Who Cares for the Future: finance gender responsive public services!

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On the eve of G20 Finance Ministers grappling with the biggest economic crisis in generations, ActionAid is calling for unprecedented collective action from African leaders ahead of the International Monetary Fund (IMF) and World Bank virtual Spring meeting, urging them to proactively agree a debt strike.

New research reveals how a new debt crisis has left health systems in Africa vastly underfunded and ill-prepared for the pandemic, with debt servicing far outstripping spending on health. ActionAid recommends a series of costed measures which could secure a cash injection of almost $1 trillion to tackle the immediate needs of the COVID-19 crisis.

Congo Brazzaville is spending five times as much ($1.4bn) on foreign debt repayments as on health ($259m). Despite the late arrival of coronavirus in Africa, its average ratio of deaths to cases is already higher than Italy, Spain and the US.

Kenya, which spent 36% of GDP on debt servicing in 2019, would have an additional $4bn to spend on public services if its external debt payments were suspended.

ActionAid's COVID-19 response recommendations could amount to a cash injection of $800 billion to avert a looming health and economic crisis by calling for:

  • Global South leaders to collaborate on a debt strike to afford progressive stimulus packages aimed at protecting people not corporations. This would immediately free up $50.4 billion for low income countries.
  • A one-time aid boost through the world’s richest countries committing long promised but undelivered overseas development assistance (ODA) totalling $500billion, for a COVID-19 emergency fund for low income countries.
  • Member states of the IMF should approve an emergency allocation of 3 billion Special Drawing Rights (SDRs) to keep weak economies afloat, as agreed after the financial crash of 2008. The proposal would put $250 billion at the disposal of African Central banks.

ActionAid’s new research shows how several countries - Kenya, Ghana and the Gambia – are spending more than three times as much on external debt repayments than on health.

By working together to declare a debt strike and immediately suspending payments, finance ministers would gain access to money already in their treasuries to respond to COVID-19.

Ghana has one of the highest debt servicing costs in the world, at 59% of GDP, spending $4.1 billion on foreign debt payments compared to $1.3 billion on health. An emergency external debt suspension would enable Ghana to double its 115,650 health-workers and still have $1 billion left over.

This data comes from ActionAid’s major new report, Who Cares for the Future: Finance gender responsive public services! which exposes the detrimental IMF loan conditions and austerity measures which have pushed 80% of low-income countries to plan for zero increase in public sector wages this year.

When countries are told to contain wage bills it means fewer doctors, nurses and frontline health workers in countries already desperately short of medics, the report finds. Two countries worst affected by Ebola – Sierra Leone and Guinea-Conakry - have IMF programmes that project a decline in health budgets.

The research goes on to outline how, after the COVID-19 recovery period, low income countries can double social spending by increasing their tax to GDP ratios by one percentage point each year. The report recommends how tax systems can be strengthened in a progressive way so that the wealthiest individuals and companies contribute to guaranteeing public services for all.

The study has costed how developing countries can afford to rebuild health, education and social protection systems ravaged by decades of austerity, to create free, fair and equal public services that liberate women from the burden of unpaid care work.

ActionAid estimates that if the report’s recommendations were implemented, it would reduce the amount of time that women spend on unpaid care and domestic work globally by nine billion hours every single day by 2030.