IMF and fiscal policy: Central to the health MDGs
EG4Health Newsletter #8 http://www.eg4health.org/
25 July 2009
The IMF, together with the World Bank, bears a huge degree of responsibility for having helped sustain the illegitimate and odious debt burden under which hundreds of millions of innocent people have found their access to schools, clinics and hospitals eroded since the 1980s .
The IMF extends its influence over poor countries' economies
Facing a financial crisis of its own years before the global economic troubles (primarily because many "emerging market" countries had turned their back on the IMF), the Fund has now been offered hundreds of billions of dollars of new money to manage the fall-out of the credit crunch and stave off an economic recession. Most of this money will be used to bail out the discredited banking system and sustain the high-consumption economies of the rich world. However, some money has been ear marked for poor countries, extending yet further the influence of the IMF over their economic policies.
The health impact of IMF policies: data from sub-Saharan Africa
Why is this relevant to the international health community? Two recent reports provide an explanation: Education on the Brink by the Global Campaign for Education, and a report by the Centre for Economic Governance and AIDS in Africa 'Evidence of the Impact of IMF Fiscal and Monetary Policies on the Capacity to Address the HIV/AIDS and TB Crises in Kenya, Tanzania and Zambia'.
In summary, the reports describe the effect of the IMF on the number of health workers and teachers who can be employed and adequately remunerated to provide essential services. It does this by influencing a country's policy on inflation and foreign currency reserves targets, as well as on fiscal deficit and public expenditure ceilings. Such ceilings are one of the principal reasons why many Ministries of Health are unable to recruit enough health workers, or to pay them a living wage.
For years, development economists and health activists have been arguing that these macroeconomic policies undermine efforts to achieve the MDGs and the universal rights of all people to essential services. Even the Fund's own Independent Evaluation Office found that its policy conditions had inappropriately prevented Sub-Saharan Africa countries from effectively spending aid - only 27% of the additional international aid to sub-Saharan Africa from 1999 to 2006 was actually spent, with the other 73% put into foreign currency reserves (see full report here).
IMF double standards
The current global financial crisis has now made the picture dramatically worse by showing up the clear double standards being applied by the IMF to rich and poor countries. High income countries are being allowed (even encouraged) to break the very same rules which prevent poor countries from training, hiring and adequately remunerating an acceptable number of doctors, nurses and teachers. Clear examples of this are the current fiscal deficits of the United States and the United Kingdom.
It is now also increasingly clear that without a change in the orthodox macro-economic policies of the IMF, the global economic recession will have a devastating impact on the lives of billions of people and consign the world to an abject failure in reaching even the modest targets of the MDGs.
