According to a recently published study on health aid and its actual impact on developing countries’ health care systems, the International Monetary Fund’s (IMF) tough loan conditions often result in health aid being diverted for other uses. In many developing countries relying on IMF loans, aid targeted at supplementing existing spending on public health projects is used for state spending instead.

The study, published in the International Journal of Health Services, compared the health spending of 24 low and middle-income countries borrowing money from the IMF with 101 countries with a similar income structure, not relying on IMF loans. The study concludes that, between the years 1996 and 2006, health spending in countries receiving IMF loans grew at half the rate of countries not borrowing from the IMF.

One likely explanation might be the IMF’s tough loan conditions which oblige receiving governments to keep their spending low, urging them to use aid to replace state spending.

"This study suggests that countries relying on IMF loans are not spending the aid in the way it was intended. A change in loan policies is needed to lift the existing restrictions on finance ministers so they are no longer prevented from spending health aid on the people that urgently need medical help", commented Dr David Stuckler of Oxford University.

Overall, the study reveals a new rationale why many developing countries are expected to fail in achieving the Millennium Development Goals on global health by 2015, despite increasing aid commitments.

Sources:

• University of Oxford
• The Guardian