Transcript The International Monetary Fund

Structural Adjustment and
Health
Thomas Stubbs
[email protected]
http://www.tstubbs.net
SOCP304 – 14B: Health, Wellbeing and Policy
1st October 2014
A Greek Tragedy
Introduction
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International Monetary Fund (IMF or Fund)
Structural Adjustment Programs (SAPs)
The IMF and Health Spending
In Focus: IMF Programs and Health Spending
in Low-Income Countries
• Conclusions
International Monetary Fund
• IOs, global economic governance, and the IMF
• History and mandate
– Technical support
– Lending (‘lender of last resort’)
– 1980s and late-2000s lending boom
• Influence and legacy
– Fund programs (SAPs)
– ‘Conditionality’
Countries Under IMF Arrangements: Sub-Saharan Africa, 1985-2013
Structural Adjustment
• Evolution of conditionality
– Core competencies
– Extension to non-core
– Country ownership and poverty reduction
• Controversial conditions
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Devaluation
Trade liberalisation
Fiscal discipline
Consumption taxes
Privatisation
Structural Adjustment
• Some general criticisms of Fund programs
– Poor track record
– ‘One size fits all’
– ‘Mission creep’
– Micro-management (e.g. size of bread loaf)
– ‘Loose coupling’ of discourse and practice
– Agents of neoliberalism and/or neoimperialism
IMF Programs and Health Spending
• Relationship between health policy and SAPs
has been subject of intense controversy
• Recent studies criticizing the IMF:
– Stuckler, King & Basu 2008
– Hoddie & Hartzell 2013
– Reeves et al 2013
– Plenty of anecdotal evidence, often polemical
IMF Programs and Health Spending
Core claims by critics
IMF response (Gupta, 2010)
1. Health spending has decreased in
countries with IMF-supported programs
1. Previous analyses of Fund-supported
programs have already shown this claim
to be untrue
2. Countries are forced to decrease health 2. IMF-supported programs have been
spending to meet rigid fiscal deficit
very flexible by accommodating larger
conditions
fiscal deficits and continuing to protect
priority social expenditures
3. Conditions on wage ceilings imposed in
program countries prevent desirable
increases in health spending
3. There is no conditionality that limits
health spending in Fund-supported
programs
4. Increased aid intended for the health
sector has been diverted to repay
domestic debt or increase reserves
4. When faced with volatile sources of
finance, governments often attempt to
maintain a stable flow of social
expenditures by smoothing the use of
available financing.
IMF Programs and Health Spending in
Low-Income Countries
• But…
– Clements, Gupta & Nozaki, 2013
– According to the study, IMF-supported
programmes have a positive and significant effect
on heath-spending in low-income countries.
• We set out to replicate and extend this study
(Kentikelenis, Stubbs, & King, forthcoming)
IMF Programs and Health Spending in
Low-Income Countries: Mechanisms
• Direct pathways
– Conditions to protect social expenditures
– Conditions to reshape the health sector
– Resource effect
• Indirect pathways
– Conditions on budget deficit
– Conditions on public sector wage bill
– Conditions on devaluation
• Differential effects in the short- and long-term
IMF Programs and Health Spending in
Low-Income Countries: Research Design
• Quantitative analysis
– Selection bias [Heckman method]
– Short- and long-term effects [error correction model]
– Control for confounding variables [controls, fixed-effects]
• 63 LICs for the period 1985-2009
• Dependent variables
– Public health spending as a share of GDP
– Public health spending as a share of discretionary
government spending
– Public health spending per capita
• Explanatory variable
– Presence of an IMF program in a given year
IMF Programs and Health Spending in
Low-Income Countries: Findings
• Entire sample (n=63)
– No relationship between IMF programs and health
spending
• Split into SSA (n=30) and non-SSA group (n=33)
– Basis for the regional split is the exceptional
circumstances of SSA and ‘special treatment’ by IMF
– Non-SSA: Negative relationship (“IMF programs
decrease health spending”)
– SSA: Positive relationship (“IMF programs increase
health spending”)
Changes in health spending as share of GDP when on
IMF program
IMF Programs and Health Spending in
Low-Income Countries: Discussion
• Interpreting the findings on SSA
– Encouraging, but…
– Health spending originally very low
– Near-constant presence of Fund programs
– Failure to meet internationally agreed goals
• Interpreting the findings on non-SSA
– Coheres with standard arguments by IMF critics
Conclusions
– Public health spending is not always and
necessarily beneficial, but…
– Health systems need both provisions of
funds and a stable funding environment
– Austerity measures and ill-conceived
structural reforms have tangible social costs
(e.g. A Greek Tragedy)
Recommended Reading
• Vreeland, J. (2007). The International
Monetary Fund: Politics of Conditional
Lending. London: Routledge.
• Stuckler, D. & Basu, S. (2014). The Body
Economic: Why Austerity Kills. New York: Basic
Books.
References
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Clements, B., Gupta, S., & Nozaki, M. (2013). What happens to social spending in IMFsupported programmes? Applied Economics, 48(28), 4022–4033.
Gupta, S. (2010). Response of the International Monetary Fund to its critics. International
Journal of Health Services, 40(2), 323–326. doi:10.2190/HS.40.2.l
Hoddie, M., & Hartzell, C. (2013). Short-term pain, long-term gain? The effects of IMF
economic reform programs on public health performance. Social Science Quarterly.
doi:10.1111/ssqu.12068
Kentikelenis, A., Karanikolos, M., Reeves, A., McKee, M., & Stuckler, D. (2014). Greece’s health
crisis: From austerity to denialism. Lancet, 383(9918), 748–753.
Kentikelenis, A., Stubbs, T., & King, L. (Under Review). Structural adjustment and public
spending on health: Evidence from IMF programs in low-income countries.
Reeves, A., McKee, M., Basu, S., & Stuckler, D. (2013). The political economy of austerity and
healthcare: Cross-national analysis of expenditure changes in 27 European nations 19952011. Health Policy. doi:10.1016/j.healthpol.2013.11.008
Stuckler, D., King, L., & Basu, S. (2008). International Monetary Fund programs and
tuberculosis outcomes in post-communist countries. PLoS Medicine, 5(7), 1079–1090.
doi:10.1371/journal.pmed.0050143