After the boom, the bust

After the boom years of the early 21st century now come the savage cuts to government services. As in the rich world, so it is in the poorer countries on the planet (those in the middle seem to be on an entirely different trajectory), except that the budgets being cut in developing countries are the essential services that are supposedly protected in the richer north, and they’re being cut because of rich world profligacy not out-of-control spending by poor country governments.

This is the back story to Sarah Bosely’s lament for impending cuts to the UN’s Aids programmes. It is a sorry story, and the likely consequence that some Aids sufferers will lose out on treatment is a tragedy, but there are several alternative tellings of this story that occurred to me.

1. How big was your boom?

If any part of the aid sector has boomed over the last decade or so it was surely the fight against HIV/Aids. Compared to malaria and other big killer diseases HIV/Aids received a greatly disproportionate share of the funds. UNAids people I know regularly talked in sums of  several million dollars at a time. Shiny new HIV/Aids treatment clinics were built right next to existing health centres which were then left to rot. Briefcase NGOs sprang up everywhere to absorb all the money being thrown at the sector. Villages received up to a dozen different Aids awareness trainings from different groups: pay the per diems or give out enough free t-shirts and people will show up, but they were bored of the message. Still the money flowed …

Guys, did you seriously not see this one coming? You thought the good times were just going to carry on forever? You didn’t think to squirrel some money away for a rainy day? (Ok, that was unfair, your budgetary procedures probably don’t allow it.) Maybe funding is just returning to the level that you could reasonably expect? Some robust belt tightening after the big splurge could maybe do you as much good as the UK’s debt-soaked consumers?

2. What budget discipline?

The immediate cause of these cuts may be recent profligacy by rich country governments, but to excuse their developing country brethren would be quite hypocritical. I’m insufficiently an expert to compare their sins with the Greeks’, but I would imagine that failing to account for outstanding debts from this year when preparing next year’s budget as they do around here must rate pretty high on the fiscal mismanagement chart of shame. I’ve also witnessed quite shameful splurging of funds before an election, leaving the country floundering the year after. These are the sorts of sins you can get away with when half your budget is provided by donors. I imagine international bond markets are rather less forgiving.

Dambisa Moyo famously favours drastic cuts to aid (20% per year for 5 years, ending at zero), replacing it with, amongst other, bond financing. I doubt the cuts in overseas development assistance will quite reach such proportions, but we may be about to find out what year one of Moyo’s programme of tough love would look like.

I very much doubt that there has been much in the way of serious planning in developing country treasuries for what to do if aid were suddenly to shrink dramatically, other than to complain very loudly about how badly it is hurting their country, especially the poorest people. This is part of the aid bargain, as outlined by Linda Polman; when aid funding drops recipient governments don’t divert money from the defence budget to make up the difference.

Should we just allow recipient countries to get away with such piss poor risk management? Or should we be applying some rather stronger medicine in the hope they start to live up to their responsibilities? I know Ms Moyo would approve …

3. Donor myopia, again?

Once again, promising programmes are being cut in their prime. Funding is phased out, and there’s no-one there to take up the slack. Yep we’re back in that ol’ complete-lack-of-sustainability trap again. Gosh, we haven’t been here before, have we?

Donors wouldn’t dare cut medication to Aids sufferers in their own country; this properly comes under obligatory recurrent spend, not an optional extra to be cut. The argument that cutting now will only further escalate costs in future seems pretty straightforward. I mean you’d have to be pretty myopic to see this as a saving to be made … I’m far from an Aids expert, but doesn’t the possibility of drug resistant strains developing also threaten our patients in the West? Maybe it’s time someone came up with a cleverer financing mechanism such that once we committed to providing antiretroviral drugs to someone, the funds to cover those costs for the rest of that person’s life were immediately set aside. Then there couldn’t be any more such nonsense. It also might have soaked up a big chunk of that boom funding.

Big variations in funding levels like this also make it very hard for developing countries to plan for the long term. Who knows when the money will be there and when it won’t? Hence a much greater proportion of funds in the boom times gets spent on short term fixes and fripperies.

So which story is right?

I don’t really know enough about the situation to say for sure which version is the most accurate. My guess is all three sides of the story have more than a smidgeon of truth – they’re certainly not contradictory. Saying everyone is to blame can sometimes be like saying no-one is to blame, but there can’t be too many managers involved in HIV/Aids programme in developing countries who are entirely blameless, and pointing the finger at the next person won’t help too much. But expect the Aids sufferers to lose out before those programme managers do.

As for all of us, I guess we’ll just have to hunker down, and wait for the next boom.


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