Advocacy on the political determinants of health has mostly focused on governments, overlooking the transnational actors and processes that drive health inequity. In 2014, the Lancet—University of Oslo Commission on Global Governance for Health explored the impact of the global governance system on health, identifying austerity measures as a key area in which global policy interventions could make a difference. Rather than being part of the solution, however, the global governance system and specific institutions within it, play a crucial role in exacerbating health inequity. In this piece, I focus on the International Monetary Fund (IMF) and its role in the recent crisis in Sri Lanka.
Until the 1980s, Sri Lanka, where I live and work, was cited as a developmental model for strides made in human development despite its “developing” status. Such progress was attributed to equity-oriented welfare policies and long-standing public investments in key social sectors like health and education. After adopting neoliberal policies as part of an IMF-led structural adjustment package in the 1970s, followed by repeated economic crises, numerous IMF agreements, and a protracted civil war, successive governments chipped away welfare spending. Yet, even today, Sri Lanka remains among a few LMICs that support non-fee levying public health and education, from primary through tertiary levels, although these systems are under strain, currently at tipping point, receiving less than 2% of GDP (health 1.9%, education 1.2%).
In April 2022, the government of Sri Lanka defaulted on its external debt and approached the IMF for the seventeenth time in its post-independence history. The latest IMF agreement, which critics argue is primarily concerned with protecting private creditor interests, includes several untenable targets, including a primary budget surplus of 2.3% of GDP by 2025 (from -3.8% in 2022) that has led to severe austerity, and a debt-restructuring programme that is expected to result in an external debt servicing equivalent of 4.5% of GDP or 30% of government revenues (i.e., more than how much the public health and public education systems together receive at present).
Between 2021 and 2023, total health expenditures increased by about 10% in nominal terms, but in reality the health budget received a massive cut of about 35% in dollar terms due to devaluation of the Sri Lankan rupee, resulting in widespread unavailability of essential medicines and services. In the education sector, government spending on general and university education rose by 17.4% in rupees, but similarly represented a reduction of about 31% in dollar terms. The state university system, in which I teach, has been defunded, with the government only allocating funds to cover our salaries since 2022, leaving the rest to be ‘self-generated’ through fee-levying programmes, with a freeze on recruitment. Rising costs of living, including an unfair income tax regime that benefits the top 10%, have led workers in both sectors to trade union action, with frequent disruptions to services. Medical professionals and university teachers are leaving the country in droves, many unable to cope with household debt.
The IMF’s austerity measures have hit the poorest hardest. With food prices spiraling upwards, malnutrition is rife. Fuel and energy price hikes brought on by cuts to subsidies have disconnected over a million households from the electricity grid. Swathes of children are dropping out of school, and many elderly people cannot afford medical care due to out-of-pocket payments for medicines. The country’s famed maternal and child health indicators are in disarray with worsening child malnutrition and rising maternal mortality.
Sri Lanka is a case in point. However, the austerity ‘pandemic’ is spreading across the world, with people in many countries, including Ghana, Zambia and, most recently, Kenya, experiencing its dire consequences. Time is now for the global health community to call for accountability on the part of powerful transnational actors like the IMF and commercial creditors, who lend poorly, and then support/compel governments to implement policies that have drastic consequences for people’s health.
About the author
Ramya Kumar is Senior Lecturer attached to the Department of Community and Family Medicine, Faculty of Medicine, University of Jaffna, Sri Lanka. Her training is in medicine and public health.
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