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Impact of financial crisis on health: a truly global solution is needed

Statement by WHO Director-General, Dr Margaret Chan
1 April 2009

WHO last issued a public statement on the financial crisis in the days prior to the Washington meeting of the G20. While acknowledging the severity of the problems faced by G20 leaders and their partners in government around the world, the statement went on to say, "It is not yet clear what the current financial crisis will mean for low-income and emerging economies, but many predictions are highly pessimistic."

Over the course of the last four months, as forecasts for economic growth in all parts of the world have been revised ever downward, it has become increasingly clear that those predictions were only too accurate. The crisis is now truly global. It strikes at a critical time for health in all parts of the world.

  • In low-income countries, the impact of the crisis is being felt through reduced demand for exports, tighter access to capital, less foreign direct investment and falling remittances. Consequent unemployment too often comes with no protective safety net. As incomes fall, public sector services become the more favoured source of health care at the very time that government revenues to finance them are under greatest pressure. Information is still patchy, but we know that at least seven ministries of health in Africa - including some of the poorest - have already been notified that the budget for health will be cut as the result of the crisis. Others anxiously await the next budget cycle.
  • When local currencies are devalued the cost of imports rises. Essential life saving medicines may become either unavailable or unaffordable. We know that costs of medicines rose in previous crises - we are already seeing the same effect again as prices rise, not just in Africa but in Europe and Central Asia (up to 30%). The potential impact extends beyond the individual and family to societies as a whole. Governments have made commitments to keep people living with AIDS on treatment. We have to take the steps needed to ensure that these promises can be upheld. Drug prices are rising in some of the countries affected by drug-resistant TB. Failure to contain this threat to public health has consequences well beyond national borders.
  • Many high-income countries with ageing populations have been positioning themselves for anticipated increases in spending on health and pensions. Several are in the process of undertaking complex and politically challenging reforms. We must be concerned when we see evidence that plans to set aside resources and create the fiscal space to address the future health needs of the elderly are being shelved as the crisis deepens.

Health is a global concern. It is a vital investment in economic development and poverty reduction. It is central to the achievement of the Millennium Development Goals. Access to health care is a fundamental entitlement and responsibility of governments the world over. Reducing exclusion, extending universal benefits and protecting people from impoverishment are common elements of a growing number of national health policies. Managing expectations and containing spiralling health care costs is critical to the continuing solvency of many economies in the industrialized world. Maintaining the integrity of systems that protect us from cross-border health threats, that detect and respond to outbreaks, pandemics and emerging diseases is of concern to all nations. Progress in one direction depends on all the others. We compromise on any one of these elements at our collective peril.

  • A global crisis requires global solidarity and actions. Maintaining levels of health and other social expenditures is critical to protect life and livelihood and to boost productivity. Where countries do not have adequate reserves and where revenues have fallen, the shortfall will have to come from aid. It will need to be skilfully managed for maximum impact. But the critical point is that commitments to maintain levels of aid are not an additional extra to the recovery agenda, but an integral element for its success.
  • The impact of the crisis will vary country by country, but to sustain levels of health there is a growing consensus as to what needs to be done. We need good quality real-time information to guide the response; we need to be able to identify groups most at risk; to ensure that safety net programmes are well targeted so they reach the most needy; to seek efficiencies in spending where possible; to recognize that crises often offer opportunities for reform; to sustain spending on prevention (which is often the first casualty of spending cuts); and where external aid is required to ensure it is as effective as possible.
  • People are the ultimate target of economic recovery. WHO's concern is people's health, but health is dependent on many factors: employment, shelter, nutrition, education. In some countries, economic stimulus packages target people's health directly (through reducing health insurance payments, or building less number of clinics). But a well-planned infrastructure programme will have multiple benefits: rural roads increase access to markets, boost farmers’ income, and reduce maternal mortality. Assistance to micro finance schemes helps keep children in schools, empowers women, and boosts the long-term health prospects of their families.

The financial crisis has shown the downside of global inter-dependence. The response must demonstrate the opposite - the benefits of global cooperation. There are positive signs: several countries have made public their commitments to maintain levels of social sector spending. Most donors have promised to keep to their commitments for aid spending. Many countries have decided to forge ahead, despite the crisis, with reforms that will make their health systems fit for purpose as they face major demographic and social changes. The UN is working hard on ensuring a more joined up response. The equation between crisis and opportunity is fast becoming the cliché of the moment. Nevertheless, I would argue that a truly global approach to economic recovery, which puts peoples’ lives and livelihoods at its centre, will mean that we could emerge with systems that are stronger, more efficient and more equitable than those that are currently under such serious threat.

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