While quoting the research of the book ‘A thousand cuts: social spending in the age of austerity’ in the previous part of this series of articles, it was pointed out that there existed a negative correlation between health spending and total number of International Monetary Fund (IMF) programme conditionalities, yet to ascertain whether IMF conditionalities have a causal relation with government health spending, the same book indicated that ‘…a number of political, economic, and social indicators…’ needed to be controlled for reaching ‘…a better understanding of the causal impact of IMF conditionality on government health spending [which, in turn,] necessitates the use of multivariate statistical models…’

Hence, taking data for 195 countries, including Pakistan, over almost two decades, that is, for the period 1995-2017, regression analyses pointed towards existence of a causal relationship whereby ‘on average, each additional binding IMF condition decreases government health spending as a share of GDP by 0.039 percentage points…’ where while most of the causation came from ‘quantitative conditions’ – whereby ‘each additional quantitative condition’ reduced government health spending by 0.035 percentage points — and not ‘structural conditions’.

READ MORE: OPINION: Growth model and IMF conditionalities – IV

Having said, once these conditions were disaggregated, it was found out that within structural conditions, ‘labour policies’ did have a significant negative impact on health spending.

The book pointed out, ‘the point estimate indicates that each additional condition in this policy area reduces government health spending as a share of GDP by 0.230 percentage point…’

Moreover, when IMF condition regarding fiscal balance is also taken as a control, given as the book pointed out: ‘…it could be because we include in our statistical models the government balance (lagged one year), which may be the precise channel by which fiscal policy exerts an influence upon government health spending. By taking it as a control, we effectively block this pathway…’ For this reason, when regression analysis in the book is — done ‘…without controlling for government balance… [it found] a statistically negative effect of fiscal conditions on government health spending as a share of GDP to the tune of 0.263 percentage points per condition.’

Hence, the book indicates that while ‘overall,........

© Business Recorder