International Monetary Fund and
HIV/AIDS
The International Monetary Fund (IMF) was
formed as a twin organization of the World Bank in 1944. It was given two
mandates: to ensure that member countries do not maintain chronic debts with
each other, and to ensure that member countries pursue policies that would not
place undue hindrance to the free flow of trade.
Basically, when the economy of a member
country is not well, the IMF gives a diagnosis and then prescribes economic
policies that the country should follow in order to resuscitate its economy and
achieve macroeconomic stability. The most obvious IMF prescriptions require a
government to balance its budget, devalue the local currency, and change the
economic structure by giving incentives to the private sector (e.g.
privatization).
A government can balance its budget in two
common ways: It can either increase taxes in order to generate more revenue that
would enable it cover all its expenses during the fiscal year, or simply cut its
expenditures. But the IMF does not want taxes to be increased, because this in
its opinion could hinder investment. So, the IMF asks the government concerned
to cut its spending on sectors such as health, education, and other social
services. Some people have argued that the tight budget ceilings which the IMF
requires poor countries to follow have increased unemployment in low-income
countries, which has brought communities much suffering. But the IMF counters
that this results in availability of cheap labor which then encourages
multinational corporations or foreign direct investment (FDI) into those
countries which help boost up their economies.
But as the HIV/AIDS pandemic continues to
cause more suffering in communities after at least two decades, governments and
stakeholders have been strategizing in different ways and introducing programs
to scale up their fight against HIV/AIDS. Such programs include HIV/AIDS
prevention education, voluntary counseling and testing for HIV, prevention of
mother to child transmission (PMCT), antiretroviral treatment, research and
development, and monitoring and evaluation. All these programs require large
sums of money. Poor countries that cannot afford to fund all their HIV/AIDS
programs on their own receive funding from foreign governments and donors.
However, due to the fact that the IMF requires low-income countries to follow
tight budget ceilings, it is difficult for them to absorb all the funds they
receive and spend them on HIV/AIDS projects. Additionally, since governments of
low-income countries are asked to cut spending on sectors such as health and
education, it means few people are trained as health workers, and the government
cannot increase wages for doctors and nurses in order to retain
them.
What matters to the IMF is the attainment
of low inflation, although its policy prescriptions for low-income countries
directly hinder the fight against HIV/AIDS. It is a paradox because this
pandemic is negatively affecting the same economies which the IMF endeavors to
stabilize and see them grow.
"Fund irate over NGO claims
that it blocks progress on AIDS" (Bretton Woods
Project)