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Bank and Fund undermining health, education spending

2 July 2007


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A high powered working group examining the IMF and health spending found that the Fund has unduly constrained counties’ policy choices, while other recent reports accuse the World Bank and the IMF of undermining quality education. Meanwhile, the Bank’s private sector arm has stepped up its support for private schooling in Africa.

The Center for Global Development’s working group – chaired by ex-IMF staffer David Goldsbrough and including officials, academics, and representatives of civil society – released its report on the effect of the IMF on health spending after nearly a year of deliberations and the consideration of detailed case studies from Mozambique, Rwanda and Zambia. It found that: “IMF-supported fiscal programs have often been too conservative or risk-averse. In many cases, they have unduly narrowed policy space by not investigating sufficiently more ambitious, but still potentially feasible, fiscal options for higher spending and aid.”

the Fund has unduly constrained counties’ policy choices

Alongside recommendations for donors, civil society and developing country governments, the working group had six recommendations for the IMF:

  • help countries explore a broader range of options for the fiscal deficit and public spending;
  • clarify the expectations for IMF staff in making alternative analyses of aid;
  • be more timely in release of information about aid expectations;
  • drop wage bill ceilings from nearly all programmes;
  • give greater emphasis to short-term expenditure smoothing; and
  • be more transparent about its rationales and assumptions.

Education uproar

In late June the World Bank co-hosted a conference in Mali on abolishing school fees. Despite such work from the School Fee Abolition Initiative, a joint project of the World Bank and UNICEF, the late UN Special Rapporteur on the right to education, Katerina Tomaševski, rebuked the Bank in her report, The State of the right to education worldwide. “The US government and the World Bank lead those who deny that education is a universal human right. That education should be free and compulsory is absent from the World Bank’s educational vocabulary. Instead, education is analysed in terms of supply and demand. This approach denies that compulsory education is a governmental responsibility. The result is that governments are pressurised not to provide free education, but to transfer its cost to families and communities.”

The report acknowledges the recent Bank efforts to end user fees in education but clarifies that “charges were to be opposed [by the World Bank] only where levied by the central government, not by local authorities or schools.”

An ActionAid International report, Confronting the contradictions takes the IMF to task for setting stringent macroeconomic conditions, particularly ceilings on the wage bill (see Update 51 ), on low-income countries that prevent the hiring of enough qualified teachers. Based on in-depth research in Malawi, Sierra Leone and Mozambique, the report concludes: “The IMF may have varying degrees of influence in setting the wage bill ceilings. However, by insisting on overly restrictive macroeconomic policies that constrain government spending on wages, it is in part responsible for the persisting teacher shortage.”

In response, Calvin McDonald, a director in the IMF Africa department, cited the complexity in getting more teachers into the classroom in low-income countries, and claimed the Fund was part of the solution, not part of the problem: “We offer them the best chance to grow faster and thus be able to put more students in better-equipped classrooms with more qualified teachers.” At the user fees conference, an IMF representative argued that wage bill ceilings were not a major obstacle to teacher recruitment

Akanksha Marphatia of ActionAid disagreed, noting that wage bill ceilings are still in place in Malawi and arguing that countries must be given more leeway to set their own budgets and macroeconomic policies, not have them dictated by the Fund: “the IMF should hand back control of policy making processes to sovereign government, the only body that citizens can hold to account for the use of public resources and the fulfilment of basic rights.”

In a controversial move, the International Finance Corporation (IFC), the Bank’s private sector arm, committed new money to private schooling in Africa through loan guarantees to local banks that provide finance to private educational institutions. In May it increased the amount available in Ghana from $2.1 million to $3.4 million, and in June it launched a new Africa Schools Program with $50 million in credit guarantees and $5 million in advisory services available to 10 countries in Sub-Saharan Africa.

According to the IFC, the goal is to "improve the financial and managerial capacity and educational quality of private schools. The private sector can fill the void. The IFC is helping private schools obtain commercial financing and providing advisory services to improve the quality of education they offer, working with a local bank to finance schools with 6,000 students in Ghana (11 schools) and adapting this innovating model for re-use in Kenya and beyond."

Despite rhetoric about helping African countries meet the MDGs on universal primary education, education activists are worried that international subsidies for private education undermine the quality and availability of public schooling and absolve governments of their obligation to provide education to all children.

Gorgui Sow, the coordinator of the Africa Network Campaign on Education for All, said: “The World Bank and IMF policies are actually promoting a decline in spending on quality public education and literacy. They are asking our governments to recruit para-teachers for poor African children’s education while supporting private schools for the minority of rich children. Without high quality public education for all children, there will be no way that Africa can meet the MDGs this century.”