Debt2Health
Investing Debt into Health
Debt2Health is a development financing instrument that enables sovereign debt to be converted into targeted investments in health. Instead of repaying debts to a creditor country, debtor countries invest the freed-up resources into programs on HIV/AIDS, tuberculosis, and malaria, or to strengthen their health systems. The mechanism was developed in 2007 by the Global Fund with support from Germany and has since been implemented in several countries.
How does Debt2Health work?
The principle of Debt2Health is clearly defined: A creditor country, such as Germany, waives repayment of certain debts from previous development cooperation. In return, the debtor country commits to investing an agreed amount in defined development and health programs. These funds are channeled through the Global Fund, which is responsible for implementation, monitoring, and reporting. The original debt is removed from the German government’s books. As a result, financial resources remain in the country, are used for clearly defined purposes, and support existing national health programs, without creating new debt.
Germany’s debt conversion facility
Germany has its own debt conversion facility, anchored in Chapter 23 of the federal budget. This facility allows the German government to forgo repayments of up to €150 million annually from previous development loans, provided the funds are redirected toward agreed development objectives. The facility is a dedicated budget line and operates independently of Germany’s regular contributions to the Global Fund. Debt conversions under Debt2Health therefore do not directly compete with other budget allocations. Germany has used this instrument multiple times in the past, with ten debt conversion agreements implemented to date. These arrangements are considered technically and administratively well established.
Role of the Global Fund
A key feature of Debt2Health is its implementation through the Global Fund, which provides:
- established grant allocation and oversight mechanisms
- long-standing partnerships with national health authorities
- existing programs to combat HIV, tuberculosis, and malaria
- standardized procedures for monitoring impact and reporting
This enables Debt2Health to build on existing structures and deploy additional resources efficiently.
Opportunities and limitations
Debt2Health is not a comprehensive solution to debt crises and does not replace broader debt relief efforts. Nor is it a traditional form of debt cancellation. Rather, it is a targeted financing instrument that can mobilize additional resources for development and health programs. Its scope is limited, as only certain types of debt are eligible and bilateral agreements are required. At the same time, where conditions allow, the instrument offers a way to link debt reduction with measurable development impact. In recent years, Action against AIDS Germany has engaged extensively with Debt2Health as a Global Fund financing mechanism and has brought the topic into various political and public forums. This has included expert discussions and exchange events with members of parliament and other political stakeholders, focusing on the functioning, potential, and limitations of the instrument. Debt2Health has also been discussed at international conferences and panel discussions. A particular emphasis has been placed on incorporating perspectives from the Global South. Through interviews and public conversations, representatives from countries with direct experience of Debt2Health, including Indonesia, Pakistan, and Mongolia—have shared their insights. Their contributions have illustrated how debt conversions translate into concrete health programs, as well as the opportunities and challenges involved.
In this way, Debt2Health has been presented not only from an institutional perspective, but also through the lived experiences of affected countries and communities.
