Germany and Mongolia Convert €29 Million Debt into Public Health Investments with Global Fund Support
09 December 2024
ULAANBAATAR, MONGOLIA – The Federal Republic of Germany, through KfW Development Bank, and the government of Mongolia, through the Ministry of Finance, signed today a landmark agreement to convert €29 million of Mongolia’s debt into public health investments. With the new funds, Mongolia will enhance access to TB care, improve case detection and treatment, and expand HIV services for key and vulnerable populations. The country will also use the investment to transition to a more integrated and efficient health system.
The agreement was signed under the Global Fund’s Debt2Health initiative [ download in English | Español | Français ] , an innovative financing mechanism designed to encourage domestic financing for health by converting debt repayments into lifesaving investments in public health programs. Under individually negotiated “debt swap” agreements, a creditor nation foregoes repayment of a loan when the beneficiary nation agrees to invest all or part of the freed-up resources into a Global Fund-supported program.
Germany – the second largest European donor to the Global Fund and the fourth largest public donor overall – has been the leading supporter of the Global Fund’s Debt2Health mechanism, both in piloting the concept in 2007 and in supporting the scheme as a creditor in multiple subsequent transactions.
The G20 Joint Finance and Health Task Force actively supports such debt-for-health swap arrangements as part of a broader strategy to strengthen health financing in low- and middle-income countries, addressing debt burdens and improving pandemic preparedness and universal health coverage.
Javkhlan Bold, Minister of Finance of Mongolia, said: “This debt conversion agreement exemplifies Mongolia’s commitment to strengthening its health systems and achieving lasting health outcomes. With the support of Germany and the Global Fund, we can address critical health needs in our communities and enhance the resilience of our health sector.”
Helmut Kulitz, Ambassador of the Federal Republic of Germany to Mongolia, said: “This debt conversion is a new and innovative element in our cooperation with Mongolia. By redirecting resources towards Mongolia’s health priorities, we are enabling sustainable development and strengthening national resilience. This is a significant contribution to the country-wide improvement of Mongolia’s health system.”
Frank Bohnet, Director of KfW Development Bank, said: “The signing of this debt swap agreement marks a significant step in our long-standing and trustful financial cooperation with Mongolia. This project reflects our commitment to support Mongolia in enhancing its health care services and ensuring that affected people receive necessary treatment and support.”
Peter Sands, Executive Director of the Global Fund, said: “Debt2Health is a transformative mechanism that strengthens health financing and improves access to care. We commend Germany and Mongolia for their leadership in leveraging innovative financing to tackle infectious diseases like tuberculosis and HIV, while also enhancing pandemic preparedness. We hope this inspires other countries to explore similar approaches to advance global health.”
Since its inception in 2007, the Debt2Health mechanism has generated close to US$330 million in health funding. Debt swap agreements have involved a range of countries, including Australia, Germany and Spain on one side; and Cameroon, Côte d’Ivoire, Democratic Republic of Congo, Egypt, El Salvador, Ethiopia, Indonesia, Jordan, Mongolia, Pakistan and Sri Lanka on the other side.
The Global Fund is committed to continue developing and implementing practical, innovative finance mechanisms to increase the impact against the three diseases. These solutions complement government spending and amplify domestic health financing.