Madrid, 19 April 2023 (IPS)– As many as 45 of the continent’s 54 countries, in the region known as Sub-Saharan Africa, have shrunk to ever-lower levels of funding, with some so-called aid It’s back in the pockets of the donor countries.
See what happens.
In its April 2023 World Economic Outlook, the International Monetary Fund (IMF) speaks of a difficult recovery. A report on it cuts global growth forecasts as the “fog thickens”.
He said the road to a global economic recovery is “getting rocky”. And while inflation is slowly declining, economic growth remains “historically low” and financial risks are rising.
good. In his April Outlook, the IMF titled the chapter on Sub-Saharan Africa “The Big Funding Squeeze.”
Growth in sub-Saharan Africa is expected to slow to 3.6% as a “huge funding gap” linked to “aid depletion and access to private finance” hits the region for the second year in a row. Rejected.
If no action is taken, “this funding shortfall will force countries to reduce their financial resources for critical development such as health, education and infrastructure, thus failing to reach the region’s true potential.” It may disappear.”
According to the IMF:
- Public debt and inflation are at levels not seen in decadeshalf of the countries are experiencing double-digit inflation, reducing household purchasing power and putting the most vulnerable under attack.
- Rapid tightening of global monetary policy has raised borrowing costs for Sub-Saharan countries in both domestic and international markets.
- All frontier markets in sub-Saharan Africa cut off from the market Access after Spring 2022.
- US dollar effective exchange rate hits 20-year high The burden of servicing dollar-denominated debt increased last year. Over the past decade, he has doubled his average interest payments on SSA member country revenues.
- Shrinking aid budgets and falling inflows From our partners, this has led to a significant funding squeeze in the region.
Big financial institutions say funding shortages are affecting regions already suffering from rising macroeconomic imbalances.
unprecedented debt and inflation
In a previous article: The Poor, Squeezed by 10 Trillion Dollars in External Debts, IPS reported on the external debt of the world’s low- and middle-income countries. In total, he will be worth US$9 trillion by the end of 2021, more than doubling that amount. Ten years ago.
Such debt is expected to grow by another US$1.1 trillion in 2023, for a total of US$10.1 trillion.
Now, the IMF says, “public debt and inflation are at multi-decade levels, nearly half of countries are experiencing double-digit inflation, household purchasing power is declining, and the most vulnerable are under attack. I am reporting.
In short, “Sub-Saharan Africa stands to lose the most in a deeply fragmented world, underscoring the need to build resilience.”
Like many other major international organizations, the IMF indirectly blames African governments for not adopting the “right” policies and encourages more investment in the region, but the solution is Some argue that it is digitization, robotization, etc.
A question arises here. Are all the recommendations and “altruistic” advice of the IMF and other currency-oriented institutions the solution to the deepening collapse of the entire continent of about 1.4 billion humans?
No, or at least not necessarily. Building on its commitment to the universality of human rights, a global movement of people fighting inequality to end poverty and injustice: Oxfam announced on 13 April 2023 that on the role of multilateral financial institutions in helping to isolate millions of people. The recovery from the economic crisis has been ‘inconsistent and inadequate’.
For example, “The IMF is directing a range of poor countries to cut more than fourfold through austerity measures for every dollar they encourage to spend on public goods.”
Countries Forced to Cut Public Funds
Then the global civil society movement describes a key IMF initiative to help the poor of the global South bounce back from their own austerity policies and the worst effects of the global economic crisis as falling apart. .
A new Oxfam analysis finds that the IMF’s “social spending floor” target is designed to help borrowing governments protect a minimum amount of social spending, but instead creates its own set of policies that force countries to cut public spending. Against austerity policies, it has proven almost powerless.
“The IMF’s ‘Social Expenditure Floor’ encouraged inflation-adjusted social spending to rise by about $1 billion in the second year of the loan program compared to the first year. across all 13 participating countries.”
IMF austerity policy
By comparison, the IMF’s austerity measures required most of these same governments to strip away more than $5 billion worth of state spending over the same period, warns Oxfam.
Amitabh Behar, incoming Executive Director of Oxfam International, said:
“This is highly concerning and unfortunate given that the IMF itself has encouraged countries to recover post-pandemic by investing in social protection, health and education.” Behar said.
“Among the 2 billion people who have suffered the most from the effects of austerity cuts and squeezed social spending, women have consistently been found to suffer.”
Fig leaf of penance?
In its new report, “The IMF Social Expenditure Floor.
Oxfam Report: ‘Austerity Attack’ Finds Discord Between Countries. There was no standard or transparent way to track progress, and many minimum goals fell short.
The IMF has made some promising improvements in its attention to social protection, health and education, the report continues, but in the IMF’s own words, it is “repeating the mistakes of the past.” You need to do a lot more to avoid .
Aid Budget Farce
Oxfam reported to the Development Assistance Committee of the Organization for Economic Co-operation and Development on April 12, 2023 in a separate report titled “Obscene amounts of aid are returning to the pockets of rich countries.” (OECD DAC) has released preliminary figures on development aid spending for 2022.
Official Development Assistance (ODA) from Development Assistance Committee (DAC) member countries reached US$204 billion in 2022, according to an OECD report.
This total included US$201.4 billion in the form of grants, loans to government agencies, debt relief and contributions to multilateral institutions (calculated on a grant-equivalent basis). Adds US$800 million to development-oriented private sector instruments (PSI) vehicles and US$1.7 billion in the form of net loans and equity to private companies operating in ODA-eligible countries (calculated on a cash flow basis) .
Total ODA in 2022 will increase by 13.6% in real terms compared to 2021, the OECD said.
“This is the fourth year in a row that ODA has exceeded record levels and is one of the highest rates of growth recorded in the history of ODA…”
Proportion of rich pockets of aid “obscenity”
In response, Oxfam aid expert Mark Cohen said: They have deprived the world’s poorest of much-needed lifelines in times of multiple crises.
“Donors have turned aid promises into farce. I poured it in.”
Rich countries inflating their aid budgets
“They continue to inflate their aid budgets by profiting from vaccine donations, the cost of hosting refugees and development aid loans. Hold them accountable and ensure aid reaches the poorest in the poorest countries. This is when you need a system with teeth for