Since the emergence of the COVID-19 pandemic, countries in the Global South have not only had to deal with the pressing health emergency but also with a highly destabilizing international economic environment [1]. Economic slowdowns stemming from pandemic-abatement policies were followed by fiscal crises as a result of rising energy and food prices. The interest rate increases by central banks in the Global North compounded these pressures, leading to increases in debt service requirements for low- and middle-income countries [2, 3]. By end-2023, 36 low- and lower-middle income countries were in debt distress or at high risk of it, and many more have brewing debt concerns [4]. This economic situation has alarming implications for health.

As shown in Fig. 1, external debt service is anticipated to be over 3% of GDP in 2024, thus exceeding public spending on health at the height of the pandemic in 2020. When disaggregated into income groups, upper-middle income countries exhibited debt service costs of 3.7% of GDP in 2020 but this decreased to 2.7% by 2024, whereas lower-middle income countries experienced a rapid escalation of these costs, increasing from 2.5% of GDP in 2020 to 3.6% by 2024. The debt servicing costs of low income countries are rapidly increasing too, more than doubling as a share of GDP, from 1.2% in 2020 to 2.5% in 2024. Even though it appears that debt service problems are less pronounced for low income countries, this is because they are de facto shut out of private markets, thus elevating the importance of the IMF to them as a key source of financing. Health spending data is not available after 2021, but it is likely that as the acute phase of the pandemic abated, health spending correspondingly declined across all income groups.

Government expenditure on health and external debt service as a share of GDP in low, lower-middle, upper-middle, and high income countries. Note: Debt service includes public and publicly guaranteed external debt but excludes International Monetary Fund debt service (charges and repurchases) and domestic debt. Data sources: [5, 6]

Against the backdrop of intense fiscal and debt pressures and mounting social dislocations, Global South countries have increasingly turned to the International Monetary Fund (IMF), the world’s lender of last resort, for financial assistance [7]. The organization makes such funding contingent on the borrowing governments introducing a range of policy reforms, known as conditionality, that commonly target fiscal policy, taxation, and a broad swath of development policies. In particular, the IMF’s budget targets are devised in quarterly or biannual program reviews in light of the most up-to-date estimates of prospective output, inflation, and available external financing. Such forecasts—like any economic projection—are not a precise science, but they do factor in all available information on expected revenues, expenditures, and inflation. To ensure implementation of the mandated targets and reforms, the IMF assesses performance during these reviews and disburses its loans in ‘tranches’: successful implementation of the mandated reforms unlocks a new batch of financing, while inadequate progress stalls the disbursement of funds [8] Excluding emergency pandemic-era assistance, 47 countries turned to the IMF for conditionality-carrying loans between 2020 and 2023. Of these, the majority were for three- or four-year lending programs (the Extended Credit Facility or Extended Fund Facility) that stipulate extensive policy reforms and have a longer timeframe for their implementation. The remainder were shorter, more targeted lending programs, commonly lasting one year.

The IMF’s increasing involvement in developing countries over the medium term brings to the fore long-standing questions on the social and health consequences of the organization’s policy advice, debates dating back to the 1980s when pioneering UNICEF research pointed to the human costs of economic reform policies [9]. Since then, voluminous scholarship has documented how IMF-mandated austerity measures undermine public health. This literature has pointed to various channels through which this relationship operates. First, and most conspicuously, the IMF’s reforms stipulate extensive budget cuts, which in turn directly affect the availability and quality of a range of social and health policies [10,11,12,13,14,15,16,17]. Second, these same reforms have also indirect implications for social policies, as they are associated with overall economic contractions and thus limit the available public resources to be invested into social protection over the medium-term [18]. Finally, austerity policies have manifold implications for the social determinants of health—that is, the conditions in which people are born, age, and work in [19]. For example, IMF programs are associated with steep increases in inequalities [20,21,22]—especially linked to adverse effects on children and women [23, 24]—and with decreasing eligibility for or access to social protection policies [10], developments which in turn increase individual health risks and have long-lasting consequences for health status.

Partly in response to such criticisms, the IMF now portends to have reformed its practices. In recent years, the IMF introduced new policies and strategies that are intended to protect and even increase social expenditures in order to ensure that its conditions do not hamper the ability of countries to invest in social protection and meet the Sustainable Development Goals [25,26,27,28,29,30,31,32]. The most comprehensive review to the IMF’s modus operandi vis-á-vis social protection came in June 2019, when the organization launched its Strategy for IMF Engagement on Social Spending [29] outlining the institutional view on social spending that will guide IMF staff on social protection, health, and education for the foreseeable future. According to former Managing Director Christine Lagarde, the strategy ‘is consistent with and supportive of the scope and objectives of social protection as defined by the international community, notably in the SDGs’ [27]. The strategy seeks to link IMF lending practices to social spending considerations, provided that this still foregrounds efficiency and fiscal sustainability considerations, and emphasizes the need to mitigate the adverse consequences of austerity and related structural reforms on vulnerable populations.

The key operational instrument in the IMF’s new strategy were the so-called ‘social spending floors’—quantitative targets that spell out the minimum public expenditure on selected social policies for countries under IMF programs. These floors are not, in actuality, a novel practice. They have been increasingly introduced in IMF programs since the turn of the millennium. As recently as 2019, four out of five IMF programs included at least one social spending floor [10]. Instead, the new strategy formalized such engagement and sought to clearly operationalize it for its staff involved in the design of lending programs. The benchmark for success was to be whether ‘on average, education and health spending in program countries either increased by more than, or at the same rate as, spending in non-program countries’ [29].

As a starting point, this type of comparison is problematic on two counts. First, it suggests countries that turn to the IMF for support are comparable to those that do not. For example, low-income countries that do not borrow from the IMF may face major developmental challenges—like the incidence of war—which depress social expenditures. Second, the comparison implies that comparing spending data of the year after IMF loan approval with that of the year before is a reasonable approach. However, in the year prior to entering an IMF agreement, countries tend to face major economic crises, which generally depress social spending. Assuming that the IMF helps stabilize economic conditions, a social spending increase may signal a return to a longer-term spending trend, rather than be attributable to the IMF program.

Even with these shortcomings, the IMF’s new strategy on social spending can represent a step forward for the organization, if it succeeds. This would mean that the IMF has genuinely sought to revamp its practices, albeit within the constraints of its own bureaucratic approach to this issue. In contrast, it is also possible that the IMF can use this new strategy to attempt to placate critics by only ceremonially changing underlying practices to comply with the new operational guidance [33].

This article seeks to take stock of these empirical issues by offering extensive new data to examine the IMF’s post-pandemic performance vis-á-vis social protection. As we have seen, IMF programs are designed after the organization’s staff model expected fiscal needs and inflationary pressures. This means that if we actually observe social spending cuts when we should—based on IMF proclamations—expect social spending to be stable or expand in real terms, then either the IMF’s projections are off the mark or the projections do not devote adequate attention to sheltering the areas of spending that they claim to promote. In either case, the implication for the borrower is the same: constrained fiscal space for social expenditures.

After outlining our data collection approach, our analysis proceeds in three steps. First, we document the return of austerity—that is, rapid and extensive fiscal consolidation targets—in the conditionality attached to IMF loans. This is already alarming for public health and social cohesion, given the evidence that these policy domains are commonly at risk from budget cuts [34,35,36,37,38]. Second, relying on policy documents and official statements, we review the evolving engagement of the IMF with health and social protection issues in its operations. In particular, the organization has now turned ‘social spending floors’ into the spearhead of its new approach, intended to ensure that such spending does not sink below a certain level over the course of lending programs. Third, we present extensive new evidence on the performance of these floors in the IMF’s post-pandemic lending.