austerity

Civil society organizations warned the IMF what frontloaded fiscal adjustment would mean in practice: large spending cuts imposed all at once, leaving ordinary people to pay the price. It is the same failed shock therapy that devastated countries and communities in the past. And it risks further damaging an IMF already struggling for legitimacy. The warnings were swept aside, even though many Directors echoed civil society’s concerns.

The International Monetary Fund (IMF) has required borrowing countries to quadruple the size of their austerity cuts over the past decade, while simultaneously weakening the protection afforded to social spending in its loan programs, reveals new Oxfam analysis. These cuts undermine vital spending on public services – from healthcare to education and housing – that protect low-income communities. 

An important International Monetary Fund (IMF) initiative to shore up poor people in the Global South from the worst effects of its own austerity measures and the global economic crisis is in tatters.

In response to the publication today of the World Economic Outlook by the International Monetary Fund (IMF), Nabil Abdo, Oxfam International’s senior policy advisor on international financial institutions, said: “The IMF is now saying that fiscal consolidation during economic crisis —like today’s economic maelstrom— hasn't served its primary purpose of reducing debt. It’s positive that the IMF is finally admitting this painfully evident fact, but it’s hugely frustrating that it continues to push austerity measures on poor borrowing countries facing huge economic challenges." 

2023 could be a turning point. A year when the world emerges from unprecedented crises, and governments deliver progressive reforms that build a brighter future for all, and for the planet.

But despite the dire economic situation facing the poorest countries today, and much political discussion of the trillions needed to tackle poverty, inequality and climate change, there is no indication that rich countries are willing to pay the true price of a fair and sustainable future. 

G20 world leaders have failed to take definitive action to tackle poverty, hunger, climate, debt and deprivation that is crippling millions of people around the world, says Oxfam.

Governments around the world are putting women and girls in danger of unprecedented new levels of poverty, peril, overwork and premature death as a result of near-universal “slash-and-burn" efforts to recover their economies from the pandemic and tame inflation.

Despite millions of people being pushed into hunger and poverty, 143 countries — including 94 developing nations — are implementing policy measures that undermine governments’ capacity to provide healthcare, education and social protection. 
 

The COVID-19 pandemic has worsened the extreme inequality in Southern African Development Community countries, and pushed millions into poverty. Recovering from the pandemic, however, offers SADC governments a once-in-a-generation opportunity to do reduce inequality drastically and eliminate extreme poverty by 2030. 

Africa is facing a crisis of extreme inequality which is undermining growth, preventing poverty eradication and contributing to insecurity. This briefing paper shows that COVID-19 has deepened this crisis, and that the responses of African governments and international financial institutions are making little difference as debt burdens grow and austerity kicks in.