The World Faces a Health Financing Emergency, WHO Warns -

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The World Health Organization (WHO) issued an alert on Friday, warning that global health aid is expected to drop by 35 to 40% this year compared to 2023 — a loss of $10 billion from the $25 billion allocated last year. This sharp decline comes at a time when the world is facing a major health financing emergency.

According to the UN agency, the U.S. government’s decision to freeze or halt aid programs, combined with several European governments’ public announcements of aid cuts, has caused “significant disruption to the aid ecosystem and national health systems.”

In addition to Washington, Australia, Belgium, Canada, France, Germany, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom, and institutions of the European Union have announced cuts to their aid budgets for this year.

Unseen Levels Since the Peak of COVID-19

The freezing or reduction of aid is already impacting the financing of health systems in several sub-Saharan African countries. “Some countries are reporting service disruptions at levels not seen since the peak of the COVID-19 pandemic,” said Dr. Kalipso Chalkidou, WHO Director of Health Economics, during a press briefing in Geneva.

In many of these countries, U.S. assistance was the primary source of external aid. It accounted for up to one-third of current health expenditures in countries like Malawi, and around one-quarter in Mozambique and Zimbabwe.

The WHO notes that this drop in aid comes after “decades of underinvestment” in health by national governments, making donor funding an essential component of health financing. Since 2006, external aid per capita in low-income countries ($12.8 in 2022) has consistently exceeded national public health spending, which has hovered around $8 per person.

Growing Household Impoverishment

Only a handful of sub-Saharan African countries have fulfilled the commitment made in Abuja in 2001 to allocate 15% of national budgets to health. In most cases, countries remain far from this target. On average, only 7% of public spending in WHO African Region countries is allocated to health.

According to the Geneva-based agency, without swift action to reallocate budgets toward health, the drop in donor funding could lead to a further rise in out-of-pocket spending.

This would weaken financial protection and worsen household impoverishment.

“As a result, not only are the poorest countries hardest hit by aid cuts, but the poorest people within those countries are also likely to suffer the most,” added Dr. Chalkidou.

Mobilizing “New Revenues”

However, due to the “debt explosion” in many sub-Saharan African countries, it will be more difficult to make health “a greater priority in government budgets — even though it should be.”

“African governments, at the continental level, are spending twice as much on debt servicing (14% of their combined GDP) as they are on health,” noted the WHO official.

To prioritize health in budgets, developing countries must fund their own health systems to achieve self-sufficiency. This requires the mobilization of “new revenues.”

“Better taxation, including health taxes, is good for both public finances and public health,” said Dr. Chalkidou, advising developing countries to “tap into untapped sources such as sovereign wealth funds, pension funds, and public development banks.”