Rising health care spending in PRGF countries appears to be benefiting the poor

• Author: Gabriela Inchauste Comboni/Stefano Fassina
• Position: IMF Fiscal Affairs Department
• Pages: 198-200

Page 198

Preliminary analysis of the IMF's Poverty Reduction and Growth Facility (PRGF) and Poverty Reduction Strategy Papers (PRSPs) suggests that in the area of health care, policies are beginning to benefit the poor. But there is also scope for improvement-notably in how health care programs are costed and prioritized.

In early 2003, the IMF conducted a preliminary review of actual and projected public expenditure in countries whose economic programs are supported by PRGFs. The results indicate a distinct increase in resources devoted to reducing poverty. In 2001, countries with PRGF-supported programs allocated an amount equivalent to 8.4 percent of GDP to poverty reduction in contrast with 6.8 percent of GDP allocated in 1999 (the most recent pre-PRGF year). For 2002-03, spending on poverty reduction is expected to climb to an average 9 percent of GDP.

Higher health care spending

One sector that appears to be benefiting from increased expenditure is health care. In 2000, average actual health care spending in 26 countries slightly exceeded the level reached in 1999 (rising a notch to 1.8 percent of GDP from 1.7 percent). Projections for 29 countries for 2001-02 indicate a stronger improvement, with health care spending increasing to 2.1 percent of GDP. In real per capita terms, health care spending in PRGF-supported programs is projected to grow at an annual rate of about 10 percent-an acceleration of the trend seen in 1996-99, when outlays rose an average of about 8 percent a year.

Is the new spending pro-poor?

Aggregate data, of course, can be misleading. Just how much of these expenditures are reaching the poor? It is too early to say with any certainty, but an IMF study, using PRSP priorities as an indicator of expenditure composition, took a closer look. Its examination of 27 PRSPs that had been endorsed by the IMF and World Bank Executive Boards suggests that measures related to health care now have a central role in overall strategies to reduce poverty and enhance growth. On average, a PRSP contained 16 measures designed to improve a country's health care, with the actual number varying between 11 and 20.

The study also categorized these PRSP initiatives to see what was being emphasized and what, perhaps, warranted further attention.Virtually all PRSPs sought better health care access for the poor (see chart, page 200)...