The Health of Egyptians in Light of Emergent Change

Ahmed Rashad, 05 Dec 2017
Ahmed Rashad

Facing financial pressures, the Egyptian government decided in 2015 to turn to the IMF for a $12 billion loan. The IMF is the last resort for countries experiencing economic crises. Borrowing countries are often required to implement Structural Adjustment Programmes (SAPs), which often involve restructuring the economies of borrowing countries into free economies. In Egypt, the Government decided to float the EGP against foreign currencies in addition to gradually reducing energy subsidies and introducing a value-added tax with the aim of reducing the budget deficit. However, it remains difficult to predict the impact of the Programme on the health of Egyptian citizens on the long and short terms. On one hand, the loan reduces financial pressures and sends positive signals to donors and investors that the country is pursuing a sound fiscal policy. On the other hand, the IMF Programme requires the implementation of social policies that may have repercussions on the health of citizens.

 

The SAP has achieved a number of positive macroeconomic results, most notably with the economic growth rate reaching 4.1% in 2017, following a slowdown in the Egyptian economy, with the growth rate dropping to 2% between 2011 and 2014. In addition, the total budget deficit fell in the first quarter of 2017 to 5.4% from 6.4% in 2016. Foreign reserves also rose to their highest level since 2011 to over $36 billion after the floating of the EGP. Moreover, the Programme has prompted the Egyptian government to pass a new investment law, which is expected to contribute to increased foreign investment flows.

 

Despite these positives effects, there have been many challenges accompanying the SAP. The floating of the currency and the reduction of energy subsidies have led to soaring inflation. The Central Agency for Public Mobilization and Statistics (CAPMAS) reported that the annual inflation rate reached 33% in September 2017, prompting the Central Bank to raise the interest rates to 20%, a move that might increase the investment costs. In addition, according to data from CAPMAS, in the period preceding the implementation of the SAF, one-fifth of the population in Egypt lived below the national poverty line. This figure might further increase following the implementation of the Programme.

 

It is too early to conduct a study on the impact of implementing the aforementioned SAP on the health of Egyptians. But it is possible to predict the relationship between the two by reviewing the economic literature and previous country experiences. According to our literature review, there are 13 studies on the implications of SAPs, similar to the one adopted in Egypt, on the health of children and women as indicators of public health [1-13]. These studies examined the impact of the SAPs as imposed by international institutions on many countries, some of which focused on the African continent, while others examined the developing countries at large. In total, 11 out of 13 studies showed that the SAPs have had a negative impact on the health of children and women. Only one study showed that SAPs have had a positive impact on reducing child mortality, while the last study found that SAPs have had neither a positive nor a negative impact on public health. Taking into consideration that each region or country has its contextual specificities, we summarized the abovementioned results with the hope of unveiling the causes, so that potential negative impacts may be avoided.

 

In general, there are three ways in which the SAP could affect public health in Egypt [14]. First, it puts pressure on public health spending. As a result, governments might resort to cut social spending and reduce or set a ceiling on physicians’ salaries to reduce the budget deficit, which in turn could affect the quality of health services and push doctors to emigrate. The SAP can also indirectly affect the health of Egyptians by devaluing the borrowing country’s currency. In Egypt, where the EGP has lost more than half of its value, the floating of the currency might increase the competitiveness of exports, but it will also raise the value and prices of imports, including that of medical equipment and pharmaceutical drugs, this, in turn, would affect the health of Egyptians.

 

Against such a backdrop, policymakers in Egypt have been taking new policy actions that aim at improving the health of Egyptians; such as the implementation of the new health insurance law. This law aims to provide comprehensive health insurance for all Egyptians and to cover the costs of all diseases by 2035. This law is based on the principle of separating health care finance from the provision and involves three main bodies: the health care authority, the contracting authority, and the quality control authority. The new law differs from the current law in several aspects, most importantly in that it promotes solidarity between the different economic classes. In addition, the family and not the individual is the core unit of this law. The law provides incentives to the private sector to be integrated into the new health system by creating competition among different health care providers. In this sense, health insurance enrollment is mandatory for all Egyptian citizens. In the same context, the law seeks to support the poor in Egypt by paying the premiums of the poorest 30% of the population in Egypt. The new health insurance law will be rolled out in a limited number of governorates, representing 3% of the population as an initial stage until 2022. It will then gradually extend to cover the entire population by 2035.

 

Consequently and in the light of the noteworthy improvements that are anticipated in the health sector, the policy makes in Egypt are expected to take all the necessary measures to prevent the negative consequences that might result from implementing the SAP and that might affect the health of Egyptians.

 

Originally written in Arabic

 

References

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Ahmed Rashad is a researcher in development economics, health economics, and applied econometrics. He holds a PhD in Economic Development and Socio-economic Inequalities in Health.

 


The views expressed here are solely those of the author in his/her private capacity and do not in any way represent the views of neither the Arab Development Portal nor the United Nations Development Programme. 

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