Public Spending on Health Care under IMF-Supported Programs

Sanjeev Gupta, Baoping Shang

March 9, 2017

Versions in Français (French)

Government policies matter when it comes to public health. And when a country’s economy is suffering a severe economic crisis, the decisions become even more critical.  Over the past few decades, protecting social programs and spending on health has been a cornerstone of the IMF’s support for countries.

Healthy channels in IMF supported programs

A number of studies have found that IMF support for countries’ reforms, on average, either preserve or increase public health spending (see box). One study finds that the effect of IMF programs is considerable—they increase public health spending by about 1 percent of GDP over a 5-year period. The reforms implemented under the programs are essential to put the economies of these countries on an even keel. Without reforms, a country’s economy could collapse, along with its public healthcare system.

While one recent study suggests a few ways in which IMF support may impede spending on public health, their impact is offset by other important factors through which the IMF’s support for a country positively affects public health spending.

Here is a closer look at the different ways IMF support to a country in crisis can help it get back on its feet, and fund social protection programs like health care:

IMF.healthspending_chart1

IMF.healthspending_chart2

There are other ways the IMF can help a country in a crisis with health spending. For example, the recent experience of the countries affected by the Ebola epidemic—Guinea, Liberia, and Sierra Leone—shows the positive influence of IMF financial support. Since September 2014, the IMF has provided emergency financial assistance to the three countries totaling US$378 million, to help respond to the Ebola outbreak. The IMF’s response helped the governments’ make room in their budgets, which is crucial to boost health spending, and provided a catalytic role vis-à-vis donors, whose assistance was largely directed at health spending.

There is certainly still room to improve the design of IMF support to countries in crisis. When it comes to public health, the empirical evidence generally points to positive outcomes.

 

Literature on public health spending

 Does the IMF constrain health spending in poor countries? Evidence and an Agenda for Action

What happens to social spending in IMF-supported programmes?

 Does conditionality in IMF-supported programs promote revenue reform?

 Revisiting the IEO Evaluations of The IMF’s Role in PRSPs and the PRGF (2004) and The IMF and Aid to Sub-Saharan Africa 

IMF Response to The Ebola Crisis

The impact of IMF conditionality on government health expenditure: A cross national analysis of 16 West African nations

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