Prospects for Government Health Financing Amidst Declining Aid

Investing in health is one of the most powerful drivers of human capital, growth, and job creation. However, low- and lower-middle-income countries are at a crossroads with growing economic uncertainty and a changing aid landscape. It puts further pressure on governments already struggling to finance and deliver universal health coverage (UHC). This report – part of an annual series  – monitors the latest trends and provides an outlook on government and donor health spending in these countries. 

Progress through 2024: Health spending remains far below the minimum benchmark needed to achieve Universal Health Coverage (UHC) and has stagnated since 2018.

• Government and donor spending remains far below the minimum needed to deliver a package of essential health services in 2024—less than one-third of the $60 required in low-income countries (LICs) and around half the $90 benchmark in lower-middle income countries (LMICs).
• Spending has stagnated while LICs and LMICs continue to face large UHC gaps, and with progress on UHC slowing since 2015.

Projections for 2024–2030: Most LICs and many LMICs are projected to face a decline in combined government and donor health spending by 2030.

• Government health expenditure is projected to grow by 14% in LICs and 17% in LMICs between 2024 and 2030, but this will be insufficient to significantly dent the UHC financing gap.
• However, combined government and donor health spending is expected to fall in 80% of LICs and 40% percent of LMICs by 2030, as sharp cuts to development assistance for health—projected to decline by around 20%—offset growth in government spending.

Government Health Spending is Well Below the Minimum Needed to Finance Universal Health Coverage

See country specific projections >>

Country Prospects and Options: Countries have policy options to alter their trajectories by spending better and spending more on health under fiscal constraints.

• Doubling down on efficiency—by prioritizing primary healthcare, aligning remaining development assistance with domestic priorities, and improving budget execution —can help resources go further. Aid-dependent countries have a reform window to restructure their health systems as aid dwindles.
• But efficiency gains alone are not enough. Progress also requires spending more and it is feasible to raise the share of government spending for health in a third of LICs and LMICs; they have the fiscal space and underprioritize health compared to peers.  Countries can also raise taxes on unhealthy products and undertake broader macro-fiscal reforms to create fiscal space.