The IMF is an important player in development issues of low- and middle-income countries. Impact of its lending policies on government health spending is contested: Opponents claim conditions attached to loans translate into reduction in government health expenditure. Others claim IMF agreements are associated with higher public health expenditure. This study aims to evaluate these competing claims by assessing the effects of IMF loans on per capita public healthcare expenditure.
This study employs a panel dataset of 126 countries for the years 1995-2012. Health expenditure is measured as per capita spending in $PPP. It uses fixed effects estimators, addresses selection bias with a selection model and controls for determinants of health expenditure.
The results indicate that IMF agreements, counter to claims in the literature do not have disastrous effects for health expenditure, but also that agreements do not lead to significant health expenditure expansion as continuously claimed by the IMF.
