IMF fiscal projections shows that budget cuts are expected in 154 countries this year, and as many as 159 countries in 2022.
This means that 6.6 billion people or 85% of the global population will be living under austerity conditions by next year, a trend likely to continue at least until 2025.
The high levels of expenditures needed to cope with the pandemic have left governments with growing fiscal deficit and debt. However, rather than exploring financing options to provide direly-needed support for socio-economic recovery, governments—advised by the IMF, the G20 and others—are opting for austerity.
More than 40 governments are forecasted to spend less than the (already low) pre-pandemic levels, with budgets 12% smaller on average in 2021-22 than those in 2018-19 before COVID-19, including countries with high developmental needs like Ecuador, Equatorial Guinea, Kiribati, Liberia, Libya, Republic of Congo, South Sudan, Yemen, Zambia and Zimbabwe.
Austerity proves to be a deadly policy.
From 2010 to 2019, billions of people were affected by reduced pensions and social security benefits; by lower subsidies, including for food, agricultural inputs and fuel; by wage bill cuts and caps, which hampered the delivery of public services like education, health, social work, water and public transport; by the rationalization and narrow-targeting of social protection programs so that only the poorest populations received smaller and smaller benefits, while most people were excluded; and by less employment security for workers, as labor regulations were dismantled. Many governments also introduced regressive taxes, like consumption taxes, which further lowered disposable household income. In many countries, public services were downsized or privatized, including health.
The weak state of public health systems—overburdened, underfunded and understaffed from a decade of austerity—aggravated health inequalities and made populations more vulnerable to COVID-19. After COVID-19’s devastating impacts, austerity will only cause more unnecessary suffering and hardship.