In what could become a model for financing future development initiatives, six European governments will use a financing technique popular among credit-card companies to pay to immunize Africans against a range of deadly diseases, reports the World Bank press review Friday.
In a series of bond offerings that will begin next month, the six governments will securitize some of their future aid budgets in much the same way that credit-card companies securitize future repayments by borrowers.
– Through the mechanism of front-loading the aid, we can spend the money on vaccines sooner rather than over time, and thus save lives faster, said Jean Pierre Le Calvez, a spokesman for the Global Alliance for Vaccines and Immunization, which will manage the immunization program financed by the bond offerings.
The bonds will be issued by a special-purpose vehicle known as the International Finance Facility for Immunization (IFFIm).
In order to meet the IFFIms payment of interest and eventual repayment of principal on the bonds, the U.K. pledged 130 million US dollar annually over the next 10 years. France will contribute 100 million dollar, Italy 30 million, Spain 12 million and both Norway and Sweden 27 million dollar annually over the same period.
Funds raised by the bond issuance will go directly to the Global Alliance for Vaccines and Immunization, which will bring immunization services to the worlds 75 poorest nations, focusing on providing vaccines for yellow fever, Haemophilus influenza type B and hepatitis B.
The IFFIm will be overseen by an unpaid five-member board appointed by the six participating countries.
The IFFIm is being seen by the participating governments as a prototype for larger future schemes. The UK and France agreed earlier this week to start work on setting up a broader international finance facility, initiating a working group that will report to the autumn meetings of the World Bank and International Monetary Fund.
The British government hopes that broad international agreement can eventually be reached to launch an IFF to raise 50 billion US dollar (310 milliarder DKR) for health care and education initiatives in the developing world by 2015.
The US government says it can not participate in the IFFIm or any similar future initiative because its budget system does not allow for the long term commitments required by the securitization structure.
Kilde: www.worldbank.org
