Growing debt burden in low- and middle-income countries during COVID-19 may constrain health financing

ABSTRACT

Debt burdens are growing steadily in Low- and Middle-Income Countries (LMICs), compounded by the COVID-19 economic recession, threatening to crowd out essential health spending. In 2019, 54 LMICs spent more on servicing their debt to foreign creditors than on financing their health services. While development loans may have positive effects on population health, the ensuing debt servicing requirements may have detrimental effects on health through constrained fiscal space for government health spending. However, the existing evidence is inadequate for an understanding of whether, and if so how and under what circumstances, debt may constrain government health spending. We call for more research on the impacts of debt on health financing and call on creditors and borrowers to carefully consider the potential impacts of lending on borrower countries’ ability to finance their health services.

KEYWORDS:

• Debt
• development loans
• COVID-19
• health financing

Responsible Editor Stig Wall

Responsible Editor Stig Wall

Acknowledgments

The authors would like to thank Dr Henning Tarp Jensen for his valuable comments on an earlier version of the manuscript.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Author contributions

FF conceived of this short communication, conducted the analysis, wrote the first draft of the manuscript and implemented comments from co-authors. JB and MM provided supervision and intellectual input along all stages of preparation of the manuscript and edited and approved the text before submission.

Ethics and consent

Ethical approval was obtained for FF’s PhD project, as part of which this text was written, from the London School of Hygiene Observational/Interventions Research Ethics Committee.

No consent was needed for this work.

Paper context

Existing evidence on the associations between public external debt obligations in Low- and Middle-Income Countries (LMICs) and health spending is scarce and conflicting. Meanwhile, the debt burdens of LMICs are growing steadily, potentially constraining essential health spending. This short communication calls to action both creditors and borrowers to carefully consider the health financing impacts of lending and asks the research community to investigate the effects of debt on health financing in LMICs.

Additional information

Funding

This manuscript was written as part of FF’s PhD project funded by the Economic and Social Research Council (ESRC) Doctoral Training Partnership (DTP), Reinholdt W. Jorck og Hustrus Fond, Torben og Alice Frimodts Fond, Christian Larsen og Dommer Ellen Larsens Legat, The Anglo-Danish Society Scholarship, Den Raben-Levetzauske Fond, Christian og Ottilia Brorsons Rejselegat for yngre videnskabsmænd- og kvinder, and Carl og Ellen Hertz’ legat til Dansk Læge- og Naturvidenskab. No other funding was received for this work.