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(PROGRESS.ORG) Prevent TB -- Avoid loans with strings attached

PROGRESS.ORG - Should a handful of global banks have a monopoly on credit to developing nations? Should such central banks even exist? We trim this 2008 article circulated by Essential Action on July 24. The author is editor of a regular column, the Washington DC-based Multinational Monitor, and director of Essential Action Focus on the Corporation.

Prevent TB -- Avoid loans with strings attached
By Robert Weissman

Tuberculosis, a treatable disease, kills 1.7 million people a year worldwide.
TB incidence seems to be correlated to broad social factors, like access to clean water and sanitation, and national health expenditures.

Another explanatory factor is the International Monetary Fund. IMF economic reform programs are strongly associated with rises in tuberculosis mortality rates in post-communist Eastern European and FSU [former Soviet Union] countries. Their TB rates were improving just prior to the collapse of the former Soviet Union.

When countries entered IMF programs, TB rates went up. When the programs ended and countries escaped from IMF influence, TB rates went down.

Tuberculosis is a good test because it has long been viewed as a social indicator. When your society breaks down, tuberculosis rates rise pretty quickly, particularly death rates from TB.

After the fall of the Soviet Union, economies crashed and per capita income plummeted. Crime rose, incarceration rates jumped, HIV spread. Aren't these the real factors behind rising TB rates?

Yet in some of the key countries where TB rates rose, economic growth increased when the wall came down. Researchers found a statistically independent effect of the IMF. That's not to say that the IMF was the only cause of TB in this region. The economy, incarceration, HIV -- these are all very important, but those factors could not fully explain TB in the region.

IMF programs drive down healthcare spending -- making fewer doctors available and causing the closure of clinics -- and this reduced funding explains the rise in TB incidence and death. The IMF does not direct countries to spend less on health. Rather, it imposes a set of policy constraints -- including overall limits on government spending -- that inevitably result in countries spending less on health.

Something that rarely happens in social science data was a dose-response relationship. The higher that the IMF loan went, the higher the TB rates went in proportion. Similarly, when the IMF loan ended, the TB rates fell to the same degree, and the duration of the loan corresponded exactly to the TB rates.

Not surprisingly, the IMF has rejected the findings. "The study does not take properly into account that countries implement IMF-supported reforms in times of economic distress."

Yet the authors of the study say they did. They compared two decades of data from the Soviet bloc. That region had relatively similar public health infrastructure, training systems, and general design of their TB program. Many of them received IMF loans of different size and duration. Therefore, they could test the impact of these IMF loans.

And they also received other loans from non-IMF sources, of similar size and duration, as a kind of control group. The non-IMF loans did not have these negative impacts either on health spending or on tuberculosis outcomes.

Even after correcting for potential selection bias, tuberculosis surveillance infrastructure, levels of economic development, urbanization, and HIV/AIDS, in those nations studied the IMF seemingly precipitated the worsening in tuberculosis rates

The IMF has argued there should have been more lag time between when countries took loans and when the impact on TB was evident. However, if you close a hospital, then people who already have tuberculosis will die, and they will die pretty quickly. As for changes in incidence, the loans began nearly 20 years ago and a couple decades is sufficient for incidence to change.

We would have averted tens of thousands of deaths and hundreds of thousands of new cases if countries in the region had never entered IMF programs.

Nothing suggests things are any different in Africa, where the IMF now exerts the most influence.

Can anything be done about IMF policies with such harmful impacts? Yes. The IMF is a human creation, not a force of nature.

The IMF needs approval from the United States Congress to sell some of the gold it controls to fund its administrative costs. Interest payments from middle-income countries previously paid for administrative costs, but these countries have paid back their loans in order to escape from IMF influence. Contingent upon approval, Congress could insist that the IMF first end the mandates that effectively restrict countries' health spending.

And who do Congress people listen to?

Labels: IMF, NEOLIBERALISM, PROGRESS.ORG

posted by MrK @ 9:47 PM