The economic crisis caused by coronavirus could push over half a billion people into poverty unless “urgent and dramatic action is taken”, a new Oxfam study published on Thursday (9 April), has warned.
The report, which estimates a 400-600 million increase in the number of people in poverty across the globe as a result of the pandemic, was drafted by the United Nations University and written by experts at King’s College London and Australian National University (ANU).
“The economic crisis is potentially going to be even more severe than the health crisis,” said Christopher Hoy from ANU.
It adds that the potential impact of the virus poses a real challenge to the UN Sustainable Development Goal of ending poverty by 2030, which was unanimously backed by world leaders in 2015.
The ‘Emergency Rescue Package for All’ published on Thursday (8 April) would enable poor countries to provide cash grants to those who have lost their income and to bail out vulnerable small businesses.
While European and North American countries have already announced financial rescue programmes for industry, small businesses and individuals suffering losses as a result of the lockdown imposed to control the COVID-19 pandemic, developing countries are facing more devastating economic hits after imposing their own curfews and restrictions.
The UN Conference on Trade and Development (UNCTAD) has called for a $2.5 trillion package to rescue the economies of developing countries. This would be made up of $1 trillion in debt relief, $1 trillion in additional liquidity mobilised through SDRs and $500bn in aid to support developing country health systems.
Pressure is growing on the international community to agree a debt relief and stimulus package for developing countries. Earlier this week, more than 100 global organisations called for debt payments to be waived this year for developing countries, which would free up $25bn (€23bn) to support their economies.
Debt relief is expected is be on the agenda as the G20 finance ministers meet by video-conference next Wednesday (15 April), ahead of the World Bank and IMF Spring Meetings between 17 and 19 April.
In the EU, Oxfam supports a programme of mutualising debt and sharing risk to help all countries in the bloc recover from the current crisis. The NGO has also called for a programme of ‘helicopter money’ from the European Central Bank – cash payments directed to all individuals in member states affected by the crisis.
This would help people, companies and the economy cope with the decrease in economic activity, support workers’ income and prevent deflation.
To fund their economic stimulus programmes, EU member states should agree on an EU solidarity wealth tax, coordinated in every country to avoid that wealth is shifted from one country to another.
“An immediate suspension of the debt payments of poor countries, combined with a one-off economic stimulus by the IMF and an increase in aid and taxes, can pay for this,” said the report.
Edited by Samuel Stolton