More than half a billion people are facing poverty unless immediate action is taken to bail out poor countries affected by the economic fallout from the Covid-19 pandemic, Oxfam has warned.
The charity said that the fallout from the virus, which has killed more than 83,000 people and destabilised economies is rapidly unfolding and is deeper than the 2008 global financial crisis.
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.”
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.
An Oxfam report published before virtual meetings of finance ministers of the G20 group, 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 curb the virus risked setting back the fight against poverty by a decade globally – and by 30 years in the hardest-pressed countries, including sub-Saharan Africa, north Africa and the Middle East.
Oxfam has called for an emergency rescue package, proposing a six point action plan 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 that taxing wealth, extraordinary profits, and speculative financial products would help raise the funds needed. The money would also 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.
Globally, two billion people work in informal sectors with no access to sick pay, according to Oxfam. A majority of the vulnerably employed live in poor countries where 90 percent of jobs are informal.
Women are more at risk than men, as they are more likely to work in the informal economy with little or no employment rights. Women also make up 70 percent of health workers and provide 75 percent of unpaid care.
More than one million Bangladeshi garment workers – 80 percent of whom are women – have already been laid off or sent home without pay after orders from western clothing brands were cancelled or suspended.
Calls for debt relief have increased in recent weeks and overall, governments around the world would need at least $2.5 trillion to support developing nations.
The Oxfam report suggested that wealthier countries could mobilise trillions of dollars to support their own economies.
“Unless developing countries are also able to fight the health and economic impacts the crisis will continue and it will inflict even greater harm on all countries, rich and poor,” the report added.
Oxfam says the funds from the cancellation of debt repayments for 2020 would be an immediate injection of desperately needed funds for many developing countries who are struggling.
In Ghana, cancelling the east African country’s external debt payments for the year would allow officials to give $20 a month to each of the country’s 16 million children, disabled and elderly people for six months.
The forecast, it has been reported, does not look positive and the UN estimates that nearly half of all jobs in Africa could be lost.
Shari Spiegel who works at the United Nations Department of Economic and Social Affairs has said that developing countries especially those driven by oil exports and tourism are slowly being pushed into a debit crisis.
He added: “If commodity prices stay low and if tourism stays slow it may lead to a long-term crisis.
While a number of proposals have been made to deal with the global pandemic, 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.