Does the IMF Constrain Health Spending in Poor Countries? Evidence and an Agenda For Action

David Goldsbrough
July 23, 2007

Controversy surrounds IMF-supported programs in low-income countries and their effect on the health sector. Those who have worked hard in the past decade to mobilize unprecedented levels of funding and attention for health programs in developing countries have contended that the IMF’s approach to macroeconomic management has constrained effective use of donor funds and thereby weakened efforts to improve health conditions in countries that are most heavily burdened by disease. The IMF has consistently responded to criticism by noting its circumscribed role, which does not include venturing into sector-level decision making, and reminded critics that health priorities must fit within a broader set of social choices that have to take account of an overall budget constraint.

In this context, the Center for Global Development convened the working group on IMF Programs and Health Spending in Fall 2006 chaired by David Goldsbrough to consider whether and how IMF and other organizations' practices should change. This working group report explores the interaction between IMF-supported macroeconomic policies and government health spending, drawing upon background analyses and detailed case studies of Mozambique, Rwanda, and Zambia. The working group finds that IMF-supported fiscal programs have often been too conservative or risk-averse; that the IMF Board and management have not made sufficiently clear what is expected of IMF staff in exploring the macroeconomic consequences of alternative aid scenarios; and that wage bill ceilings have been overused in IMF programs and should be limited to the (probably rare) circumstances where a loss of control over payrolls threatens macroeconomic stability.

Please click here to see the brief for this report.

For more information, please visit the IMF Initiative Page.

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