PHM-Exch> Oxford study: IMF programs correlated to lower spending of aid for health

[Claudio Schuftan]

From: ESCR-Net <Escr-net at escr-net.org>


  Poor countries with IMF loans 'divert aid from public health'

Oxford University-led research finds signs that tough loan conditions
imposed by IMF has led to health aid being diverted for other uses

http://www.guardian.co.uk/business/2011/jan/17/imf-health-aid-millennium-development-goals

Poor countries that borrow from the International Monetary Fund are spending
just one cent in every dollar received in health aid on improving the
medical care of their populations, according to new Oxford University-led
research.

The study, published in the International Journal of Health Services, said
there were signs that the tough loan conditions imposed by the
IMF<http://www.guardian.co.uk/business/imf>were leading to health aid
being diverted for other uses.

In an investigation of more than 100 low and middle-income countries, the
report sought to explain why increased aid spending had left many countries
well off track to hit the United Nations millennium development
goals<http://www.guardian.co.uk/advocacy/millennium-development-goals?INTCMP=SRCH>(MDGs)
for health, which include a two-thirds reduction in infant
mortality and a three-quarter decline in maternal
mortality<http://www.guardian.co.uk/journalismcompetition/theme-safe-motherhood?INTCMP=SRCH>
.

They said one likely explanation was that the curbs on public spending
stipulated by the fund were encouraging governments in poor countries to use
health aid for other needs. Countries that did not borrow from the IMF were
found to have channelled 45 cents into health systems for every dollar of
aid received.

The study by Dr David Stuckler of Oxford, Dr Sanjay Basu at the University
of California, San Francisco and Professor Martin McKee at the London School
of Hygiene and Tropical Medicine looked at 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.

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.

Stuckler said: "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. 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.

"This study suggests that countries relying on IMF loans are not spending
the aid in the way it was intended. 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."

According to the research, countries borrowing from the IMF tended to do so
when their economies were struggling and needed health aid the most. It
concluded that changes are needed to loan conditions so that finance
ministers in poor countries had more "fiscal space" to use health aid for
its intended purposes – tackling disease and supporting public health
projects.

The report's authors said the study was limited to measuring pledges of aid
rather than a full picture of what was actually paid. But they said the
findings offered a "new rationale that reconciles the failure to achieve the
MDGs despite increasing amounts of aid."

Aid channelled through governments was associated with lower public spending
than relief through private non-governmental organisations, they said.
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