The convergence of health, economic and social crises over the past 1.5 years has posed profound questions over the direction of travel for the world after COVID-19. The narrative emerging out of major international organizations like the International Monetary Fund stresses avoiding a ‘divergent recovery’, whereby some countries steam ahead with high growth rates underpinned by robust government interventions and others fall further behind. In this account, crisis aftermath should not witness budget cuts, but investment in employment and human capital formation. So, is austerity a thing of the past? In this article, we review available evidence, focusing on public spending projections by the IMF and the precise content of IMF lending arrangements. Overall, we find that abandonment of the austerity argument is partially true right now, and questionable in the medium-term. Our analysis of public expenditure projections reveals that by 2023, 83 out of 189 countries will face contractions in government spending compared to their 2010s average, thereby exposing a cumulative total of 2.3 billion people to the socio-economic consequences of budget cuts. Most of the contracting countries will be middle-income, while public spending in low-income countries is expected to stagnate at low levels. Further, the IMF's lending arrangements reveal the return of extensive austerity measures and structural reforms, reminiscent of the organization's past policy advice. Drawing on these findings, we elaborate on how this will likely impact global public health.
- Efforts to achieve equitable and sustainable development once the pandemic subsides could be jeopardized by an impending wave of budget cuts.
- Policymakers need to prepare for and mitigate crises in public finances in the medium-term.
- International financial institutions need to bolster their financial assistance to help countries bridge their financing gaps without resorting to stringent conditionality.
- Austerity measures have repeatedly been shown to have adverse socio-economic effects and should therefore be avoided.
- Progress in investing in health systems needs to be maintained with a focus on achieving universal health coverage rather than imposing budget cuts to the healthcare sector.