges AFRODAD as a source of this document: www.afrodad.org
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HIV/AIDS has become a leading cause of death in the African continent. It not only constitutes a serious constraint to growth and stability of most African economies and societies, but has actually begun to destroy the hard-won development. Even countries with a relatively low national HIV prevalence rate have pockets of crises that are concealed by national statistics- clusters of people or specific locations where the prevalence rate is as high as 20 per cent or more. Over three quarters of total deaths from AIDS occurred in Sub Saharan Africa. More than 10 million children in the region had been orphaned by AIDS by 2005 (UN 2005). While the global prevalence rate is estimated at 1 per cent, the average for sub-Saharan Africa is over 9 per cent thus making the continent the highest incidence of the disease. HIV/AIDS thus constitutes a serious developmental challenge to not only policy makers but also policy implementers in Africa.

Addressing this state of emergency requires that governments operate outside the traditional restrictive macroeconomic policies and budget ceilings that have constricted some recipient governments from giving HIV/AIDS the attention it deserves. In this regard, governments need to assess their macroeconomic policy goals and impact on the pandemic. The region therefore needs stronger domestically led policy formulation and strong public institutions to develop a flexible macroeconomic framework to address the challenges posed by the disease. Sub Saharan countries must strive to move out of the tight macro-economic frameworks that are based on conditionalities imposed by the lending instruments of the International Monetary Fund. The implication is that fighting HIV/AIDS requires a broad socio-economic and political framework, requiring the input of all stakeholders.

In recent years, there have been increasing concerns about macroeconomic policy constraints interfering with the ability of many African governments to increase health sector spending and getting access to urgently needed funds for HIV/AIDS human resource development. The International Financial Institutions (IFIs) and, in particular, the IMF have been accused of undermining health care systems in many developing countries through conditionalities that favour budgetary ceilings as a panacea for macroeconomic stability. The economic policies sometimes affect overall spending, resulting in caps on the health sector, salary and recruitment of health workers and the acceptance of large amounts of financial assistance. IMF policies often require that countries forgo significant grants for health care in order to ensure macroeconomic stability1.

AFRODAD has conducted a two country study aimed at looking at the linkages between macroeconomic frameworks provided by the International Financial Institutions (IFIs) and the social spending, and in particular, the fight against HIV/AIDS in Ghana and Malawi. This study reviewed the major channels through which fiscal and monetary policies impact on public expenditure frameworks and how this, in turn, affects the ability of the countries under study to design and implement public programmes concerning those living with and affected by HIV/AIDS and assessing the debt positions of the case studies to see how the HIV/AIDS has impacted on their financial portfolios and planning abilities or vice-versa.


Footnote:
  1. A large coalition of NGOs representing people living with HIV/AIDS in 38 countries wrote a petition to the IMF and World bank managing directors in August 2004, demanding assurances that there will be no imposition of strict adherences to budget ceilings and inflation target and that there will not be blockade of funds available for the fight against HIV/AIDS. The petition signified major concerns of civil society organizations about the impact of the activities of IFIs on policy constraints in developing countries.


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