Background
After the era of the Millennium Development Goals (MDGs), the world’s leaders recognized that although progress had been made in some areas, many objectives had not been accomplished. Agenda 2030 continues the unfinished agenda of the MDGs but is more ambitious and comprehensive, acknowledging that more systemic policy changes are needed in both high- and low-income countries to successfully address ongoing health challenges facing the world’s population. Alongside concrete targets on, for instance, poverty reduction and improved health outcomes, Agenda 2030 places strong emphasis on reducing inequities and the need for fairer economic arrangements at the global level.
The call for such a comprehensive agenda is not new. Already at the Conference on Primary Health Care in Alma Ata in 1978 political leaders called for a ‘
New International Economic Order’ and emphasized that the world’s
‘sustained economic and social development’ is only within reach if its people are healthy [
1]. This was also a central message in the report of the World Health Organization’s (WHO) Commission on Social Determinants of Health, which attributed persistent poverty and inequities to a
‘toxic combination of poor social policies and programmes, unfair economic arrangements and bad politics’ ([
2 p. 1). The earlier WHO Commission for Macroeconomics and Health, released around the same time as the MDGs, pointed out that investments in health represent a useful and successful poverty reduction strategy, and that investments to improve population health would lead to better and stronger economic growth [
3].
More recently, in 2016, experts from the International Labour Organization (ILO), the Organization for Economic Cooperation and Development (OECD), and the WHO drew attention to how the health sector should be considered an economic resource-generating sector, not only by promoting a healthy and more productive population, but also by providing possibilities for paid employment [
4]. The goal of this High-Level Commission on Health Employment and Economic Growth (UNHEEG) was to stimulate countries to create 40 million new jobs in their health and social sectors as a means for inclusive economic growth in the SDG era. The Commission report estimated that for every additional year of life expectancy a country creates through health improvements, it generates a 4% increase in GDP [
4].
What does it take, then, to move from acknowledgement to action? The comprehensive nature of the Agenda 2030 represents not only an opportunity but also a challenge, as governments and multilateral organizations may use the extensive list of goals and targets as a ‘shopping list’, cherry-picking their favourites, or those easiest and less threatening to implement, rather than adhering to the Agenda in its intended holistic manner. The interlinkages between the goals are not automatically translated into a comprehensive policy-making approach, with implications for health improvement. Health remains an important part of the Agenda 2030, as reflected in the ‘health goal’ SDG3 on healthy lives and well-being for all with its expansive targets focusing on main health threats such as infections, non-communicable diseases, road accidents, and pollution, by fostering access to quality health services without inflicting financial hardship. While the accomplishment of SDG3 is an end in itself, it is also an important means to contribute to other SDGs, notably SDG8. The reverse question, however, is whether SDG8 unequivocally contributes to SDG3.
The objective of SDG8 is to promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work for all. Its first target (8.1) is to sustain per capita annual economic growth at a level of at least 7% of the GDP for the least developed countries (LDCs), which include our three focus countries [
5]. The use of the GDP as an indicator is not surprising, given that it is a widely-used indicator, is measured frequently, and allows inter-country comparisons. Moreover, there is a broad consensus among countries on the technical definition of the GDP. By extension, since its establishment in the Bretton Woods conference in 1944, the International Monetary Fund (IMF) has been using the GDP as its main tool in measuring a country’s economy, as can be seen in its prominence in the IMF’s indicators [
6,
7].
However, the pursuit of a GDP target in itself does not ensure either sustainability or inclusivity. Although this is recognised in different targets under SDG8, in practice, economic policies are often focused on a few macro-economic indicators, such as consistent GDP growth, low inflation, and a balanced budget. In many LICs and lower-middle income countries (L-MICs), this focus in their economic policy goals is often driven by policy advice from the IMF, or determined by conditions tied to IMF loans [
8]. It is well documented that the World Bank’s and IMF’s Structural Adjustment Programs (SAPs) in the 1980s and 1990s applied a one-size-fits-all approach targeting reductions in government spending and promoting deregulation and privatization [
9‐
12]. In many countries, this led to reductions in public investments in health and education, the negative effects of which are still being felt [
10]. Following extensive criticisms in the early 2000s, the IMF and World Bank started adopting more flexible adjustment approaches that emphasized poverty reduction. As of 2010, IMF programs also include social protection floors, aimed at increasing spending on public services such as health and education [
13].
In spite of the rhetoric that things have changed [
14], current policy conditionality under IMF loans still requires general fiscal austerity, posing unnecessarily tight limits on public spending [
15]. Targets for budget deficits and inflation remain low, in general arbitrarily set at 3 and 5% respectively, although there remains no consensus on the necessity for such low rates. These low targets impede governments from being able to increase their social spending [
16]. While the IMF now includes ‘priority’ expenditures on social programs, like distinct health programs or primary education, these pro-poor conditions are non-binding and non-compliance with them does not undermine ongoing financial support by the IMF. Research in 16 West African countries with IMF programs in the period 1995–2014, finds that less than half of social spending targets were met. In several of these countries the IMF advised against increases of social spending out of concern that these increases would not be sustainable. Moreover, health spending in this sample of 16 countries was negatively correlated with the number of binding conditions included in the program [
10]. Perhaps indicative of the dominating influence of fiscal austerity, similar research in West African countries with IMF programs between 1985 and 2014 found that even when social spending floors were not met, budget balance conditions were consistently abided by and often far-exceeded [
11].
In this article, we discuss how the focus on SDG8.1, and the way in which GDP growth is pursued with a focus on austerity, can impair or delay the realization of SDG3 for health and well-being for all. We express concerns on the choice of GDP as an SDG indicator of inclusive and sustainable economic growth in general, and how it may undermine the prioritization of social sectors, including health, and hamper equity. We discuss alternative indicators for, as well as alternative paths towards, sustainable development, and the need for drastic action at the global level to promote economic justice. Without this, it will not be possible to realize the Agenda 2030.
Discussion
The above findings clearly indicate that, in order to reach the levels of health investment required to realize the SDG3, countries would need levels of GDP growth that they have never before witnessed. Even if this highly unlikely event were to happen in a distinct future, our country analyses underline the fact that GDP growth is still no guarantee for an increase in government health spending or poverty reduction. However, it is true that LICs and L-MICs will need to expand their economic base (and in ways that do not jeopardize SDGs related to the physical environment, including climate change) and take the political decision to invest those gains in social spending, including health.
As reported by the United Nations, GDP growth has been volatile and far below the target of 7% set for the LDCs in SDG8.1. The average rate of growth in LDCs has even decreased from 3.5% in the period 2000–2004 to 2.3% in the period 2010–2016 [
47]. In our analysis, over the last 10 years, we saw GDP per capita increases in Uganda and in Tanzania, while it has been volatile and not growing in Malawi. Meanwhile, government health spending per capita over this same period went up in Malawi and in Tanzania, but went down in Uganda. As well, Tanzania’s steady growth of 7% annually did not initially lead to any increase of public health spending, which only started to match GDP growth in the last 2 years. This underscores once more that an increase in GDP does not always lead to higher government health spending.
Under the influence of structural adjustment in the past, our focus countries (as many others) have focused their economic policies on lowering budget deficits through reducing public expenditure. This continuing emphasis on fiscal austerity directly or indirectly leads to reduced (or insufficiently increased) investments in health. Under SAPs, health spending was cut in many countries [
48].
Our analysis of the latest IMF programs and policy advice in the three countries showed that fiscal consolidation was still a prominent part of all three. Adjustment measures considered by Uganda in the years 2010–2013 were related to wage bill cuts/caps, consumption (VAT) tax increases, and pension reform, with the wage bill cuts/caps leading to salary erosion among public healthcare providers [
16]. Tanzania has followed advice regarding the reduction of subsidies for agricultural products, wage bill cuts/caps, and pension reforms [
16]. In addition to these, the government also decided to increase consumption taxes and electricity prices [
9]. In the case of Malawi, the IMF program strongly emphasized the need for tight fiscal policies, recommending spending reductions on agricultural and fuel subsidies, and limits on public sector wage increases. Our findings on wage bill cuts imply outcomes similar to those found in studies of IMF programs in Sierra Leone and Guinea, which called for wage bill freezes or reductions during and after the Ebola crisis, and which led to serious reductions in health worker to population ratio in Sierra Leone, as well as in nearby Ghana and Senegal [
10]. Consistent with our findings, research by Eurodad on conditions attached to IMF loans in 26 country programs approved in the years 2016 or 2017 revealed that, contrary to what the IMF has been propagating, the majority were geared towards fiscal consolidation, including conditions to restrict spending and/or increase taxes [
15].
With a view to increasing tax revenue, IMF advice focuses primarily on consumption taxes such as VAT (as in our three focus countries), which are generally regressive and hurt women and the poor disproportionately. Such taxes can contribute to or exacerbate existing poverty rates and (health) inequities. Analysis by the Commitment to Equity Institute revealed that in several of the twenty-nine countries they studied, including in Tanzania and Uganda, ‘
the extreme poverty headcount ratio is higher after taxes and transfers than before’ and identify consumption taxes as ‘
the main culprits of fiscally-induced impoverishment’ ([
49] p. 4). In each of the three focus countries, recent IMF programs recommend an expansion of VAT. Furthermore, in Tanzania the government decided to lower income taxes for the wealthy and instead shifted the tax burden to the rest of the population [
45]. More progressive tax advice does appear in IMF programs, as we have noted, but whether such measures are adopted by governments or are sufficient to improve substantially public revenues and subsequent increases in health and social protection spending remains moot. Corporate tax rates in all three countries, for example, have not increased over the past decade [
50].Property taxes, as proposed by the IMF for Tanzania, may be progressive if applied only to large land-holdings of wealthier groups, but could also be regressive if affecting small-hold farmers or poorer urban dwellers.
Since 2010, IMF programs started to include non-binding social spending floors [
13]. Although social spending floors are a move in the right direction, the targets would need to be set at a meaningful level to bring countries closer to achieving SDG3, which is not yet the case for our three focus countries. In Malawi the social spending target is too low to have any substantive health impact. In Uganda, the IMF advised the government to increase much needed social spending but only when economic growth recovered. In Tanzania the IMF advised the government to increase investments in the infrastructure sector while at the same time freezing total spending.
Another similarity found in all three countries is their adherence to the IMF’s advice of a floating exchange rate. In the case of currency devaluation this can drive up prices of imported goods important for health, including medical supplies and medication, and can rapidly harm the entire health care service provision of a country. Additionally, all three countries have adopted, or are in the process of adopting, an inflation-targeting framework, which is usually implemented through maintaining high interest rates. High interest rates can be harmful for the economy, by increasing the cost of borrowing for small and medium sized enterprises (reducing their expansion and employment creation) and for the government (increasing their debt burden and thereby reducing their fiscal space). In spite of the fact that there is no empirical consensus that inflation rates of up to 20% are harmful for the economy, the IMF recommends setting inflation targets at ‘lower single digits’ [
51].
Clearly, alternative policies are needed to make greater progress towards not only SDG3, but other SDGs that have indirect but important impacts on health. For country level policies, experts have been proposing different options for more accommodating macroeconomic policy to expand government expenditure. An empirical study carried out in 2017 for the ILO on fiscal space for social protection in relation with the SDGs in 187 countries [
45] showed that a 2% increase of a country’s fiscal deficit could result in vast increases in the resources available for public health. The authors suggest that.
it is important to carry out a rigorous assessment of fiscal sustainability within a country, taking into account not only economic aspects such as debt burden, revenue generation capacity and likely GDP growth trajectory but also the potential opportunity cost of foregoing social spending. ([
43] p.49)
The second channel of a more accommodating macroeconomic policy is via more expansionary monetary policy. Low inflation, although still considered to be the best tool to ensure macroeconomic stability and growth, has become a goal in itself pushed for by the IMF [
45,
52]. The views on what consists an ‘acceptable’ and ‘safe’ inflation level have been very diverse and conflicting, ranging from 3 to 40% [
45,
52]. The most common tool to maintain low inflation is by setting high interest rates. If this policy was loosened and interest rates lowered, it would be less costly for both government and entrepreneurs to borrow and thus make investments, including in the public health sector.
These options need to be further explored at the country level. In addition, we question the use of a unique SDG target on GDP growth. It is known that both the reduction of poverty (SDG1) and a healthier population contribute to economic growth [
2,
4], as does SDG4 (quality education) [
53] and SDG10 (reduced inequalities) [
2,
54]. The inclusion of SDG target 8.1 risks bringing more health harm than good, as it suggests that GDP growth is an end in itself. In doing so, it presents governments with the option to put more emphasis on SDG8.1 following the conventional, but empirically unfounded, argument that GDP growth will inevitably ‘trickle down’ and translate into a wealthier, healthier, and more inclusive society.
We do not deny that in order to increase spending on social sectors, including health, LICs and L-MICs will need to increase their overall public revenue. Current economic policies being pursued by, and/or promoted via IMF programs and policy advice, do not appear to result in significant GDP growth, nor lead to a sufficient level of investments in health, and DAH remains inadequate to meet the shortfalls. The funding gap is not so large, though, when compared to the income that is lost every year due to tax avoidance and tax evasion, to debt repayments, and to unfair trade arrangements [
55]. Some, but not all, of these international challenges are targeted in SDG17 – a global partnership for sustainable development. SDG17 includes several targets aimed at increasing finance for development, including a call on high-income countries (HICs) to implement official development assistance (ODA) commitments, support developing countries to increase domestic resource mobilization, and reduce the level of debt service of developing countries. Progress on this SDG is conspicuously lagging behind. Commitments to increase ODA and improve its quality are not implemented, developing countries’ debt service payments are rising as percentage of their GDP, and the rate of taxation relative to GDP has fallen for Sub-Saharan Africa and for the LDCs [
56,
57] What is missing in this SDG, is a target for reducing tax avoidance and evasion, even though global losses due to tax avoidance are estimated at USD 500 billion annually [
58]. SDG16 does include a target on reducing illicit financial flows, but the SDG progress reports do not mention monitoring of this indicator [
59].
Although SDG8.1 identifies its GDP growth goal for LDCs only, its legitimation of GDP as the most appropriate economic metric can influence its continued adherence in LICs, L-MICs and HICs. This will be problematic for health and development in the LDCs, since aggregate (global) GDP growth increases the already oversized carbon footprint of HICs, and to lesser extent LICs and L-MICs, and stretches the economy beyond the planet’s ecological ceiling [
60]. Emphasis on the constant pursuit of GDP growth is also likely to prevent HICs from taking action towards the realization of SDG17.
Several alternative measurements to the GDP have been developed over the years. The Human Development Index (HDI), first introduced in 1990, measures achievements in three basic dimensions of human development—a long and healthy life, access to education, and a decent standard of living [
61]. Building on that, the Human Development Report 2010 introduced the inequality-adjusted HDI (IHDI) [
62]. The same year, the Global Multidimensional Poverty Index was developed. It is a measure of serious deprivations in the dimensions of health, education, and living standards that combines the number of deprived and the intensity of their deprivation. While it measures the same dimensions as the HDI, it has more indicators, which makes it more complicated to calculate but less susceptible to bias [
62]. GDP per capita and HDI have similar trajectories according to trend data for the focus countries of this study. However, in all three countries, there is a loss in the HDI figures when adjusted to inequality. The loss stands at approximately 30% for Malawi, 28% for Uganda, and 25% for Tanzania [
61]. This fact is contradictory with the neoliberal suggestion that constantly increasing economic growth will finally eliminate inequalities, as once depicted by the iconic Kuznets’ curve [
60].
These indicators are already widely used alongside, but not replacing, the GDP. An alternative that could replace GDP as a policy goal is the Genuine Progress Indicator (GPI). GPI has already been used by some states of the United States of America, with Costa Rica, Scotland, and Sweden soon to follow. The GPI starts with a measurement of GDP but then takes into account positive non-monetary factors such as household and volunteer work, and subtracts negative factors such as pollution, resource depletion and crime. It also adjusts for inequality. If governments shifted towards pursuing a maximization of the GPI instead of the GDP, they would adopt policies that would facilitate inclusive and sustainable economic outcomes, accelerate progress towards social well-being and allow for a fairer distribution of wealth and health across the globe [
63,
64]. As suggested by Raworth, economic impact assessments should be based on indicators of ecological overshoot and domestic social inclusion in order to achieve ‘
human prosperity in a flourishing web of life’ ([
60] p. 60).
Limitations
As we conducted a purposeful selection of the most recent IMF documents for analysis, our approach was not exhaustive and might lack relevant literature that would have given a deeper insight. In addition, we chose to focus primarily on the IMF’s role in the countries’ policy-making acknowledging its prominent role in macroeconomic advice. However, to expand the scope of knowledge on the full picture of macroeconomic development in the three focus countries, other influential international financial institutions and organizations, such as the World Bank, regional development banks, and multi/bilateral donors could have been taken into account. This study focused on three countries in the East African region, which diminishes generalizability and external validity of the study. However, as our focus countries share political and economic features with several LICs in Africa, the insights gained may give rise to further studies and evidence-based advocacy in the region.
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