US is back but why WHO needs to be healthcare’s IMF

The good news for the moment is that WHO’s single largest donor, the United States, has retracted the former US administration’s move to withdraw its membership from the WHO. (Photo source: Reuters)

The World Health Organisation’s funding model that draws strength from voluntary contributions is ill-suited for handling global health crisis.

The ask is a humble sum and the pitch is to invest in health for all. Yet, the global guardian of public health, as the World Health Organisation (WHO) describes itself, is left scurrying for funds. Consider the two investment cases it presents: First, a chance to help provide a billion more people with universal health coverage, protect a billion more from health emergencies, and bring a further billion people better health and well-being. The ask: US $14.14 billion till 2023 – an amount, equivalent to the campaign spending in the just concluded elections in America.

With an annual budget of $4 billion, it adds just an additional $10 billion, which in a global context is also a piffling sum – India alone will have to set aside an equal amount if all its citizens are to get a COVID-19 vaccine free-of-charge, as is being sought by politicians. Yet, WHO remains underfunded.

The good news for the moment is that WHO’s single largest donor, the United States, has retracted the former US administration’s move to withdraw its membership from the WHO. Return of the US provides the much-needed comfort, as is apparent from the responses from the leadership at the WHO.

Time To ACT

More worrying is the funding gap faced by the second investment case. This is a much-wider global call along with other partners for funds specifically for combating COVID-19. In April last year, the ACT (Access to COVID-19 Tools)-Accelerator initiative was launched by the WHO, European Commission, and the Bill and Melinda Gates Foundation. As of 19 January, 2021, it faces a funding gap of $27.2 billion which is expected to reduce to $23.2 billion as projected funds are operationalized. Of these, the silver lining is COVAX, which is one of the three pillars (vaccines, treatments and tests) of the ACT Accelerator. It is aimed at providing the access to vaccines especially for the low-income funded countries. COVAX has already signed purchase agreements with Pfizer-BioNTech for 40 million doses and anticipates nearly 150 million doses of Oxford-AstraZeneca vaccine in the first quarter of 2021 thanks to its agreements with the Serum Institute of India (which makes this vaccine in India) and with AstraZeneca. All of it, it hopes sets it on track to deliver at least 2 billion doses by the end of the year, including at least 1.3 billion doses to 92 countries.

India is listed under lower-middle-income in the list of 92 countries. The only unanswered question is what is holding back WHO from giving pre-qualification to Serum Institute when it already has the vaccine in stock? Or is the plan to first get the vaccines from Pfizer and others and by the end of the year get the Serum doses?

At the heart of the WHO funding architecture is its model that depends on its member contributions – described as the “assessed contributions”. Even before the lockdowns-triggered financial pain hit nations, these contributions were down from $501 million in 2018 to $490 million in 2019. The bulk of the funding – more than three-quarters of the total financing – are “voluntary contributions.” These are from member states in addition to their assessed contributions and from other entities that the WHO refers to as “partners” and include the likes of Bill & Melinda Gates Foundation, GAVI Alliance, Rotary International, and European Commission. The problem with these is that while some allow for flexibility in spending, many tend to be earmarked for specific projects.

Money & The Muscle

Financial Express Online learns that WHO’s three review committees are looking at the two serious challenges: low assessed contributions and ways to strengthen the powers of WHO. Unlike, say an IMF or a WTO (World Trade Organisation), WHO plays only a technical role with no powers to penalize countries that do not abide by its recommendations. Also, it has become vulnerable and prone to getting bullied by a major donor, as was seen with the USA recently. These questions have now surfaced again laster year after China pledged increased lending.

The three committees are the pandemic preparedness response committee, the IHR (International Health Regulations) review committee, and the Independent Oversight and Advisory Committee.

Wealth In Health

The WHO sure needs more powers but its funding model apparently needs a review. “A global health organization like the WHO just cannot be at the mercy of voluntary contributions. Healthcare is too serious a matter to be left to such levels of uncertainties and unpredictability,” says Marti G Subrahmanyam, Charles E Merrill Professor of Economics, Finance and International Business at the Stern School of Business at New York University. He instead sees a case for having a more robust IMF kind of income model with broader access to funds. The IMF income sources include quotas from member nations, an endowment to fall back on, and an investment income. Each member country is assigned a quota (revised at regular intervals). Then, there is a Special Drawing Right (SDR) – an international reserve asset to supplement member countries’ official reserves. Finally, it holds gold, and profits from the limited sale of gold were used in 2008 to establish an endowment to help boost its lending capacity.

The argument is that the WHO needs strict capital allocations or an enforceable quota, which is not “contributions” and these should be in the form of equity with each member country committed to the sustainability of the organization like a shareholder, says Subrahmanyam.

Cutting The Flab

The WHO also needs to rein in its high-cost structure. In 2019, total staff (7,000 in all) and other personnel costs increased by US$ 60 million and adding up to 32 percent of total expenses, lower than the previous year’s 37 percent but still the largest expense outflow. WHO is also headquartered out of a rather expensive city in the world – Geneva.

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