IMF aid substituting, not supplementing existing health spending, study finds

Jan 20 2011

International Monetary Fund (IMF) "aid to some of the poorest countries [is] not being used to supplement existing spending on public health projects, but instead it often substitutes state spending," according to a study published in the International Journal of Health Services, Press Trust India/MSN reports. "The study comes at a time when there is serious concern about whether developing countries will meet the Millennium Development Goals (MDGs) on global health by 2015," the news service writes (Sonwalker, 1/19).

Researchers analyzed data from "34 low- and middle-income countries that borrowed from the fund and 101 countries on a similar income that did not rely on IMF support," the Guardian reports. "Their analysis showed that health spending in countries borrowing from the IMF in the decade from 1996 to 2006 grew at half the rate of countries that did not have IMF programmes" (Elliott, 1/17).

"Governments in countries that borrowed from the IMF were found to provide just one cent more towards funding the health system for every U.S. dollar received in health aid," according to a University of Oxford press release. "By contrast, countries that did not borrow from the IMF channelled an additional 45 cents into the health system for every dollar of aid received." The researchers "also found that aid channelled through governments was associated with lower public spending than when it was routed through private nongovernmental organizations," the release states (1/18).

"Countries seeking IMF support are likely to differ from countries that are not and a request for an IMF loan is often associated with severe economic problems," the University of Oxford's David Stuckler, who was a co-author on the study, said, according to the Guardian. "Nonetheless, even in such circumstances, it is reasonable to expect aid from donors to have at least some positive impact on health funding, especially given that health needs are often greatest at such times," he added (1/17).

One reason behind the differences in health spending, the study suggests, could be "that IMF loan conditions, which aim to keep government spending low, are so limiting for finance ministers in countries that borrow that aid that they turn up substituting for state spending on some public health projects," PTI/MSN writes (1/19).

"This study suggests that countries relying on IMF loans are not spending the aid in the way it was intended," Stuckler said, according to the University of Oxford press release. "A change in loan policies is needed to lift the existing restrictions on finance ministers so they are no longer prevented from spending health aid on the people that urgently need medical help," he added. The authors "cautioned against drawing far-reaching conclusions as the data used in the study is limited to measuring pledges of aid rather than data that provides a full picture of what was actually paid," the release states (1/18).