After World War II, economists and politicians created the International Monetary Fund (IMF) to help keep the international financial system stable. From the outset, the Fund's specific roles were to promote balanced growth of international trade, provide funding to countries in economic distress, and safeguard income levels necessary for people to purchase essential goods and services. The IMF put "conditions" on its loans to help countries pay them back, but over the years these conditions began to include aggressive anti-inflation targets. These targets not only lacked a sound economic basis but prompted cutbacks in public spending on health, education, and other vital services that poor and vulnerable populations rely on governments to provide.
While the IMF and its critics have engaged in many heated exchanges in recent years, few claims about the Fund's impact on social welfare have been subject to rigorous statistical investigation. Yet the case of the IMF's lending to Eastern Europe and the former Soviet Union offers a "natural experiment" for evaluating the effect of the IMF's activities on public health. Some of these countries underwent IMF lending programs of different sizes and durations, while others borrowed similar amounts from other banks at about the same time, which means there's a "control group" to contrast with the IMF-lending countries. The former Soviet-bloc economies also faced a relatively similar set of economic challenges, which makes the experiment more credible than one comparing the Fund's impact on Latin American or African countries. And, despite the unique challenges facing the region, the IMF's standard loan conditions were applied to all of their reform packages, allowing us to observe the impact of typical IMF programs.
Unlike other IMF borrowing countries, where health and education data are often missing or inaccurate, the Eastern European and former Soviet nations had built up an impressive public health surveillance system. Some of the most reliable data were on tuberculosis — a treatable disease. Although tuberculosis rates had been falling or stable for the past 50 years throughout the region, one in three people are thought to carry the bug in a dormant or "latent" disease form. As a result, new tuberculosis cases must be aggressively detected and treated to prevent epidemics. When medical infrastructure breaks down and prevents rapid detection and treatment, the disease can potentially resurge. Since a rise in tuberculosis deaths reflects a recent decline in access to or quality of medical care and public health surveillance, the region's tuberculosis data provided a test of the IMF's effect on public health.
We studied two decades of data from 21 countries in the region to examine how IMF lending programs related to changes in the number of tuberculosis cases, carriers, and deaths. To isolate the effect of the IMF programs, we corrected for numerous hypothetical social or economic determinants of tuberculosis rates, such as falling GDP, bank crises, unemployment, inflation, or war, as well as other health measures such as HIV, which can make people more susceptible to tuberculosis. We also developed a "hazard of IMF participation" statistic to adjust for the possibility that the reasons countries borrowed from the IMF might also have predisposed them to worse tuberculosis (i.e., to detect if the IMF was an innocent bystander).
Consistent Evidence
After taking into account economic downturns, as well as other alternative explanations and country-specific variables (differences between nations), we found consistent evidence that exposure to IMF programs increased tuberculosis rates.
Prior to the IMF's arrival, tuberculosis rates were falling or stable. Our before- and after-analysis indicated that tuberculosis rises occurred at the point of or within a few years after, but not before, the IMF's arrival on the scene. When countries ended their participation in the IMF programs, tuberculosis rates fell by close to the same amount as they had risen upon IMF participation. Both greater size and duration of the IMF loans were linked to greater tuberculosis rates (a "dose-response relationship"). The IMF's reforms were found to reduce healthcare resources identified as critical for tuberculosis control, including government spending, the number of doctors per person, and access to the World Health Organization's recommended anti-tuberculosis treatment approach. Non-IMF ("control group") loans of similar size, duration, and timing had the opposite effects as the IMF loans and were, in some cases, related to lower tuberculosis rates.
How did the IMF respond to these findings?
We were surprised that the IMF's first response was to call our study "phony science" even though our study used the same scientific methods as those of the IMF's staff and was reviewed by five anonymous and independent experts in tuberculosis, statistics, and economics prior to publication at one of the world's premier medical journals. (We released our own detailed response to the Fund's reaction.)
Instead of choosing to correspond in a legitimate public forum, the IMF distributed a number of false statements about our study, mainly over the Internet. First, they claimed the study did "not take into account that the economic and social instability following the collapse of the Soviet Union may have had a direct impact on TB." This was false, as we anticipated this obvious possibility in the paper using more than 10 different indicators of a country's financial health (including per-capita income, economic growth, inflation, hyperinflation, price liberalization, trade liberalization, foreign direct investment, bank crisis, unemployment rates, real wages, democratization, hazard of taking loans from the IMF, and other factors used by IMF researchers to measure economic distress) in addition to other established methods.
Second, the IMF cited two studies to suggest that IMF-supported programs were associated with improved public health. Their first citation actually suggested the opposite of the IMF's claim and the IMF misreported their second citation. Neither citation related to the countries under study. Furthermore, the IMF's rebuttal revealed that, despite decades of criticism from respected physicians and public health experts, the Fund has never, as far as the public knows, undertaken a rigorous analysis of its programs' potential impacts on health, as it claims to do for economic outcomes.
Finally, the IMF claimed that our results were inconsistent with previous epidemiological studies. This was also incorrect. Our epidemiological findings replicated prior findings from other researchers, including the World Health Organization. Our study supported the well-known observations that HIV/AIDS was linked to higher tuberculosis rates, and that higher income and government expenditures were linked to lower tuberculosis rates.
The IMF's response to our study seems to reflect a more general way in which the IMF has handled evidence-based critiques. When the IMF's own Independent Evaluation Office, consisting of some of the world's premier economists, found that IMF programs did not work under some circumstances — and sometimes made economies and social conditions worse — the evidence was also ignored. The IMF's Independent Evaluation Office pointed out that the Fund's anti-inflation targets were likely too severe. Nonetheless, the IMF's conditions on their loans continue to be much the same as they were two decades ago.
The Fund should reduce its activity of imposing archaic economic mandates not set out in its charter that are repeatedly rebuked by leading economists, and follow its mission to ensure that people's basic needs are not being harmed by instability in the global marketplace — as the Economic Policy Institute's Robert A. Blecker puts it, to "tame global finance."
And the IMF should monitor its impact on health, education, and other vital public goods and services to follow the physician's mantra of "first do no harm."
David Stuckler is a research fellow at Oxford University Department of Sociology and Christ Church, Oxford. Sanjay Basu is an MD/PhD candidate in the Division of Microbial Disease Epidemiology and the AIDS Program of the Yale University School of Medicine, and is Chief Operating Officer of Nyaya Health. They are Foreign Policy In Focus contributors.
