Implications of Statutory Instrument 142 of 2019 on the Health Sector

THE government through the Ministry of Finance and Economic Development recently announced major changes in the monetary policy of Zimbabwe following the imposition of the Statutory Instrument 142 of 2019.

By Zimbabwe AIDS Network

Monetary policy is a macroeconomic policy that is laid down by the central bank of a country to show the financial plan of the government.

As the Zimbabwean economy imploded, characterized by hyperinflationary environment in 2008, the country abandoned its local currency, the Zimbabwean dollar, in April 2009 as the official currency and adopted the multicurrency regime with US Dollar as the main reference currency.

As result of the the monetary reforms, the country experienced improvements in Foreign Direct Investment (FDI) which recorded 33.3million net inflow in 2016 (World Bank, 2018), inflation rate reduced and stabilized hovering between -3% and 3% from 2009 to 2016 respectively (MoFED, 2018), domestic revenue reached $5 billion per fiscal year.

Significantly, there was fiscal balance in which was a key component to the obtaining macroeconomic stability which saw a positive rebound in various sectors, health included.

There was considerable progress recorded in the health sector as evidenced by health sector growth by more than 10% from 2010 – 2014 (National Budget Statement, 2018) by addressing issues such as exodus of health personnel and infrastructure bottlenecks.

The public health spending as a percentage of GDP was oscillating between 2 and 3.5% from 2009 to 2016 as compared to less than 1% from 2005 to 2008. Clearly, the dollarization era was messianic for the health sector as it accounts for the improvement in various health indicators such: as maternal mortality, morbidity, drug availability and uptake. Some of the milestones achieved are:

  • The identification of over 1.3million Persons Living with HIV (PLHIV) and over 1.2million of them being on ART (UNAIDS Progress Report, 2018)
  • A reduction in maternal mortality from 960 deaths per 100 000 live births to 614 per 100 000 live births as of 2017;
  • A reduction in neonatal mortality from 29 deaths per 1 000 live births to 23 per 1 000 live births; and
  • A decline in the HIV prevalence for adults (15 – 49 years) from 20.6% to 15%. (MoHCC, 2018)

It is imperative to safeguard these gains and strive to upscale health service delivery.

In November 2016, the Reserve Bank of Zimbabwe introduced bond notes in an attempt to cure the mismatch between electronic bank balances and physical cash balances, that is, addressing the debilitating liquidity challenges. Officially, the bond notes were pegged at par with the USD.

Thereafter, the 2019 February Monetary Policy introduced the interbank system that abolished a fixed exchange rate.

This development resulted in the increase in user fees by health service providers as well as negatively impacting on affordability, accessibility and availability of health services. On the 24th of June 2019, the RBZ introduced SI 142 of 2019 which officially abandoned the use of all foreign currencies as legal tender in Zimbabwe and iterated the introduction of official local currency.

It is against this background that ZAN believes SI 142 of 2019 presents the following scenarios:

  • Uncertainty resulting in speculative and panic buying of drugs by patients to secure adherence to treatment which may impact on drug stock levels.
  • Price hikes on essential drugs due to the up-surge in inflationary pressures emanating from financial instability and possible shortage of foreign currency.
  • Possible limited access to foreign exchange by private health service providers to procure medical supplies and commodities which are key to prevention and treatment retention.
  • Pharmacies either destock or demand punitive charges for drugs to hedge against losses because of the volatility of the local currency considering that more than 70% of medical supplies and commodities are imported.
  • Catastrophic costs to access health services, including those on medical insurance as service providers demand cash upfront or part payment in cash.
  • Donor fatigue- driven and fueled by policy incongruences especially considering the 2007 scenario when the RBZ sequestrated foreign currency accounts including humanitarian support from external support.
  • NGOs downsizing community responses because of the mismatch in service costs payable in USD versus the local currency.

Whilst ZAN acknowledges that from a government perspective SI142 of 2019 appears an economic masterstroke, it however raises unintended dire consequences for health delivery if not the entirety of social protection portfolio. Notably, the main external funding mechanism for social protection will be reviewing their positions on Zimbabwe.

For instance, the Global Fund, which is the biggest funding stream for HIV, TB and Malaria, is unlikely to lift the Additional Safeguard Measures. Other cooperating and development partners are equally likely to maintain a tight leash on direct funding to the state and at the same time evaluate their long-standing support channeled through Civil Society Organizations.

Secondly, the catastrophic costs associated with access to health care are an affront to the national thrust of achieving Universal Health Coverage. ZAN’s calls on policy makers to urgently institute measures to consolidate the health sector gains and at the same time gradually work on up-scaling service delivery to the vast majority who depend on the Public Health System.

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