Question: The International Monetary Fund often attaches strict conditions to its loans, hoping to help the economies of the recipient countries grow and become stable. For example, in order to tamp down inflation, countries have been required to limit expenditures for education, social services, and health. The expectation is that once inflation is in check, people's personal health will improve, despite the cutbacks, as their economies revive. But does this actually happen?
New study: It's a hard question to answer with confidence, but a new paper argues exactly the opposite. The authors find that the IMF's strictly conditioned loans are associated with a fall in the quality of health, measured by one important indicator: an increase in the rate of tuberculosis. They further argue that this is a relationship of cause and effect—that the IMF loans (or, realistically, the conditions attached to them) are responsible for the observed decline in health. While it's perhaps impossible to prove this using the tools of epidemiology, the authors substantiate an extremely strong case.
Set-up: The study examined the rate of tuberculosis (measured in three different ways) in the populations of 21 countries that were formerly part of the Soviet Union or Communist Eastern or Central Europe. All but one (Slovenia) have received IMF loans. On average, the former Soviet Union countries needed more money (an average $850 million, compared with $270 million) than the other countries. Their loans also extended over a longer period of time (an average 10.3 years, compared with 5.5 years). The rates of tuberculosis mortality in the former Soviet bloc doubled during the period under study, 1992 to 2002. The TB rate there is currently among the highest in the world. In contrast, in the European countries with smaller and shorter IMF loans, tuberculosis mortality dropped by 40 percent during the same decade.
Findings: In all of the countries under scrutiny, as IMF loans increased, so did tuberculosis death rates. For every 1 percent increase in credit, the TB mortality rate climbed by 0.9 percent. The longer IMF loans lasted, the greater the rate of tuberculosis deaths: Every extra year of money was associated with about a 4 percent increase in deaths. Those numbers are pretty striking. Were the TB-sickest countries likely to have the sickest inhabitants to begin with? Nope. There was no association with increased tuberculosis rates before the IMF showed up. Also, at times when countries received loans from other sources that were free of stringent conditions, their TB rates did not increase. And when countries paid off their IMF loans, their TB mortality rates dropped. Nor was IMF participation associated with two other plausible causes of higher TB, an increase in HIV/AIDS and incarceration rates.
Explanation: Why should these well-intended loans apparently lead to such a bad outcome? TB treatment is a long, slow process—a matter of many months of daily medication. If patients are unreliable about taking their medication, their infection is likely to become resistant to antibiotic treatment and the people who catch tuberculosis from them will be much harder to treat. For that reason, the standard of care for much of the world is DOTS—"directly observed treatment, short course"—which monitors patients as they take their medications three times a week to make sure that no dose is missed. This is, without a doubt, one of the most effective and cost-effective public-health methods known, but it depends on public-health workers. The stringent conditions attached to IMF loans often lead to cutbacks in employing those workers. Slovenia, which never accepted IMF loans, has 100 percent DOTS coverage of its tuberculosis patients. Russia, after 13 years of IMF participation, has only 25 percent DOTS coverage and, as one might expect, an extremely high rate of tuberculosis.
Conclusion: Maybe the IMF's bitter pill of strict fiscal responsibility is not just what the doctor ordered.