EU ruling boosts Africa plan for vaccine fund

BRUSSELS – The European Union’s statistics office removed a potential obstacle to a proposal to fund vaccination schemes in Africa yesterday when it ruled money spent on the plan would not count towards donors’ debt.

Under the British proposal, funding for vaccines for Africa would come from bonds issued by a new organisation, the International Finance Facility for Immunisation (IFFIm). The plan could raise an extra US$4 billion over the next 10 years, saving an extra 5 million lives, Britain has said.The IFFIm, a pilot project for a much broader aid scheme for Africa, would service the bonds thanks to regular contributions from donor countries.The plan has raised questions as to whether the donors would have to take on their share of the IFFIm’s debt obligations.But Eurostat ruled yesterday that it would not.”The borrowing of IFFIm should be considered as the borrowing of a non-government unit and not as the borrowing or debt of donor countries,” Eurostat said in a statement.But it warned that the ruling applied only to the IFFIm and should not be seen as an automatic precedent for the bigger IFF scheme which Britain estimates could double aid spending to US$100 billion a year by securitising donors’ aid budgets.The IFFIm’s lack of impact on debt levels is important to European Union members because under EU rules they cannot have public debt higher than 60 per cent of gross domestic product – even though it is a threshold few respect.The annual cash spend by donor countries on IFFIm would, however, be considered as government expenditure and such increase their potential budget deficits, Eurostat said.EU members must keep their budget deficits below 3 per cent of GDP and almost half of the 25-nation bloc is above the limit.The euro zone’s three biggest economies, Germany, France and Italy, are all in breach of the debt and deficit rules.- Nampa-ReutersThe plan could raise an extra US$4 billion over the next 10 years, saving an extra 5 million lives, Britain has said.The IFFIm, a pilot project for a much broader aid scheme for Africa, would service the bonds thanks to regular contributions from donor countries.The plan has raised questions as to whether the donors would have to take on their share of the IFFIm’s debt obligations.But Eurostat ruled yesterday that it would not.”The borrowing of IFFIm should be considered as the borrowing of a non-government unit and not as the borrowing or debt of donor countries,” Eurostat said in a statement.But it warned that the ruling applied only to the IFFIm and should not be seen as an automatic precedent for the bigger IFF scheme which Britain estimates could double aid spending to US$100 billion a year by securitising donors’ aid budgets.The IFFIm’s lack of impact on debt levels is important to European Union members because under EU rules they cannot have public debt higher than 60 per cent of gross domestic product – even though it is a threshold few respect.The annual cash spend by donor countries on IFFIm would, however, be considered as government expenditure and such increase their potential budget deficits, Eurostat said.EU members must keep their budget deficits below 3 per cent of GDP and almost half of the 25-nation bloc is above the limit.The euro zone’s three biggest economies, Germany, France and Italy, are all in breach of the debt and deficit rules.- Nampa-Reuters