You report a study that claims “poor countries that borrow from the International Monetary Fund (IMF) are spending just one cent in every dollar received in health aid on improving the medical care of their populations” (“IMF loan conditions blamed for health cuts,” January 28).
The research suggested that “the curbs on public spending stipulated by the fund were encouraging governments in poor countries to use health aid for other needs”. This is a serious charge. It is also false. The study, published in the International Journal of Health Services, has serious methodological problems.
It ignores the economic situation of countries borrowing from the IMF — they nearly always face severe economic disruption, and are likely to have problems paying their bills as financing dries up. The research fails to address this selection bias because it does not examine what happened in crisis-hit countries that did not turn to the IMF.
Controlling for this effect, there is no evidence whatsoever that countries with IMF loans see a reduction in health spending. If anything, the opposite is true. We see this in our own research and in that of reputable outsiders. The Centre for Global Development, for example, found that poor countries with IMF loans saw larger increases in health spending than those without such loans. The IMF’s independent evaluation office also found social spending does not fall when countries receive IMF loans.
You report the study’s conclusions that “changes are needed to loan conditions so that finance ministers in poor countries [have] more ‘fiscal space’ to use health aid for its intended purposes”. But these safeguards are already in place, because the IMF takes its responsibility to low-income countries very seriously.
Since the onset of the global financial crisis, we have quadrupled concessional lending and are lending at zero interest. We have made our lending programmes more flexible, streamlined policy conditions, supported higher government spending to cushion the downturn, and introduced a more flexible approach to debt.
The IMF also supports social safety nets. These are important not only for economic stability but also for all-important social and political stability. Despite severe pressure on budgets, we advocated the protection of social spending to cushion the poor and most vulnerable from the ravages of recession. This was the case in countries all across the world.
In general, government spending rose in low-income countries during the recent crisis and this rise was more pronounced in countries with IMF loans. The same is true for health and education spending, which rose faster in countries with IMF support than in those without. Your article makes no mention of this at all.
The role of the IMF in low-income countries is a valid topic for debate; the challenges we all face in helping the poorest nations achieve growth and poverty reduction remain huge. But the study you report on does a disservice to the issues involved.
Gerry Rice is the IMF’s deputy director of external relations.