The Effectiveness of Debt Relief: Assessing the Influence of the HIPC Initiative and MDRI on Tanzania’s Health Sector

Abstract

Debt relief initiatives have been part of the international development sphere since the early 1990s. With the launch of the Heavily Indebted Poor Country (HIPC) Initiative in 1996 and the Multilateral Debt Relief Initiative (MDRI) in 2005 many countries have been able to successfully qualify for debt relief. Tanzania has been one of the primary beneficiaries of debt relief over the years. While empirical evidence demonstrates that the country’s economic growth has been positively impacted by debt relief initiatives, other aspects of human development need to be analyzed to ensure a comprehensive assessment of the HIPC Initiative and the MDRI. This study compiles Tanzania’s health data into a composite indicator to perform a graphical analysis to compare the trends between health outcomes and external debt. The graphical analysis is contextualized through a qualitative analysis of political, economic and health financing literature from the Bank of Tanzania, UNICEF and USAID. The results indicate that there health outcomes improved throughout the whole study’s time period particularly after the HIPC Initiative. The health financing literature also points to increased development expenditure during this period. Nonetheless, the effects of debt relief seem to diminish in the long-term due to fluctuations in external donors and logistical barriers to budget execution. Tanzania also continues to face socio-economic and geographic disparities in health outcomes and funding. Some of the literature also states that the country’s weak system of checks and balances and the lack of robust institutions could cause opportunistic policy preferences that might not necessarily improve Tanzania’s health outcomes. KEYWORDS: Child Mortality Rate; Debt Relief; External Debt; Heavily Indebted Poor Country Initiative; International Monetary Fund; Life Expectancy; Maternal Mortality Rate; Multilateral Debt Relief Initiative; Official Development Aid; Prevalence of Undernourishment