OBJECTIVES:

Emerging market (EM) countries dependent on single natural resource as the most viable source of revenue are vulnerable to cyclical government spending due to price volatility. During economic downturn, public healthcare expenditure falls due to an overall budget reduction and higher inflation rates. This research aimed to explore public healthcare expenditure in two oil dependent nations, Saudi Arabia and Nigeria, during cycles of volatile oil prices.

METHODS:

Publicly available data on oil prices, GDP growth rate, GDP per capita, PPP, inflation rates, population and urbanisation growth rates, public health spending as a proportion of overall spending, and private healthcare investments as a proportion of total investments were analysed. Additionally, public health indicators representing crude outcome measure were assessed: infant mortality rates, life expectancy at birth, distribution of public and private hospital beds, and healthcare staff across the population.

RESULTS:

Analyses showed that both Saudi Arabia and Nigeria undertook significant healthcare budget cuts relative to other sectors during downturn of oil prices. In both countries, spending cuts affected the growth of the public healthcare infrastructure and service provisions. However, private healthcare investments continued to rise stimulated by income growth in the previous years. In contrast to Nigeria, Saudi Arabia significantly boosted investments in public health infrastructure during times of economic growth. Spending cuts limited the ability of public healthcare facilities to maintain and expand treatment access, thus facilitating outward medical tourism.

CONCLUSIONS:

Prices of natural resources significantly impact public health expenditure in single-resource dependent EM countries. During the upturn of natural resource prices, governments should invest more in healthcare so that the population can sustain the benefits during the downturn. While volatility is hard to control, ring-fencing policies for health care expenditures during higher prices of natural resources could help EM countries manage the downturn more effectively, without drastic cuts.