Crippling poverty

The coronavirus pandemic has brought at least some realization that there is a need to build a fairer society and an economy that can sustain opportunity for more people, especially those left behind too long. But there are disturbing signs that this may not happen. The president of the World Bank has warned that up to 60 million people will be pushed into ‘extreme poverty’ by the coronavirus. Extreme poverty is described as living on less than $1.90 per person per day. President of the World Bank David Malpass noted that millions of livelihoods have been destroyed, jobs lost and businesses failing, poorer countries feeling the brunt of this. Malpass also said that he was ‘somewhat frustrated’ by the slow pace exhibited by some commercial lenders in offering debt relief to the poor. The World Bank and IMF are working together on a scheme, according to Malpass, to allow poorer countries to request debt relief on loan repayments owed to G-20 members until the end of this year.

While the World Bank is offering $160 billion in grants and low-interest loans to help poor countries deal with the crisis and 100 countries, home to 70 percent of the world’s population, have already been granted emergency finance, the fact is that economists point out that World Bank schemes have in the past not drastically changed the lives of people in any meaningful manner. In some cases, they have added to the pressures the poor face particularly in developing nations. We hope that with the World Bank predicting a five percent shrinkage in global economic growth this year resulting in an eradication of the poverty alleviation achieved in the past three years, there will be a wider recognition that more needs to be done to help poorer nations survive the crisis. Loans from the IMF have proved to be a poor solution for many nations, as more and more of their GDP goes into debt servicing rather than human development.

Right now, the world is in crisis mode. All nations must come together to devise a plan which can both provide immediate relief and set up greater sustainability for the future, with developing nations also considering what they can do to attain a higher degree of self sufficiency and thus less dependence on debt.