Oxfam has warned that more than half a billion more people could be pushed into poverty unless urgent action is taken to bail out poor countries affected by the economic fallout from the Covid-19 pandemic.
An Oxfam report published before virtual meetings of finance ministers of the G20 group of leading developed and developing nations, the International Monetary Fund and the World Bank, said by the time the pandemic was over half of the world’s population of 7.8 billion people could be living in poverty.
Ahead of three key international meetings next week, the charity said the impact of shutting down economies to prevent the virus spreading risked setting back the fight against poverty by a decade globally – and by 30 years in the hardest-pressed countries of sub-Saharan Africa, north Africa and the Middle East.
The research – conducted by King’s College London and the Australian National University – said that a 20% drop in income as a result of a recession caused by Covid-19 would push an additional 548 million people below $5.50 a day – one of the World Bank’s definitions of poverty.
The meetings of the G20, the IMF and the World Bank will discuss plans to offer debt relief to the world’s poorest countries and whether to increase the funds available to the IMF through the creation of special drawing rights (SDRs), a form of international currency that can be used to help struggling countries. The UN, which says $2.5tn is needed to support developing countries through the crisis, says nearly half of all jobs in Africa could be lost.
Oxfam called for an emergency rescue package that would enable poor countries to provide cash grants to those who have lost their income and to bail out vulnerable small businesses. The charity said the money would come from a variety of measures, including the immediate cancellation of $1tn worth of developing country debt payments and the creation of at least $1tn in SDRs.
A proposal to create $500bn of SDRs is being blocked by the US on the grounds that some of the money would go to Iran. A more limited plan for debt relief, which excludes payments owed to private creditors, is up for discussion.
José María Vera, Oxfam’s international interim executive director, said: “The devastating economic fallout of the pandemic is being felt across the globe. But for poor people in poor countries who are already struggling to survive, there are almost no safety nets to stop them falling into poverty.
“G20 finance ministers, the IMF and the World Bank must give developing countries an immediate cash injection to help them bail out poor and vulnerable communities.”
Many wealthy nations, including the UK and the US, have introduced large-scale economic stimulus packages to support business and workers, but Oxfam said most developing nations lacked the financial firepower to follow suit.