SENT VIA EMAIL AND FED EX

August 13, 2004

Rodrigo de Rato y Figaredo
Managing Director
International Monetary Fund
700 19th Street, N.W.
Washington, DC 20431

James D. Wolfensohn
President
World Bank
1818 H Street, N.W.
Washington, DC 20433

Dear Mr. Rato and Mr. Wolfensohn:

As you know, in 2003, almost five million people became newly infected with HIV, the greatest number in any one year since the beginning of the epidemic. At the global level, the number of people living with HIV continues to grow—from 35 million in 2001 to 38 million in 2003. In the same year, almost three million were killed by AIDS; more than 20 million have died since the first cases of AIDS were identified in 1981. The World Health Organization (WHO) has estimated that 6 million of us living in the developing world need antiretroviral therapy now, yet only 440,000 people living with HIV/AIDS in these countries receive these medications.

Global organizations and individual countries are setting ambitious health and development goals. The WHO has set the target of getting 3 million people living with HIV/AIDS in developing countries on anti-retroviral therapy by the end of 2005. The United States has committed to treating 2 million people with HIV/AIDS. The United Nations has established Millennium Development Goals that include reversing the spread of AIDS, tuberculosis, and malaria by 2015; reducing the child mortality rate in 2015 by two-thirds compared to 1990, and; reducing the maternal mortality in 2015 by three-quarters compared to 1990.

Much will be required to meet these goals, including significant financial resources, community involvement, and strong government commitment. They will also require human resources—the doctors, nurses, and other health care workers who provide the health services needed to meet these goals. Unless greater attention is given to developing human resources, these goals almost certainly will not be met. Many low-income countries are facing serious shortages of health care workers, which are most severe in sub-Saharan Africa, the region hardest hit by the AIDS epidemic.

Overcoming these shortages and achieving health and development goals will require significant financial investments. Yet macroeconomic concerns are interfering with the ability of many African and other countries in Asia, Latin America, the Caribbean and the former Soviet Union to increase their health sector spending, including urgently needed funds for HIV/AIDS and human resources. The policies include ceilings on countries' overall spending, resulting in caps on health sector spending, and restrictions on the civil service budget, which may lead to freezes in health worker hiring and salaries. The ceilings may limit the ability of countries to accept large amounts of financial assistance, especially unexpected assistance.

We recognize that your organizations might not be directly involved in setting ceilings on health sector spending, that these are national decisions. However, these national decisions are the inevitable consequence of the need to keep spending within the overall budget ceilings that your institutions do promote. As a result of these decisions, funds that might otherwise be channeled to the health sector are unavailable. Consequences are measurable in ill health and even death. We appreciate your desire to ensure macroeconomic stability, and do not doubt that it is driven by a genuine concern for the well-being of the poor, of ordinary people. Macroeconomic stability will not nourish us or treat our illnesses, however. We need firstly, strong, well-funded, health systems. Macroeconomic policies are making this more difficult to achieve.

The effect of macroeconomic policies has been described in a recent report by Physicians for Human Rights (PHR). We concur with PHR's analysis and recommendations.¹ Thus, we are asking that the IMF, World Bank, ministries of finance of developing countries, and other partners develop new policies to ensure that macroeconomic constraints do not limit effective and productive spending of developing countries on health, education, and related sectors, or salaries and hiring of workers in these areas. One possibility would be to increase flexibility around spending limits and the macroeconomic targets, such as inflation and fiscal deficits, upon which those limits are based. The flexibility would enable whatever limits or targets exist to expand to accommodate unexpected external assistance or domestic spending in these sectors that is higher than originally planned. Another possibility would for your organizations to revise any economic targets—such as overall government spending or overall spending on civil servant—to exclude these sectors. Insulating these sectors from overall budget targets would prevent these targets from conflicting with the imperative to increase spending for health, education, and related areas. Targets for these sectors would remain to assist in planning. The changed policies should be publicized among all stakeholders, including finance, health, education, and other national ministries.

If this new policy cannot be designed and implemented immediately, we ask that your organizations take the following steps at once. We believe your organizations should immediately issue joint or separate statements announcing that the IMF and World Bank will not withhold loans or grants, suspend or cancel programs, or otherwise penalize countries that break overall spending ceilings because of increased spending in health, education, and other sectors and activities needed to promote human development. Such activities include increasing salary and benefits to health staff and hiring new health personnel. We also would hope that these statements reiterate your support for additional spending in these sectors, including on human resources. Your July 2004 note on "The Use of Grants in Low-Income Countries" is heartening in this regard, as it welcomes increased grant aid to low-income countries and recognizes that achieving the Millennium Development Goals will sometimes require significant levels of foreign assistance. We encourage your organizations to build on this note.

Even before a new policy is adopted, we urge you to immediately encourage flexibility in budget ceilings in health, education, and other sectors central to human development, as well as to urge that countries implement a moratorium on any restrictions on hiring, salary, and benefits in these sectors. We hope that your staff will actively share these statements—and the understandings of the importance of increased funding in these areas that they represent—with key government officials, including in finance ministries.

Furthermore, we encourage your organizations to publicize the precise nature of existing economic restraints that may limit substantially higher country spending on health and other social sectors, and to create mechanisms for on-going transparency of macroeconomic policies and how they impact the health and education sectors. Such mechanisms should welcome NGO input.

We understand that making exceptions in spending for health or education-related programs or the acceptance of foreign assistance in these areas would represent a departure from the IMF's and World Bank's current policies and strategies, but we believe that such exceptions are necessary if these countries are to adequately respond to the HIV/AIDS epidemic. We would like to meet with you at your earliest convenience to discuss these matters. Please direct all correspondence regarding this letter to Gregg Gonsalves at Gay Men's Health Crisis at 119 West 24^th Street, New York, NY 10011 (phone: 212-367-1169; email; greggg@gmhc.org).

Sincerely,

NOTE: If an email bounces back to you from GMHC, please copy email to my personal account at gregggonsalves@earthlink.net.

Gregg Gonsalves
Director of Treatment and Prevention Advocacy
Gay Men's Health Crisis
119 West 24th Street
New York, NY 10011
Phone: 212-367-1169
Mobile: 646-250-8130
Fax: 212-367-1235
Email: greggg@gmhc.org or gregggonsalves@earthlink.net

1. Physicians for Human Rights, An Action Plan to Prevent Brain Drain: Building Equitable Health Systems in Africa, Boston, MA, June 2004 (available at: http://www.phrusa.org/campaigns/aids/pdf/braindrain.pdf)