Inequality between rich and poor nations worsening during the coronavirus pandemic.
The world’s poorest countries have cut public spending during the last two years, sometimes to make debt repayments to rich creditors, according to a report by Oxfam. In 2021, lower-income countries spent 27.5% of their budgets on repaying their debts – “twice the amount that they have spent on their education, four times that of health and nearly 12 times that of social protection”.
Its 2022 Commitment to Reducing Inequality Index found that rich countries, including the UK, “exacerbated an explosion of economic inequality” by overseeing demands by lenders for huge debt repayments while the pandemic ravaged annual spending plans.
Analysis across 161 nations found that despite the biggest global health emergency in a century, half of low- and lower-middle-income countries cut health spending, while almost half cut their welfare budgets and almost three-quarters cut education spending.
Data from the IMF showed that three-quarters of all countries were planning further cuts to public spending over the next five years, totalling $7.8tn (£7tn).
Oxfam said developing nations were facing “a global economy that is making it ever more difficult to meet the needs of their population”. The charity accused the IMF of exacerbating economic inequality and poverty in poor countries by insisting on new austerity measures to reduce debts and budget deficits.
Katy Chakrabortty, Oxfam’s head of policy, said: “The index exposes how governments around the world are not only failing to reduce rising inequality – many are also deliberately choosing policies that will profoundly disadvantage the poorest for years to come.
Matthew Martin, director of Development Finance International said: "With the help of the IMF, the world is sleepwalking into measures that will increase inequality further. For every dollar spent on health, developing countries are paying four dollars in debt repayments to rich creditors.”
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