Aid, Debt, IMF Conditionalities and Domestic Health Financing in Low- and Middle-Income Countries.

Area of Science:

• Global Health Economics
• Health Systems Financing
• International Development

Background:

• Low- and Middle-Income Countries (LMICs) face growing external debt and International Monetary Fund (IMF) loan conditionalities.
• Official Development Assistance (ODA) and macro-fiscal factors influence national health spending (GHE-S) and out-of-pocket payments (OOP).
• The balance of health financing sources critically impacts health access and outcomes, especially for vulnerable populations.

Purpose of the Study:

• To jointly examine the associations between external factors (ODA, debt, IMF) and GHE-S and OOP in LMICs.
• To compare the correlation sizes of these external factors on health financing.
• To inform policy levers for achieving Universal Health Coverage (UHC).

Main Methods:

• Panel data analysis of 105 LMICs from 2005-2019.
• Investigated associations between GHE-S and OOP with ODA, public external debt servicing, and IMF programme variables.
• Employed the Generalised Method of Moments estimator with robustness checks.

Main Results:

• Increased ODA was associated with modest reductions in both OOP and GHE-S (per GDP).
• Increased public external debt servicing correlated with slight increases in OOP and decreases in GHE-S (per CHE).
• No significant relationship was found between IMF programmes/conditionalities and GHE-S or OOP.

Conclusions:

• ODA, both on- and off-budget, appears to modestly subsidize OOP, suggesting less concern for aid fungibility in health.
• Rising public external debt servicing shifts the payment burden from government to users, potentially impacting health service access.
• Findings support calls for debt resolution in heavily indebted LMICs to mitigate negative implications for health service access.