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The IMF Responds on Debt
A Letter to the Editor
by G.E. Gondwe
Director of the International Monetary Fund’s African Department

December 17, 1998

Janet Bush's statement ("IMF must be forced into line over debt", The Times, December 9) that one of the IMF conditions in Mozambique and Zimbabwe was to increase the proportion of their "health spending recovered through user fees," is so disconnected from its context that it actually suggests the opposite of what is true.

All Fund-supported programs in Mozambique have sought to protect government spending in the areas of education and health. In fact, the current Fund-supported program supports an increase in the share of budget expenditures allocated to the health sector, and user fees paid by the better-off can help to stretch these expenditures even further in raising the quality of health services. When carefully designed, user fees can help ensure that expenditures are rationalized, with the poorest segment of the population being exempted from paying any fees for essential needs or basic social services. In general, of course, in designing the modalities for improving health services under Fund-supported economic reform programs, country authorities draw upon the advice of other donors and experts in this area, including importantly the World Bank. Improvements in the provision of health services are also a key condition for Mozambique's attainment of debt relief under the HIPC initiative, supported jointly by the Fund and the World Bank.

As regards Zimbabwe, Ms. Bush's statement that user fees for health services "were introduced...as part of IMF structural adjustment programmes in 1992" is incorrect. Quite to the contrary, eligibility of the poor to receive free health services was actually broadened in 1992 by increasing the income threshold below which health services were provided free.

Finally, contrary to what is stated in the article, social programs in different countries do not need to be protected from the IMF nor have such programs been raided in countries receiving assistance from the IMF. Evidence shows that public spending on health and education has risen as a share of GDP in 66 countries with IMF-supported programs during 1986–96. For low-income countries, the improvement has been even larger. In fact, the Fund has recruited Social Policy Development Officers in the African Department specifically to ensure that Fund-supported programs in Africa continue to increase resource allocation to the social sectors.