London: Global poverty is set to rise above one billion people once again as a result of the coronavirus pandemic. The virus is reducing the income of the world’s poorest by USD 500 million a day, according to new research published Friday. The research has been carried out by the King’s College here and the Australian National University. It points to poverty increasing dramatically in middle-income developing countries. In many of these countries millions of people live just above the poverty line.
Countries likely to suffer
Countries like Bangladesh, India, Indonesia, Pakistan and the Philippines are considered to be particularly vulnerable to the pandemic’s economic shockwaves. Lockdown in these countries has severely curtailed activity.
“The pandemic is fast becoming an economic crisis for developing countries,” said Andy Sumner. He is a professor of international development at King’s College and one of the report’s co-authors.
Because millions of people live just above the poverty line, they are in a precarious position as the economic shock of the pandemic plays out. In worst case scenario the number of people in extreme poverty is forecast to rise from 700 million to 1.1 billion. The people who live in extreme poverty earn approximately USD 1.90 per day, the report said. The report has been published by the United Nations University World Institute for Development Economics Research. “Without action this crisis could set back progress on reducing global poverty by 20 or even 30 years,” Sumner said.
Researchers are calling for ‘urgent global leadership’ to address the crisis. But hopes are low after the Group of Seven meeting of world leaders was postponed. The meeting was due to take place June 10-12 at President Donald Trump’s retreat at Camp David. Trump now aims to host an expanded meeting in September. In the meeting leaders from Russia, Australia, South Korea and India have been invited.
Sumner said three actions need to be prioritized. First, a ‘rapid response global commission on poverty and COVID-19’ needs to be established. A prominent global leader will lead the commission. The commission will identify the level of financing required and what rich countries can do to help.
Second funds should be released quickly by expanding the current debt servicing standstill that the IMF is providing to all developing countries. Also World Bank debt repayments should be frozen at least until the end of 2020, possibly into 2021, Sumner said.
Sumner asserted that debt restructuring or outright cancellation of debt for some developing countries ‘will be needed’. Thirdly countries benefiting from the standstill should use the money to shore up and expand social safety nets.