- Health spending has been cut by 18% in countries where the IMF is requiring large-scale austerity rather than allowing them to seek debt relief
- Education spending has been cut by 16%
- GDP growth per person is just 1.2%, less than half the average for countries in the global South
Lower-income countries that have been refused the opportunity to seek debt relief by the IMF have instead cut health and education spending by a sixth, according to new research by Debt Justice.
The IMF is breaking its own policies by finding external debts in these countries to be sustainable, when paying debts in full is leading to large cuts in spending on key social services, and trapping countries in low economic growth.
The new research is being released ahead of crucial IMF decisions on whether countries including Kenya and Senegal need debt relief.[1] The IMF is also reviewing its definitions of when countries need debt relief, which will be part of discussions at the IMF and World Bank Annual Meetings in Washington DC (13-19 October).[2]
Heidi Chow, Executive Director of Debt Justice said:
“By denying debt relief for countries that need it, the IMF is acting as a debt collector for rich and powerful creditors, while harming millions of people in debtor countries. Forcing countries to pay debts in full is leading to deepening crises in health, education and vital public services. The IMF needs to follow its own policies and support debt cancellation to meet development goals, alongside major improvements to the debt relief system.”
Abdul Khaliq, from the Committee for the Abolition of Illegitimate Debt Pakistan, said:
“The IMF’s austerity measures attached have come at a heavy social cost. The removal of subsidies on fuel, electricity and food has led to higher prices, especially for essential goods, affecting low-and middle-income households the most. Due to rising costs and stagnant wages, poverty levels have increased. IMF-mandated cuts in government spending have negatively impacted healthcare, education and social welfare programs.”
The Debt Justice research covers the countries where the IMF is giving long-term loans and where the IMF says there is a high risk of countries not paying, but that large-scale austerity is needed, rather than debt relief.
The research finds that, over the course of IMF programmes in the eleven countries which meet these criteria, real public spending per person has on average been cut by 10%, education spending cut by 16% and health spending by 18%. Real economic growth per person has averaged just 1.2%, less than half the average for countries in the global South.
The eleven countries are Argentina, Republic of Congo, Egypt, the Gambia, Guinea-Bissau, Kenya, Mozambique, Pakistan, Papua New Guinea, Sao Tome and Principe and Sierra Leone.
The IMF has a policy which requires it to find that debt relief is needed when the Fund agrees loans if paying external debt in full will lead to a lack of progress towards development goals and unsatisfactory levels of GDP growth.[3] However, in none of their debt sustainability assessments in the eleven countries does the IMF even analyse what the impact of paying the high levels of debt in full will be on growth and development.
Notes
[1] The full research including methodology is available at https://debtjustice.org.uk/wp-content/uploads/2025/10/IMF-and-sustainable-debt_10.25.pdf
A spreadsheet with all the calculations is available at https://debtjustice.org.uk/wp-content/uploads/2025/09/IMF-sustainable-debt_10.25.xlsx
[2] The IMF is currently reviewing its Debt Sustainability Framework for Low Income Countries.
[3] The policy is that debt is sustainable where there is a “high likelihood that a country will be able to meet all its current and future financial obligations [which implies] that the debt level and debt service profile are such that the policies needed for debt stabilization under both the baseline and realistic shock scenarios are politically feasible and socially acceptable, and consistent with preserving growth at a satisfactory level while making adequate progress towards the authorities’ development goals.”
International Monetary Fund (2018) “Guidance Note on the Bank-Fund Debt Sustainability Framework for Low Income Countries”. www.imf.org/en/Publications/PolicyPapers/Issues/2018/02/14/pp122617guidance-note-on-lic-dsf