This latest paper of the World Bank’s Double Shock, Double Recovery series, Health Financing in a Time of Global Shocks, is a first attempt to comprehensively gauge how government health spending has fared in developing countries over the past three years – a period when the world faced shocks in swift succession.
During the first two years of the COVID-19 pandemic, central government health expenditures soared in developing countries as governments began prioritizing health in their spending to combat the initial onset of the virus.
- In 2020, real per capita central government health spending grew on average by 21% (in 78 developing countries), and in 2021, it stood at 25% above 2019 levels.
- The strong advance over the first two years of the pandemic was primarily driven by governments prioritizing health in their spending. By 2021, the health share in central government spending had grown 17% since 2019.
- In contrast, general government spending rose by just 6% since 2019.
After the initial strong response to the pandemic, health spending is no longer a priority for many governments.
- In 2022, government health spending contracted, from its peak of 25% to only 13% over the 2019 baseline, bringing it close to its pre-pandemic trajectory.
- The reversal was even starker in the priority that governments gave to health. In nearly half of the countries, the central health share in general government spending fell below 2019 levels.
- In turn, in 2022, it was growth in general government expenditure spending that primarily bolstered central government health spending above 2019 levels.
Rapid action of governments will be necessary to secure the prioritization of health spending and avoid further setbacks on the path toward the health-related SDGs.
- As governments started to cut back on health spending in 2022, the Omicron variant caused another wave of COVID-19 infections and death worldwide, and many health systems struggled to cope with the backlog of non-COVID-19 services from earlier service disruptions.
- Especially in countries where the macroeconomic outlook remains concerning with limited capacity to increase government spending, the reversal in the priority given to health will affect progress toward the health SDGs.
- Government spending on health does not have to fall even when economic and fiscal space shrink, as seen during the global financing crisis 2008/09.
- To get the world on a new, pandemic-proof, sustainable development trajectory, governments need to reverse the latest trends and prioritize health in their spending.
“From Double Shock to Double Recovery” is a discussion paper series that offers analyses of most recent trends and outlooks on government health spending in a time of successive global shocks. Papers of this series also explore health financing options that policymakers can pursue to put their countries on a new pandemic proof trajectory to attain the health SDGs.
The first outlook was published in March 2021 at the height of the COVID-19 crisis and included a comprehensive review of health financing options to maintain or increase health investments during macroeconomic downturns. A technical update, “Widening Rifts,” followed in September 2021, and a second update, “Old Scars, New Wounds,” in September 2022.
The June 2023 paper, “Strong Advance, Early Retreat,” provides a first, comprehensive analysis of government health spending trends in developing countries during the past three years of successive economic shocks (2019 to 2022).