covid-19

Oxfam International has called on the International Monetary Fund (IMF) to suspend austerity conditions on existing loans and increase access to emergency financing for African countries.

The humanitarian organisation made the call as it noted that 87 percent of the IMF Covid-19 loans are requiring developing countries to adopt tough, new austerity measures that will further exacerbate poverty and inequality.

Oxfam said its new analysis found that 13 out of the 15 IMF loan programmes negotiated during the second year of the pandemic require new austerity measures such as taxes on food and fuel or spending cuts that could put vital public services at risk.

In 2020, the IMF deployed billions in emergency loans to help developing countries cope with Covid-19, often with few conditions or none at all.

In recent times, however, the IMF has imposed austerity conditions on low-income countries, preventing equal access to vaccines.

Kenya, with more than three million people facing hunger, had in 2021 secured a $2.3 billion loan from the IMF which included a three-year public sector pay freeze and increased taxes on cooking gas and food.

However, due to imposed austerity conditions, nearly half of all households in Kenya are having to borrow food or buy it on credit.

‘This epitomises the IMF’s double standard: it is warning rich countries against austerity while forcing poorer ones into it’, Oxfam International’s Senior Policy Advisor, Nabil Abdo, said in the statement.

‘The pandemic is not over for most of the world. Rising energy bills and food prices are hurting poor countries most. They need help boosting access to basic services and social protection, not harsh conditions that kick people when they are down’.

Oxfam also noted that African governments’ ‘failure’ to tackle inequality – through support for public health care and education, workers’ rights and a fair tax system – left them woefully ill-equipped to tackle the Covid-19 pandemic.

According to Oxfam, the IMF has contributed to Africa’s challenges by consistently pushing a policy agenda that seeks to balance national budgets through cuts to public services, increases in taxes paid by the poorest, and moves to undermine labour rights and protections.

The Oxfam policy advisor advised the IMF to encourage countries to increase taxes on the wealthiest and corporations to replenish depleted coffers and shrink widening inequality.

Source: Oxfam International

Photo source: World Bank

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