## Public Spending on Health Care under IMF-Supported Programs

_IMF Blog, March 9, 2017_

## Source details

**Canonical URL:** [Public Spending on Health Care under IMF-Supported Programs](https://www.imf.org/en/blogs/articles/2017/03/09/public-spending-on-health-care-under-imf-supported-programs)

## Other formats

- [Markdown version](/en/blogs/articles/2017/03/09/public-spending-on-health-care-under-imf-supported-programs/index.md)
- [Structured JSON version](/en/blogs/articles/2017/03/09/public-spending-on-health-care-under-imf-supported-programs/index.json)
- [Bundle manifest](/en/blogs/articles/2017/03/09/public-spending-on-health-care-under-imf-supported-programs/bundle-manifest.json)

## Bibliographic details
- Authors: Sanjeev Gupta, Baoping Shang
- Published: March 9, 2017

---

### Key findings and summary
- Over the past few decades, protecting social programs and spending on health has been a cornerstone of the IMF’s support for countries.
- A number of studies have found that IMF support for countries’ reforms, on average, either preserve or increase public health spending.
- 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.
- 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.
- The empirical evidence generally points to positive outcomes for public health spending under IMF-supported programs.

### Mechanisms through which IMF support can raise health spending
- Higher long-term economic growth
  - Economic and financial stability promoted in IMF-supported programs can help governments raise revenue to finance health care.
- More donor support
  - IMF support can help countries receive more financing from other donors, increasing resources available to finance priority spending on health and other social programs.
- Tax reforms
  - IMF programs typically emphasize tax reforms that increase revenues, giving governments more money to spend on health care in a sustainable way.
  - The number of countries with tax reforms has increased rapidly since 2007.
  - This paper shows the positive link between IMF support, reforms, and revenues for 126 low-income and middle-income countries.
  - The potential for raising the revenue ratio is almost one percentage point of GDP in a given year.
- Social spending protection
  - The explicit incorporation of minimum levels of social spending in IMF-supported reforms has encouraged countries to raise health spending.
  - The number of requirements on social expenditure as well as public investment in low-income countries has increased substantially over recent years.
  - The IMF’s Independent Evaluation Office found that 29 of 30 recent reform programs incorporated these minimum levels.
  - Emphasis on growth-enhancing public expenditure—including education and health spending—in country reforms supported by the IMF also helps raise spending on public health.
- More efficient spending
  - Improving the overall efficiency of spending can help governments finance spending on education, health, and investment.
  - Examples include phasing out energy subsidies—which typically benefit the rich more than the poor—to save money.
  - In recent years, the number of requirements that help improve budget execution and control—and thus public spending efficiency—has increased considerably.
  - In public investment, measures include introducing more rigorous appraisal, selection, and approval of investment projects, and strengthening management and monitoring of project implementation.
  - Higher public health spending efficiency means governments can achieve better health outcomes with the same level of health spending.

### Case example: IMF response to health crisis (Ebola)
- The experience of Guinea, Liberia, and Sierra Leone during the Ebola epidemic 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, crucial to boost health spending, and provided a catalytic role vis-à-vis donors, whose assistance was largely directed at health spending.

### Remaining challenges and scope for improvement
- There is 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, but specific studies indicate potential adverse channels that should be addressed in program design.

### Literature cited (selected)
- 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

*Public Spending on Health Care under IMF-Supported Programs — Sanjeev Gupta, Baoping Shang — March 9, 2017*

---


## References

- [https://www.imf.org/wp-content/uploads/2017/03/imf-healthspending_chart1jpg](https://www.imf.org/wp-content/uploads/2017/03/imf-healthspending_chart1jpg)
- [energy subsidies](https://blogs.imf.org/2015/05/18/act-local-solve-global-the-5-3-trillion-energy-subsidy-problem/)
- [https://www.imf.org/wp-content/uploads/2017/03/imf-healthspending_chart2.jpg](https://www.imf.org/wp-content/uploads/2017/03/imf-healthspending_chart2.jpg)
- [IMF’s response](http://www.imf.org/external/np/fad/ebola/)

_Source: https://www.imf.org/en/blogs/articles/2017/03/09/public-spending-on-health-care-under-imf-supported-programs_