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International Monetary Fund and aid displacement
David Stuckler1, Sanjay Basu, Martin McKee
1Christ Church, Oxford University, United Kingdom. david.stuckler@chch.ox.ac.uk
Summary
Global health aid is diverted from health systems, especially when countries borrow from the International Monetary Fund (IMF). IMF borrowing significantly reduces the impact of health aid on health spending.
Area of Science:
- Global Health
- Health Economics
- International Finance
Background:
- Global health aid is increasingly found to be diverted to non-health sectors.
- This diversion may stem from competing government priorities or macroeconomic policies.
- Previous studies suggest aid routed through governments negatively impacts health spending, unlike aid to NGOs.
Purpose of the Study:
- To evaluate if aid displacement is greater in countries undertaking International Monetary Fund (IMF) borrowing programs.
- To analyze the impact of IMF policies on the effectiveness of development assistance for health (DAH).
Main Methods:
- Comparative analysis of health spending in IMF-borrowing versus non-IMF-borrowing countries.
- Examination of data from 1996 to 2006 to assess aid displacement.
- Quantification of the impact of each dollar of DAH on health system spending.
Main Results:
- For every $1 of DAH, non-borrowing countries added approximately $0.45 to their health systems.
- IMF-borrowing countries added less than $0.01 to their health systems per $1 of DAH.
- Health system spending grew at roughly half the speed in IMF-exposed countries compared to non-exposed countries.
Conclusions:
- IMF macroeconomic policies and borrowing programs appear to exacerbate the displacement of global health aid.
- The political economy of global health finance is critical for interpreting financial flow data.
- Policy interventions are needed to ensure health aid effectively reaches and benefits health systems.
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