Malawi rejects World Bank AIDS loan because of existing debt burden

The Government of Malawi has refused a US$40 million loan from the World Bank aimed at slowing down the spread of AIDS in the country, calling instead for grants to help address the crisis.

Defending the government's decision, Deputy Health Minister Philip Bwanali said that it would be "immoral" to accept the loan as Malawi was already struggling under an external debt of over US$2 billion.

Malawi is among the countries hardest hit by the AIDS epidemic, with at least 14% of the population infected with HIV, the virus that can lead to AIDS. There is a desperate need for external resources to fund community development programmes that could curb the spread of HIV but, Mr Bwanali said, "the best thing the World Bank can do is to give us a grant.”

A New York Times report on 28 August suggested that other African countries may follow Malawi's example in refusing to accept new loans. The paper reported: "Africans have reacted coolly to the US's offer last month of $1bn in annual loans to finance the purchase of anti-AIDS drugs in sub-Saharan Africa, suggesting that the approach would merely add to the already heavy debt burden of African nations."

Kwesi Owusu, Head of Jubilee 2000's Africa Initiative, commented: "Earlier this year, forty African heads of state signed the Abuja Declaration on health and debt. They called for urgent debt cancellation and in exchange they promised to spend the money on improving the health of their people. If the World Bank is serious about helping Malawi tackle AIDS, the last thing it should do is further increase its already intolerable debt burden."