Ideas to Action:

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July 23, 2007

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

This report of the CGD working group on IMF Programs and Health Spending explores the controversy that surrounds IMF-supported programs in low-income countries and their effect on the health sector. Critics contend that programs unduly constrain health spending though macroeconomic, especially fiscal, policies that are too restrictive towards government spending and wage bill ceilings preventing a scaling up of the health workforce. The working group, chaired by CGD visiting fellow David Goldsbrough, examined the evidence through detailed case studies and cross-country data to make recommendations for the IMF and other relevant actors. They urge the IMF to explore a broader range of options on the fiscal deficit and government spending; clarify the role of the IMF with regards to aid projections; constrain the use of wage bill ceilings to very specific circumstances; and give greater emphasis to the smoothing of expenditures.

David Goldsbrough