Oxfam Report: First Crisis, Then Catastrophe

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According to a new report by Oxfam, over a quarter of a billion people will be pushed into poverty in 2022.

About the Report

• Title: First Crisis, Then Catastrophe
• The Oxfam estimates are based on World Bank projections and earlier research by the World Bank and Centre for Global Development. 
• The report was released ahead of the spring meetings of the World Bank and the International Monetary Fund.

Key Findings

• Financial crisis: The worldwide financial crisis will be mainly driven by the price inflation due to:
  • Russia’s invasion of Ukraine and 
  • economic crisis caused by the COVID-19 pandemic.
• Increasing Gap between rich and poor: The convergence of these two events is also widening the gap between the rich and the poor at an unprecedented rate.
  • Nearly half of the global population (3.3 billion) are living below the poverty line, while a new person becomes a billionaire every 26 hours since the beginning of the pandemic.
• Pandemic and Rich People:
  • The fortunes of 10 of the richest people in the world have doubled during the pandemic. 
  • At the same time, some 2,744 small billionaires have recorded an unprecedented rise in fortunes compared to the last 14 years

Image Courtesy: Report 

• People in extreme poverty: The combined impact of COVID-19, inequality and food price hikes could result in 263 million more people living in extreme poverty this year, resulting in a total of 860 million people living below the $1.90 (Rs 144.7) a day extreme poverty line. 
  • This would be an extraordinarily damaging rise that reverses decades of progress in the fight against poverty.
• Loss of savings for poor: The pandemic resulted in people losing their jobs and savings, while they are faced with a greater food price inflation than the 2011 crisis. 
• Effect on agriculture companies: Oil companies are making record profits with soaring energy prices and margins while investors expect agriculture companies to rapidly become more profitable as food prices spiral.
• Food costs and poverty: The increasing poverty is not spread evenly across geographies. 
  • Food costs account for 40 per cent of consumer spending in sub-Saharan African nations, while the same figure is half for those living in advanced economies. 
  • Developing nations, which were already faced with a worrying fiscal condition, are now witnessing debt levels unseen so far. 
• Hunger and other issues: As many people struggle now to cope with sharp cost-of-living increases, having to choose between eating or heating or medical bills, the likelihood of mass starvation faces millions of people already locked in severe levels of hunger and poverty across East Africa, the Sahel, Yemen and Syria. 
• Affecting Real term wages: For most workers around the world, real-term wages continue to stagnate or even fall. 
  • The effects of COVID-19 have widened existing gender inequalities too — after suffering greater pandemic-related job losses, women are struggling to get back to work. 
  • In 2021, there were 13 million fewer women in employment compared to 2019, while men’s employment has already recovered to 2019 levels.

Suggestions 

• The World Bank and IMF should cancel debt payments for 2022 and 2023 for low and lower-middle-income countries. 
• Cuts in value-added taxes on staple food and cash transfers to support income should be implemented to protect the poorest from inflation. 
• A 2 percent tax on personal wealth above $5 million, 3 per cent for wealth above $50 million and 5 per cent for wealth above $1 billion should be imposed. This could amount to $2.52 trillion — enough to save 2.3 billion people from poverty. 
• Special Drawing Rights under the IMF should be reallocated to ensure it is debt- and conditionality-free.
• Emergency support provided to lower-income countries should be increased.
• Introduce one-off and permanent wealth taxes to fund a fair and sustainable recovery from COVID-19.
• Act to protect people from rising food prices, and create a Global Fund for Social Protection to help the poorest countries provide essential income security for their populations, and maintain these services in times of severe crisis.

Source: DTE