Advertisement
This story is over 5 years old
News by VICE

IMF Debts Made the Ebola Outbreak Worse, Report Says

British researchers say stringent IMF lending policies left Sierra Leone, Liberia, and Guinea with underfunded health systems and a shortage of doctors.

by Samuel Oakford
Dec 22 2014, 7:35pm

Photo via Flickr

Decades of stringent lending policies in West Africa by the International Monetary Fund (IMF) left the countries hardest hit by the Ebola outbreak with underfunded health systems and a paucity of doctors, according to researchers in the UK.

In a report published in the Lancet medical journal, investigators from the University of Cambridge, the University of Oxford, and the London School of Hygiene and Tropical Medicine found that both current and older IMF agreements had the same net effect of hindering spending on public health.

Researchers looked at IMF lending in Sierra Leone, Liberia, and Guinea since 1990. Attached to the money — as with many other IMF packages — were economic reform instructions that "required reductions in government spending, prioritization of debt services, and bolstering of foreign exchange reserves."

"Such policies have often been extremely strict, absorbing funds that could be directed to meeting pressing health challenges," the authors wrote.

In Guinea, the IMF advocated decentralizing the nation's healthcare system. The report says the move had disastrous consequences when the Ebola outbreak began earlier this year, since containing the spread of the virus requires top-down coordination and constant communication among health officials.

The economies of Guinea, Liberia, and Sierra Leone have been wrecked by Ebola. Read more here.

In the mid 1990s, the IMF likewise instructed Sierra Leone's government to reduce the number of public sector employees in the country by 28 percent, and advocated further curtailment of wages in the 2000s. The report's authors found that "by 2004, the country spent about 1-2 percent of GDP [gross domestic product] less on civil service wages than the sub-Saharan African mean."

World Health Organization (WHO) data shows that the number of "community health workers" in the Sierra Leone fell from 0.11 per 1,000 in 2004 to an even more miniscule 0.02 in 2008. When the country initiated a free healthcare program in 2010, the IMF instructed it to "carefully assess the fiscal implications," and suggested "a more gradual approach to the salary increase in the health sector."

'In terms of how catastrophic the disease has been and how its impacted their economies, it's as bad as any hurricane or 8.7 earthquake.'

"The IMF doesn't say 'Reduce health spending or fire doctors,' but, at the same time, they impose blanket austerity and impositions on reducing the civil service," Alexander Kentikelenis, a sociologist at Cambridge and one of the report's authors, told VICE News. "These have follow-up effects on health."

More recent IMF agreements and guidance include language that encourages spending on social programs, including health and education. But Kentikelenis and his colleagues found that those benchmarks were rarely met by national governments in all three countries. In Sierra Leone, of the 36 targets set out for social and health spending since 2000, they found that only 13 were reached.

Recent IMF evaluations reviewed by VICE News show the organization still maintains a strict focus on monetary policy. In order to keep inflation down, countries often reduce social spending — including on health worker wages — of their own volition.

'The Fight Against Ebola.' Watch the VICE News documentary here.

"In a way, its a rhetorical shift by the IMF — on the ground this hasn't made a big difference," Kentikelenis said.

The IMF has long been sensitive to criticism of its structural adjustment policies in the developing world, and has responded to the Ebola crisis with aid packages. In September, the fund agreed to $130 million in emergency funding for Liberia, Sierra Leone, and Guinea. Critics point out that the use of "aid" can be misleading, since the deals will further indebt the countries, albeit with low interest rates and generous repayment plans.

In a response to the Lancet report published in the Telegraph, an IMF spokesperson said the researchers' claims "are based on misunderstanding, and, in some cases, a misrepresentation, of IMF policies."

"Since 2009, loans from the IMF to low-income countries have been at zero interest rate, which has freed up resources for countries to spend more on health and education," the spokesperson said.

A larger, $300 million IMF package for the Ebola-stricken countries is currently under negotiations in Washington, where the IMF is headquartered. The US has pushed for a greater portion of the deal to consist of debt relief and grants, though VICE News sources close to the negotiations say non-loan elements will likely comprise only about a third of the package. The Lancet report, however, will apply pressure on the IMF to lessen the deal's long-term debt implications. The negotiations likely won't be finalized until January, at the earliest.

Sierra Leone, Liberia, and Guinea continue to make payments on their existing debt to the IMF. Last week, the IMF requested that Sierra Leone "repay $2.7 million," according to the debt advocacy group Jubilee UK. By the end of this year, Liberia and Sierra Leone will have paid the IMF approximately $14 million dollars — money that could have otherwise been spent on public health.

'I'm going to live': American Ashoka Mukpo on what it's like to have Ebola. Read more here.

Jubilee Debt Campaign UK, an organization that opposes international debts, estimates the three countries will spend $130 million on debt payments in 2015, about a quarter of that to the IMF. Eric LeCompte, executive director of Jubilee's sister organization in the US, said the upcoming IMF package is a litmus test of the organizations long-term support of the countries.

"We believe that the package should be grants and debt relief, but we also believe there is a very strong case for canceling their existing debt," LeCompte told VICE News.

"In terms of how catastrophic the disease has been and how its impacted their economies, it's as bad as any hurricane or 8.7 earthquake," he added. "There are going to be long-term implications for their economies."

Photo via Flickr

Follow Samuel Oakford on Twitter: @samueloakford

Tagged:
africa
VICE News
West Africa
Liberia
Sierra Leone
IMF
Guinea
The Lancet
Sub Saharan Africa
International Monetary Fund
international debt