RESULTS UK recently signed up to a declaration calling for a Currency Transaction Levy (CTL) for health. It is an initiative that NGOs including RESULTS have been campaigning on for years, but what is it and what implications could it have for the health of people living in the developing world?
Stamp Out Poverty and the International HIV/AIDS Alliance have published a briefing paper entitled “¥€$ to Health – the Currency Transaction Levy: Funding the Health Millennium Development Goals” which makes the case for the introduction of a CTL to raise much needed, additional resources for efforts to reduce child mortality, improve maternal health and to fight diseases of poverty such as HIV, TB and malaria.
Why is RESULTS supporting the introduction of a Currency Transaction Levy?
Significant financing gaps exist to meet the health MDGs. The funding gap for TB alone is estimated to be in excess of $3 billion per year. Even if donors such as the UK met the commitments they have made to help improve the health of the world’s poorest people, it would not be enough. So new, innovative sources of financing are needed – urgently. RESULTS supports the CTL because it is one of the few initiatives with the potential to generate such significant additional resources for health and development.
What is it?
The CTL is a proposal to harness some of the vast wealth of the foreign exchange market through a very small levy – just 0.005% on currency transactions.
The foreign exchange (FX) market is the largest in the world by volume with $3.2 trillion of FX transactions occurring every day. Unlike most other areas of the financial market, the FX market has continued to grow, even during the economic downturn.
How much could the CTL raise?
A CTL rate of 0.005% levied on all major currencies would generate US$33.41 billion a year. A CTL levied on just the British Pound would annually yield US$4.98 billion.
Is the UK government supportive?
Gordon Brown has been co-chairing a High Level taskforce on innovative financing for health but has not publically supported the idea of the CTL. The UK government is currently backing the idea of an International Financing Facility for health systems (similar to the IFFIm created in 2006 for immunisations). Many NGOs agree this is less preferable because it borrows future ODA to be used up-front rather than generating additional resources. The head of the Financial Services Authority has recently supported the idea of the CTL.
Clearly, this idea is gathering momentum. RESULTS will be working closely with our partners to help keep the pressure up. For more detailed information feel free to visit the Stamp Out Poverty website.