TREASURY is willing to address the 2 percent Intermediated Money Transfer Tax burden on recipients of the Global Fund money.
By Kudakwashe Pembere
This follows complaints by recipients implementing health programs funded by the Global Fund, that Finance Minister Professor Mthuli Ncube’s 2 percent tax is wading into forbidden territory. The Global Fund team had a meeting with the Finance Minister over the 2 percent issue and domestic resource mobilisation.
In an exclusive interview with HealthTimes, Grant Management Division Head Mr Mark Edington said they had fruitful deliberations with the Treasury boss. The Global Fund in its agreements with the Zimbabwean government is immune to taxes given its massive contribution in ensuring improved health in the country.
“We had a good and productive meeting with the Honourable Minister of Finance and his staff. He fully understands the challenges for the Global Fund with the 2% tax, given that our donors fund the Global Fund out of their tax dollars, and do not want to see those being used to pay tax in other countries.
“The Agreements we have signed with the Government of Zimbabwe are also clear that we are exempt from taxes.
Mr Edington added that Prof Ncube showed remorse by promising to address the 2 percent tax.
“He agreed to look carefully at the situation and how to resolve it, and reiterated the Government’s commitment to domestic resource mobilization,” he said.
On the sidelines of the signing ceremony of the US$12 million E8 grant in Harare last Thurdsday, Mr Edington explained that their visit was to meet Prof Ncube over a myriad of issues.
“It’s not about the 2 percent tax. It’s one of the topics. But it’s perfectly normal practice when I visit the country so that I meet with both the Ministers of Health and Finance. The Minister of Finance is critical to make sure there is sufficient funding for the health system and that the counterpart financing that the government has agreed to provide as part of our grant agreements is actually provided,” he said.
He added that in the meeting they would give Prof Ncube a crash course on how the Global Fund operates.
“A number of steps are in place for it to be done, it is not yet been done. Given the honourable minister of finance is relatively new, we will be explaining to him how the Global Fund works, and the importance of counterpart financing.
“We will discuss the 2 percent electronic tax, and a number of items just general to make sure there is a strong and functioning health system. Because Zimbabwe has a very strong human capital for the health system so the question will be how can that be put to work to produce the best results,” Mr Edington said.
Meanwhile, the Global Fund is pleased with strides made by Zimbabwe in combatting HIV, TB, and Malaria although the economic crunch is making the gains achieved appear futile.
“From the Global Fund perspective, Zimbabwe has delivered good results, against the three diseases. We would like to see these results continue and the progress continue. We want to make sure that the gains that have been achieved are not jeopardised in any way. I think the primary concern right now is the impact of the economic crisis on the health sector. Its just probably the primary risk to maintain the gains against continuing to make progress. So that is our primary concern and we are talking to a number of people in government, our donor partners, our development partners, about how best to mitigate those risks,” Mr Edington said.
Mr Edington said The Global Fund will not reduce its funding towards the country if replenishment levels they expect are met.
“The global fund allocates money based on two things that is disease burden and economic level. So Zimbabwe has made good gains over the past years against the three diseases. Over the years we have signed grants of about US$1, 1 Billion with Zimbabwe. The current three year cycle has grants of about US$470 million which about US$400 million if for HIV, US$50 million if for malaria and the rest for TB.
“So assuming that the Global Fund has a successful replenishment in October from our donors, and it’s above the levels we had last , we will not expect to decrease investments to Zimbabwe. It will be dependent on how much money we raise for replenishment,” Mr Edington said.
Prof Ncube tweeted of the meeting on Monday. “Meeting with The Global Fund (HIV, TB, Malaria) team from Geneva, led by Mark Edington. The Global Fund is an important funder for the health sector, and Zimbabwe supports the replenishment drive for the Fund,” he said.