Thomas C. Dawson
Thomas C. Dawson

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Thailand and the IMF

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The IMF did not Force Thailand to cut Public Health Spending
A Letter to the Editor
By Thomas C. Dawson, Director
External Relations Department
International Monetary Fund
Tribune de Genève
February 5, 2003

Sir:

Joseph Stiglitz has chosen to make a second career out of attacking the International Monetary Fund, as he demonstrated in his interview with you published December 23.

The IMF has debunked most of Professor Stiglitz's spurious accusations elsewhere (see the IMF website, www.imf.org), but he leveled a novel and especially pernicious charge in his interview with you, which requires a response. Stiglitz claims that the IMF "forced [Thailand] to reduce its health spending" during the 1997-98 crisis, and implied that these cuts are responsible for rising AIDS cases in that country. In fact (as can be seen on the IMF website), we encouraged the Thai government to protect health spending even as revenue was falling.

The August 1997 loan agreement with Thailand, at the very beginning of the crisis, provided for "the protection of vital health and education expenditures in the central government budget". By the February 1998 supplementary agreement, the details had become more clear, and it called for the government to "Maintain program coverage for maternal, child health, and HIV/AIDS activities" as well as providing for "Improved and increased subsidies for health insurance" and "health care and prevention programs at the community level, focused on AIDS patients."

In fact, health expenditures rose by 8 percent in 1997/98, even as tax revenue fell by 14 percent. This increase was still not enough to cover the soaring cost of AIDS medication, and there were some real cutbacks in the AIDS program, including deep cuts in the budget for constructing new clinics until the crisis passed. But the spread of AIDS is a complex phenomenon. To attribute a resurgence of AIDS in Thailand to budgetary constraints is naive. And to say that the IMF forced Thailand to cut back is pure invention.




IMF EXTERNAL RELATIONS DEPARTMENT

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