Germany and Indonesia sign landmark €75 million debt swap deal to strengthen public health – press releases

Germany and Indonesia sign landmark €75 million debt swap deal to strengthen public health

December 16, 2024

– The Federal Republic of Germany and the Republic of Indonesia, with the support of the Global Fund to Fight AIDS, Tuberculosis and Malaria (the “Global Fund”), have signed the landmark Debt2Health agreement, transforming €75 million of Indonesia’s debt into transformational investments for the general public health sector. This agreement represents Debt2Health’s largest swap up to now and can significantly enhance Indonesia’s ability to combat infectious diseases and strengthen its health systems.

The converted funds will support malaria control efforts, improve health system infrastructure and promote local drug production. These initiatives aim to enhance diagnostic capabilities and construct more resilient health systems across the country.

Additional emphasis will likely be placed on Indonesia’s fight against tuberculosis (TB); the country has the second highest tuberculosis burden on the planet. The investments will likely be used to buy essential diagnostic tools and medicines, strengthen screening capabilities, and expand public-private programs for TB prevention and social welfare.

The Debt2Health initiative launched by the Global Fund provides a novel financing mechanism that permits countries to show debt into investments in national health priorities.

These investments will play a key role in Indonesia’s transition from international to domestic health financing, especially in supporting malaria control efforts. Debt swap funds are central to the country’s transformation roadmap, ensuring the long-term sustainability of Global Fund investments.

Germany, the second-largest European donor to the Global Fund and the world’s fourth-largest public donor, is a significant supporter of the Debt2Health mechanism. Germany pioneered the concept in 2007 and has since facilitated quite a few debt-for-health swaps, setting an example encouraging other countries to participate. To date, Germany has engaged in 10 of 14 Debt2Health transactions, significantly increasing its impact and helping to shut critical gaps in healthcare financing in countries around the globe.

The G20 Joint Task Force on Finance and Health actively supports debt-for-health arrangements as a part of a broader strategy to scale back debt, improve pandemic preparedness and expand universal health coverage in low- and middle-income countries.

Director General of Budget Financing and Risk Management on the Indonesian Ministry of Finance, noted: “The signing of the Debt2Health Swap Agreement is a key step in the two governments’ shared commitment to improving health at home and globally. This is a great example of how nations can come together using innovative financial instruments to address global health challenges.”

The German ambassador to Indonesia, ASEAN and East Timor said: “This debt conversion represents a major next step within the long-standing and trust-based cooperation between Indonesia and Germany and can support the brand new government in achieving its goal of improving public health. “

director of KfW Development Bank’s Jakarta office, added: “With Debt2Health, we are unlocking the potential for significant investments in high-impact health interventions, directly improving people’s well-being and strengthening health systems in our partner countries.”

Executive Director of the Global Fund, emphasized: “Redirecting financial resources to health priorities not only helps us address urgent challenges such as AIDS, tuberculosis and malaria, but also strengthens health systems to cope with future crises. This approach is an innovative, smart way to invest in population health and accelerate progress towards global health goals.”

Since its inception in 2007, Debt2Health has generated nearly $330 million in funding for health programs. Debt swap agreements have been concluded with several countries, including Germany, Australia and Spain, benefiting countries corresponding to Indonesia, Cameroon, Egypt, Ethiopia, Pakistan and Sri Lanka.

The Global Fund stays committed to developing progressive financing solutions that complement government spending, increase national health financing and maximize the impact of fighting AIDS, tuberculosis and malaria.