Germany and Indonesia Sign Landmark €75 Million Debt Conversion Agreement to Strengthen Public Health
16 December 2024
JAKARTA, INDONESIA – The Federal Republic of Germany and the Republic of Indonesia, with support from the Global Fund to Fight AIDS, Tuberculosis and Malaria (the Global Fund), have signed a landmark Debt2Health agreement, converting €75 million of Indonesia’s debt into transformative investments for public health. This agreement represents the largest Debt2Health swap to date and will significantly enhance Indonesia’s ability to combat infectious diseases and strengthen its health systems.
The converted funds will support malaria control efforts, enhance health system infrastructure, and promote local production of medicines. These initiatives are designed to improve diagnostic capabilities and build more resilient health systems across the country.
An additional focus will be placed on Indonesia's fight against tuberculosis (TB); the country has the second-largest TB burden in the world. The investments will be used to procure essential diagnostic tools and medicines, strengthen screening capacities and expand community outreach and public-private programs aimed at TB prevention and care.
The Debt2Health initiative, launched by the Global Fund, provides a unique financing mechanism that allows countries to transform debt into investments in national health priorities.
These investments will play a crucial role in Indonesia's shift from international to domestic funding for health, especially in supporting malaria control efforts. Debt swap funds are key to the country's transition roadmap, ensuring the long-term sustainability of Global Fund investments.
Germany, the second-largest European donor to the Global Fund and the fourth-largest public donor globally, has been a leading proponent of the Debt2Health mechanism. Germany pioneered the concept in 2007 and has since facilitated numerous debt-for-health swaps, setting an example that has encouraged other countries to participate. To date, Germany has been involved in 10 of the 14 Debt2Health transactions, significantly amplifying the impact and helping to address critical health funding gaps in countries around the world.
The G20 Joint Finance and Health Task Force actively supports debt-for-health arrangements as part of a broader strategy to reduce debt burdens, improve pandemic preparedness and expand universal health coverage in low- and middle-income countries.
Suminto, Director General of Budget Financing and Risk Management at Indonesia’s Ministry of Finance, remarked: “The signing of this Debt2Health swap agreement marks a crucial step in both governments’ shared commitment to better health nationally and globally. It is a shining example of how nations can come together, using innovative financial instruments to address global health challenges.”
Ina Lepel, German Ambassador to Indonesia, ASEAN and Timor-Leste, said: “This debt conversion marks a significant further step in the long-standing and trustful cooperation between Indonesia and Germany and will support the new government in reaching its goal for better public health.”
Burkhard Hinz, Director of the KfW Development Bank Office in Jakarta, added: “Through Debt2Health, we are unlocking the potential for meaningful investments in high-impact health interventions, directly improving the well-being of people and strengthening health systems in our partner countries.”
Peter Sands, Executive Director of the Global Fund, emphasized: “Redirecting financial resources toward health priorities not only helps us address urgent challenges like AIDS, tuberculosis, and malaria, but also strengthens health systems for future crises. This approach is an innovative, smart way to invest in the health of populations and accelerate progress toward global health goals.”
Since its inception in 2007, the Debt2Health mechanism has generated nearly US$330 million in funding for health programs. Debt swap agreements have been established with several countries, including Germany, Australia, and Spain, and benefiting nations such as Indonesia, Cameroon, Egypt, Ethiopia, Pakistan and Sri Lanka.
The Global Fund remains committed to developing innovative financing solutions that complement government spending, amplify domestic health financing, and maximize the impact of the fight against AIDS, TB and malaria.