LONDON/NEW YORK, OCTOBER 24 (IPS) – G20 and world finance ministers met in Washington, October 10-16, to discuss how to deal with crises, including spending Rising cost of living, disrupted global supply chains, turbulent climate and prolonged COVID-19 pandemic.
All of this focuses a lot on IMF outlookpointing to a bleak future ahead.
This is bad news especially for developing countries. Using IMF data, our research shows that recovery spending over the past two years of the pandemic in the Global South has averaged just 2.4% of GDP, a quarter of the level recommended by the United Nations and a fraction of that of rich countries. .
Meanwhile, only 38% of the total is social protection, with corporate loans and tax breaks accounting for a large proportion.
Things will only get worse unless there is a fundamental change in policy. This year, the recovery fund has dried up, and since most countries are heavily indebted, the IMF is projecting major spending cuts.
By 2023, at least 94 developing countries are expected to cut public spending as a percentage of GDP. Ours report It is estimated that 85% of the world’s population living in 143 countries will live in the grip of austerity measures by 2023 and this trend is likely to continue for many years.
Unless these policies are reversed, people in developing countries will suffer the consequences of cuts in social protection and public services when they need it most, with 3.3 billion people (or nearly half of humanity) is expected to live below the poverty line line of US$ 5.50/day at the end of 2022.
This crisis will especially affect women who receive less than half of their COVID-19 recovery funds than their male counterparts.
But the impact goes far beyond women. Older people and people with disabilities will receive lower benefits. Workers around the world will see fewer jobs, wages and poorer working conditions as regulations are lifted.
A recent study Inequality shows that the vast majority of countries are making the labor market more flexible to help large corporations. As inflation continues to rise, made worse by higher consumption taxes, families will suffer more while any support they receive will be less due to austerity cuts.
South Africa reflects the crisis of countries falling into the austerity trap. The government has provided R350 Relief of Suffering (SRD) Social benefits (US$24 in 2021) per month held at the start of the pandemic, providing assistance to those earning income for the first time. low in working age.
These grants have been renewed several times, providing a lifeline for those hardest hit by the pandemic.
However, despite the cost-of-living crisis, the IMF-backed government is now considering reducing social spending and helping only the most vulnerable, leaving many low-income households without any support. Other austerity measures being discussed include cuts to civil servants’ wages and flexible labor reform.
Instead of cutting these austerity, the South African government and the IMF should focus on increasing additional revenue to fund social protection and public services, ensuring everyone pays taxes, reduces loopholes and waives corporate taxes, taxing excess profits and wealthy individuals.
Likewise, Ecuador has been rocked by social unrest because of austerity reforms. In 2019, after major riots, Lenin Moreno’s government flew out of the capital and had to stop loan with IMF proposed subsidy cuts and other austerity reforms.
In 2021, the IMF proposes similar austerity policies, such as cutting subsidies and public services, reducing social protection and labor regulations.
In 2022, indigenous farmers, men and women, march to the capital again with harps to join students and workers oppose austerity policyforcing President Lasso to refuse and agree to grant subsidies and other requests.
These are just two examples that reflect the austerity storm that is gathering around the world. This is extremely unfair and will create unnecessary social hardship, as people are already struggling with a severe cost of living crisis, especially at a time when many countries are losing their resources. substantial revenue due to tax abuse, illegal financial flows and tax exemption to a large extent completely unnecessary companies.
Austerity cuts are not inevitable, there are alternatives even in the poorest countries. Instead of austerity cuts, governments can increase tax revenues incrementally, restructure and write off debt, eliminate illicit financial flows, and reallocate public spending, among others. another choice.
Policymakers must act on this. All the human suffering and social unrest that asceticism causes is unnecessary. Civil society organizations have come up with a Global campaign to end austerityincluding, among others, ActionAid International, the European Network on Debt and Development (Eurodad), the Coalition Against Inequality, the Alliance for Financial Transparency and Oxfam International.
The austerity campaign calls on citizens and organizations from around the world to combat the wave of austerity sweeping the globe, increasing inequality and compounding the impact of the spending crisis. cost of living.
Our decision makers need to wake up and change course. There is no time to lose.
Matti Kohonen is the Executive Director of the Financial Transparency Alliance; Isabel Ortiz is the Director of the Global Social Justice Program at the Joseph Stiglitz . Policy Dialogue Initiative
IPS UN Office
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© Inter Press Service (2022) – All rights reservedOrigin: Inter Press Service
