Information and news about economic crisis

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How Heart for Lebanon is Addressing the Economic Crisis in Lebanon

Economic Crisis in Lebanon
Since 2019, Lebanon has been in an ongoing struggle as a nation. What started as an economic crisis in Lebanon has now pushed more than 80% of the population into poverty. Of this population, poverty has most significantly impacted marginalized groups including migrant workers, children and the elderly. One of the many organizations fighting for the citizens living in poverty in Lebanon is Heart for Lebanon. Post-COVID-19, Heart for Lebanon continues to fight for its home country as its economic crisis continues. 

Heart for Lebanon

Following the elections of new government officials, when the prime minister could not agree on the cabinet mandate, this, in turn, led to obstruction. They continued to obstruct the domestic investigation into the Beirut blast in 2020, which took 220 lives and injured more than 7,000. This blast disrupted electricity and these issues have continued to spiral as the country dealt with the COVID-19 virus. 

The country is in a humanitarian crisis, deemed “the worst humanitarian crisis since World War II,” and organizations such as Heart for Lebanon have offered their aid. Heart for Lebanon’s new center is designed to lower these numbers of poverty, providing aid for families and children as well as Christian education. Located in the heart of Bekka Valley, their facility features a warehouse for packaging aid items, a chapel room, a clinic, a cafeteria and dormitories. 

Hope on Wheels

One thing it has provided to the community is its mobile ministry truck, called “Hope on Wheels.” The truck travels to different parts of Lebanon, spreading biblical messages in the form of skits, games, songs and puppets. Hundreds of children gather around every week to stay for a few hours and distract themselves from the everyday terrors they face in their current situation; it lets them enjoy being children again. The Hope Ministry is equipped to handle and educate more than 12,000 refugees each year, and as it continues its efforts, it is helping children working through the current poverty crisis in Lebanon. 

The H.O.P.E Program

The H.O.P.E program, Helping Overcome Poverty Through Education, provides a proper education to children in multiple communities in Lebanon struggling from poverty. Due to the poverty that has affected the majority of the population during the economic crisis in Lebanon, children have not had access to formal education, but the H.O.P.E program has offered informal education for children during this time. Children not only learn about biblical content, but the curriculum covers the essentials they need such as math, English, Arabic and art.

Looking Ahead

Though a few other reputable organizations are helping with the poverty crisis in Lebanon, Heart for Lebanon is actively helping to serve the vulnerable demographics of the population. From donations to offering educational material/lessons, it is helping many children across Lebanon to escape from the stress of their day-to-day lives. 

More than one in 10 families have had to send their children to work to help with the inflation that has taken place in Lebanon. Alongside this fact, 15% of families have had to halt their children’s education as many can no longer afford it. With these facts in mind, it can be difficult to see a child undergoing these huge life changes but having something to look forward to whether it be school or fun puppet shows, is one of the simple ways to care for the children of Lebanon. 

– Isabella Polo
Photo: Flickr

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How Lebanon’s Economic Crisis Is Affecting Its People

Lebanon’s Economic Crisis
Lebanon has been suffering through a brutal economic crisis for more than a year; the resulting financial insecurity has thrown an estimated 1.4 million people into high levels of food insecurity. However, efforts are underway to combat Lebanon’s economic crisis.

Hyperinflation

As of May 2023, inflation rates in the nation reached a shocking 260%, and since July 2022, the Lebanese currency has lost 70% of its value. This has contributed to the food Survival Minimum Expenditure Basket (SMEB) increasing by 230% in the same period. The IPC defines the SMEB as “a benchmark to estimate the cost of food and other basic needs of a refugee family in Lebanon.” Thus, it is becoming progressively more difficult for the people of Lebanon to sustain themselves. 

Political Uncertainty

Since the end of the presidential term in October 2022, there have been multiple failed attempts to elect a new leader. This has dropped the nation into a state of dramatic institutional uncertainty. Lebanese politics’ current chaotic state makes it extremely difficult for the government to deal with the economic issues they are facing and is the catalyst for the continuation of this crisis. The International Monetary Fund (IMF) has claimed that if the political situation is not resolved and drastic reforms are not made in the near future, Lebanon could fall into a perpetual crisis.

Unemployment in Lebanon

Unemployment in the nation is decreasing but still stands at one-quarter of the population. These figures are much higher for certain groups, with women and young people facing almost 40% unemployment.

The nation is also harboring a large number of Syrian refugees. Accessing formal employment for these groups is incredibly difficult leading them to fall into more informal work that often leads to them suffering through extremely exploitative working conditions. Nearly 30% of Syrian refugee households in Lebanon have no working members and temporary labor in agriculture and construction is the primary source of income for these groups, behind humanitarian assistance.

The effects of the crisis are by no means even and universal for the entire country. Certain regions are feeling the strain to a far greater extent than others. In El Hermel, 82% of Syrian refugees cited humanitarian aid as their main source of income.

Food Insecurity

According to the World Food Programme (WFP), an estimated 37% of the Lebanese population is in a state of acute food insecurity. The WFP goes on to state that due to hyperinflation, reduced access to basic services and increasing social tensions, the difficulty of finding a sufficient source of food will only increase.

Humanitarian Food Assistance (HFA)

Currently, 28% of all Lebanese residents and 75% of all Syrian refugees in the country are receiving Humanitarian Food Assistance (HFA). In April 2023, the number of people receiving HFA in the nation reached 1.12 million. Although this is going a long way to limit the suffering the people of Lebanon are facing as a result of the crisis, more action is necessary to find a real long-term solution. 

Recommended Actions

The IPC Acute Food Insecurity Analysis gives multiple recommendations for potential solutions to Lebanon’s economic crisis. It suggests there needs to be an expansion and standardization of the social safety nets that the Lebanese government has provided to ensure security for the nation’s poorest citizens.

Livelihood support programs need to be scaled up, particularly in the agricultural sector to provide stable sources of income and to mitigate the resulting loss of purchasing power that the nation’s extreme levels of inflation have caused. There needs to be an increase in asset creation, again mainly in the agricultural sector, to allow citizens to not only make a livelihood but also to allow people in poorer areas to support themselves through personal food production. However, to achieve reforms this substantial, increased political stability is necessary.

Conclusion

Although Lebanon’s economic crisis is ongoing, the continued support from HFA and a clear plan of action that the IPC Acute Food Insecurity Analysis has laid out presents a sliver of hope for a brighter future. 

– Henry Tuppen
Photo: Flickr

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The Unprecedented Impact of Laos’ Economic Crisis

Laos' Economic Crisis
In Summer 2022, Laos’ economic crisis hit a breaking point. The national debt rose to more than 10% of the GDP of the country. Two-thirds of workers had their pay either decrease or remain the same. Food insecurity increased to dangerous levels, with 35% of households reporting regularly not eating a meal for an entire day. However, despite these worrying statistics, the economy has shown signs of rejuvenation in the past year; major international organizations have worked to aid the Asian nation. To grasp the scope of this issue affecting millions, a breakdown of the key issues, people and possibilities is necessary.

What Caused the Crisis?

Similar to much of the world’s economic shortcomings over the past three years, the main cause of this crisis is the COVID-19 pandemic. However, that is not the only cause of the issue. Laos relies heavily on trade with China which has also seen a slowdown in the growth of their economy. Also, the war in Ukraine has proved to be an additional factor that has severely affected worldwide trade and commerce.

Public and publicly guaranteed debt (PPG) is the main issue that Laos faces. Laos owes most of this debt to its main trading partner – China. As China has not had the GDP growth it would have wanted, the pressure to recoup some of the money owed from Laos increased. Public debt dwarfed government revenues in 2022, with 966% more debt than revenue. The Lao currency, the kip, has currently lost 90% of its value in comparison with the U.S. dollar. 

As is the case with many developing countries, the economy is incredibly fragile and subject to the international climate. Increased global prices for items such as fuel have caused inflation to peak at around 23%, the highest rate in Laos since 2000 and almost three times larger than the global average. 

In August 2022, Fitch, a New York-based capital company, rated Laos’ Foreign Currency Issuer Default Rating (IDR) at a ‘CCC-’, meaning ‘substantial credit risk.’ Fitch has described this rating as a “very low margin for safety, default is a real possibility.” Laos’ economic crisis has caused the nation to receive a rank in the bottom 15 across the globe for financial security. 

Who Does Laos’ Economic Crisis Affect?

The poorest in Laos are on the front lines of this crisis. A report by World Vision International (WVI) highlighted the precarious position of food security. Out of 217 households surveyed across 38 communities, 62% stated they experienced severe food insecurity, ranging from skipping meals to going over a day without eating. 

Even more worrying, it was reported that 46% of households used personal savings to be able to afford food, 26% took out loans, and 14% had to take on additional daily labor. One in three households began to sell assets to be able to eat, such as livestock, transportation and mobile devices. 

Fortunately, the citizens of Laos often rely on their own agriculture for their food production so the crisis has not impacted as many families as severely as first feared. However, some households in rural areas that were not adequately equipped to maintain agricultural production had to resort to growing their own food, resulting in a poorer diet and increased risks of health conditions. 

Laos’ economic crisis caused a major decrease in public spending on crucial services and infrastructure. Low-income households had to reduce health care spending, and 7% of children dropped out of school due to not being able to afford to keep their children enrolled. 

Laos’ citizens had to take drastic measures in an attempt to secure work. Farmers who could no longer afford fuel for their machinery abandoned their professions and homes and immigrated to other countries to seek out jobs, an incredible risk to their safety and stability. 

What is the Hope for Laos?

Despite the hardships millions are currently facing there is hope for the future. The World Bank published ‘The Vital Five’, a five-step plan to secure macroeconomic stability. These goals are:

  • Cut costly tax exemptions to raise public revenue
  • Improve the governance of public and public-private investment
  • Restructure public debt through negotiations
  • Strengthen financial sector stability through legal and regulatory tools
  • Enhance the business environment through regulatory reforms

Laos was also one of the quickest developing economies in Southeast Asia before a slowdown caused firstly by natural disasters towards the end of the 2010s, and then the COVID-19 pandemic. The rate at which Laos’ economy was growing before 2018 is a good sign for future progression; the foundation was already laid out and saw great success. 

Investments in newly constructed sectors such as hydropower are also great opportunities to boost trade and commerce in the nation. About 21% of the economy was directly contributed by hydropower and mining in 2021, despite only accounting for 1% of all jobs. Further expansion into these avenues will create sustained opportunities for job security for thousands of the Lao people. 

The UNDP, the United Nations International Development Agency, stated that “The future of the country must be built of its current and future assets: its natural capital, its young population and its revitalized links to its neighbors and to the world. Now is the time to increase spending on health and education to establish a workforce that is ready for the future, and to pave a pathway for all Lao to prosper.”

Looking Ahead

Laos’ economic crisis is a matter that will continue to affect the most vulnerable for years to come. However, with the work of international organizations such as the World Bank and the UN, Laos has the structure in place to attain the goals set and ensure security and prosperity for its people. The government of Laos must adapt quickly and invest in its citizens to steer away from this crisis and towards a more equal, developed nation. 

– Oliver Rayner
Photo: Flickr

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The Economic Crisis in Haiti

Economic Crisis in Haiti
Haiti is undergoing significant economic turmoil. The economic crisis in Haiti has posed challenges for families in affording essential items like food and has also affected their ability to sell crops in local markets. Political instability, natural disasters and social unrest have worsened these challenges, further affecting the country’s capacity to attain sustainable economic growth and improve the well-being of its impoverished population.

Haiti’s Turbulent Economic History

During the past few years, Haiti’s economy has been under pressure due to several factors such as natural disasters, diseases, political instability, mishandling of humanitarian assistance and the devaluation of its national currency. The country’s previously thriving tourism industry has declined as well. In contrast to the peak of 1.3 million tourists in 2018, which brought in $620 million in revenue, Haiti only received 938,000 visitors in 2019. The outbreak of the COVID-19 pandemic also significantly curtailed travel and economic activity.

After an earthquake in 2010, international lenders canceled Haiti’s debt; however, its borrowing has increased to around $3.57 billion since then. Additional turmoil, such as the growing protest movement, the assassination of President Jovenel Moïse in 2021, consecutive natural disasters in July and August of the same year and widespread gang-related violence, has further strained the nation’s economic circumstances. 

In 2022, armed gangs fueled the economic crisis in Haiti with their actions, including blocking the southern entry to the nation’s capital, which isolated four departments from the rest of the country. These areas produce consumer goods supplied to Pourt-au-Prince, and the blockade affected the country’s economy during a severe nationwide fuel shortage. This also exacerbated the hunger crisis in Haiti, with a total of 4.9 million people in Haiti experiencing food insecurity. 

Solutions

The United States is the largest contributor of humanitarian aid to Haiti. The U.S. prioritizes fostering economic growth, reducing poverty, upholding human rights and strengthening democratic institutions. To combat poverty and address persistent unemployment by creating jobs, the U.S. promotes bilateral trade and investment in Haiti. The substantial Haitian diaspora in the U.S. presents a potential influential partner in the endeavor to expand business prospects and capitalize on the numerous connections that bind Haitian and American communities.

The International Development Association (IDA) supports the government of Haiti to address the ongoing economic crisis in Haiti. They participate in supporting private secret actors and removing infrastructure barriers to market access. IDA’s support centers around enhancing human capital by expanding access to education in health care. Simultaneously, the IDA assists the government in enhancing transparency, accountability and efficacy in public investment This effort also involves strengthening institutional capabilities to generate crucial data, manage sectors, establish evidence-based policy priorities and cultivate fiscal sustainability.

Looking Ahead

According to the United Nations Conference on Trade and Development (UNCTAD), achieving lasting economic security will rely on increasing investment levels in both the public and private sectors to foster rapid and more inclusive growth. Developing infrastructure, enhancing productivity on farms, increasing manufacturing and ensuring the provision of fundamental services will have the potential to create connections that will establish are more lawful development cycle.

– Marisa Del Vecchio
Photo: Flickr

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4 Charities Operating in Sri Lanka

charities operating in Sri LankaAs of 2022, 2.5 million people in Sri Lanka are living in extreme poverty, surviving on less than $2.15 a day, according to the World Bank. Compounding the impacts of the COVID-19 pandemic, Sri Lanka is currently enduring a severe economic crisis that has worsened living conditions across the nation. Amid deteriorating social and economic conditions, countless charities operating in Sri Lanka are looking to improve the lives of the most vulnerable groups living in extreme poverty. In particular, there are four charities operating in Sri Lanka with the aim of helping the impoverished.

4 Charities Operating in Sri Lanka

  1. The Tarana Foundation. This charity operating in Sri Lanka was founded in 2018 with the aim of strengthening the “socio-economic norms of rural communities in Sri Lanka,” its website says. The Tarana Foundation’s work centers around five specific U.N. Sustainable Development Goals: water and sanitation, shelter, education, health care and environment. The organization has completed more than 60 projects with an impact on more than 12,000 children through more than 20 collaborations and partnerships. For example, School Project Bandarawela, occurring in March 2023, entailed the organization providing 1,447 students across 24 disadvantaged schools with school bags, stationery, shoe vouchers and sports equipment.
  2. Save the Children. This children’s organization has worked in Sri Lanka since 1974, holding children as the focus of humanitarian efforts. Save the Children works to improve the state of children’s education, health, rights and livelihood of children in poverty in Sri Lanka through several programs and initiatives. For instance, in terms of the overall health and nutrition of impoverished children in Sri Lanka, Save the Children is working with the Ministry of Health to improve the school feeding program in more than 1,000 schools across the country. The organization is also working to strengthen access to maternal, child care and nutrition services in Sri Lanka, especially for the most marginalized communities, such as people working in the plantation sector.
  3. The Tea Leaf Trust. Couple Yasmene Shah and Tim Pare founded the Tea Leaf Trust after visiting the Sri Lankan tea estates in 2007 and realizing the poor living conditions of tea estate communities. The tea industry is responsible for a large part of Sri Lanka’s exports and produces 340 million kilograms of tea per year, with 4% of the land covered by tea plantations, according to Sri Lanka’s Export Development Board. The industry employs 1 million people overall. Despite the fact that the tea industry is a thriving sector, tea plantation communities often live in poverty and endure exploitation in unsafe working conditions. The Tea Leaf Trust works to ensure the education of young people in tea estate communities so that they can move on to secure gainful employment and financial stability to lift their families out of poverty. The Tea Leaf Trust has ensured an education for nearly 40,000 young people and around 350,000 tea estate workers are supported by the organization’s alumni.
  4. The Asha Trust. This local charity operating in Sri Lanka works on the outskirts of Colombo, supporting children from impoverished households. At the charities’ venue, both educational and recreational classes are provided for the children and mothers can take part in sewing and cooking activities. The Asha Trust also accommodates children with disabilities and assists families with accessing disability-specific support. In July 2022, the organization launched the Family Food Challenge, calling for donations to continue providing food essentials to families in Sri Lanka amid inflation. Using these donations, the Asha Trust provided 800 food packs made up of rice, lentils, coconuts, soy meat, sugar and tea to families in need.

These charities operating in Sri Lanka provide support to the country’s most impoverished people amid the deteriorating conditions of the economic crisis.

– Jess Wilkinson
Photo: Flickr

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Resolving Sri Lanka’s Economic Crisis

Sri Lanka’s Economic Crisis
World Bank data reveals that almost 300,000 Sri Lankans fell under the poverty line in 2020, meaning that 12.7% of the population lived on less than $3.65 a day. The COVID-19 pandemic had a lethal effect on the tourism, manufacturing and construction sectors that locals are financially reliant on.

In an interview with The Borgen Project, Saman Kumara, a guest house owner in the city of Haputale in Sri Lanka, shares that the local population has resorted to selling their personal property to secure money for food and medicine. According to 2022 data from the World Food Programme (WFP), close to 30% of Sri Lanka’s households (more than 6 million people) experience food insecurity. Adding insult to injury, citizens are experiencing power cuts of up to 13 hours and massive shortages of medicine and fuel. These consequences stem from government mismanagement and failure to act on time, resulting in Sri Lanka’s deepest economic crisis yet.

Coping with the Crisis

To alleviate the impacts of Sri Lanka’s economic crisis, in 2020, the United Nations Children’s Fund (UNICEF) examined Sri Lanka’s social protection response, concentrating on cash transfer initiatives. The Sri Lankan government swiftly established a cash transfer initiative in response to the crisis, “providing millions of monthly payments of LKR5,000 (roughly $14) to households in April and May.” Although the initiative lasted just two months, the government managed to reach most of the country’s citizens with this financial sustenance.

Kumara says that, during the pandemic, “the rich became richer” by buying off the properties that poverty-stricken people were forced to sell due to financial difficulties. “We had to sell our properties, vehicles and land to earn some money because every other income was blocked. [Wealthy] people bought those properties and vehicles at a very low price and that made the situation even worse.”

Government Mismanagement

Official records from Sri Lanka’s Department of External Resources show that by the end of April 2022, the government’s external debt amounted to $34.8 billion. The BBC reported in May 2022 that “Sri Lanka has defaulted on its debt for the first time in its history.” The economic turmoil, rolling blackouts, shortages of essential resources and staggering inflation have caused countrywide protests.

According to protestors, “a series of missteps” that the president and his administration have made have led the once vibrant and thriving economy of Sri Lanka to a fatal crash. In July 2022, after angry protesters stormed his family residence, President Rajapaksa chose to step down from his position and fled the country.

Some of the decisions that triggered Sri Lanka’s economic crisis include the ban on chemical fertilizers, a decision that the government later reversed, but detrimentally affected Sri Lanka’s tea industry and increased food insecurity. Tax cuts in order to garner political support worsened the economic situation while Sri Lanka’s external debt continued to grow. Overall, citizens blame Sri Lanka’s economic collapse on poor governance and severe mismanagement of the economy.

A New Administration

In June 2022, Sri Lankan members of parliament appointed Prime Minister Ranil Wickremesinghe as Sri Lanka’s new president, but according to Kumara, the new government has not helped the situation. “Yes, the government has changed but prices keep increasing. Before the pandemic, 1kg of rice cost 80 rupees (equivalent to $0.22), but now it costs more than 240 rupees (equivalent to $0.66). Petrol, gas and electricity have increased by about 800%,” Kumara says.

“Many of us [have no choice but] to leave the country as we cannot recover from the pandemic. Lots of restaurants are closed, most hotels have remained closed and people skip meals to save food and money.” Kumara also shared that the crisis has led to an increase in criminal activity and mental difficulties. “Every day we see on the news more robberies, suicides, people struggling with income.”

“We were lucky because our business received help from abroad. Previous guests [who] have been staying at our guest house sent us some money to lend a hand. However, it’s been almost impossible to recover from Sri Lanka’s economic crisis,” Kumara notes.

A September 2022 report by the U.N. says, in Sri  Lanka, “Fundamental changes will be required to address the current challenges and to avoid repetition of the human rights violations of the past.”

A Helping Hand

Help from abroad comes as UNICEF and Rotary International announce their new scheme to “deliver critical lifesaving supplies to families impacted by the crisis in Sri Lanka,” the UNICEF website says. The partnership, announced on 22 August 2022, aims to tackle the deepening economic crisis impacting the Sri Lankan community. Among other essentials, the partners will provide clean water, medicines, educational resources and medical equipment.

Projections by the World Bank suggest that poverty will continue to stand above 25% in the years to come. Aid from international organizations helps struggling Sri Lankans meet their basic needs, but for lasting change to occur, the new government needs to step up with reforms and solutions to reverse the damage that the previous administration caused.

– Ralitsa Pashkuleva
Photo: Flickr

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4 Ways that Fuel Shortages in Sri Lanka Affect Poverty and Inequality

Fuel Shortages in Sri Lanka
Recently, Sri Lanka quite literally ran out of fuel and has since resorted to extreme rationing, negotiating credit for fuel with foreign nations and receiving international aid. The economy is in shambles, with soaring inflation and foreign debt, mostly due to government mismanagement, according to experts. Amidst protests, the previous president fled to Singapore. Fuel shortages in Sri Lanka have prevented mobility across the country and ground the economy to a halt. Cars queued for days for a chance to get fuel. Due to a lack of transportation, food and other essentials have become difficult to access for many. While concerted responses in both the short and long term can help mitigate the consequences of this fuel crisis, Sri Lankans will continue to endure hardships for months if not years to come. Here are four ways that the fuel crisis is affecting the country.

4 Ways that Fuel Shortages in Sri Lanka are Affecting Poverty and Inequality

  1. Reduced Access to Schools. Lacking fuel for transportation, many children have no way to get to school. Sri Lanka had to close down its schools for several weeks at the end of June. Although many schools have since reopened, attendance rates have plummeted as students still face transportation issues. With the subsequent food crisis, many children walk long distances to grocery stores. Poor internet infrastructure prevents the widespread use of virtual learning. As children do not have access to education, their economic futures are likely to suffer. Considering that schools were not open for a year and a half at the beginning of the pandemic, continued closure from fuel shortages could mean that many children might not receive an education at all.
  2. Reduced Access to Employment. As transportation becomes increasingly unavailable, Sri Lanka’s employment crisis deepens. Government employees had to work from home in order to reduce fuel consumption. Most workers have had to travel long distances by foot, and many companies have had to shut down or downsize, further reducing employment. According to Sarala Emmanuel, a Sri Lankan researcher and activist, “There is no fixed salary, no protection, no compensation if there is an accident, no pensions, and no support if a person cannot do their job anymore.”
  3. Food Insecurity. According to a World Food Programme Assessment, in July 2022, nearly 6.3 million Sri Lankans were food insecure. Not only does the lack of fuel exacerbate access to food, but food companies have decreased production in response to dwindling sales. The agricultural sector has also taken a hit, with rice production dropping by 50% as of July.
  4. Inequality. Sri Lanka has received fuel shipments to ease the ongoing crisis. However, fuel is not always evenly distributed, with the wealthy and well-connected having more access than taxi drivers and tractor operators. Unequal access to resources is a particularly important issue to Sri Lankans, as the whole crisis is mainly the result of government corruption, nepotism and mismanagement.

Re-Mobilizing Developments

While fuel and food shortages have battered the people and strained the capacity of the government in Sri Lanka, other countries are pitching in to help with the crisis. India, Sri Lanka’s closest neighbor and largest import partner, has supplied Sri Lanka with $3.5 billion of aid as of May 2022. The World Bank has also funneled $160 million in aid for Sri Lanka to buy more fuel. Meanwhile, the IMF will provide $2.9 billion to mitigate the effects of Sri Lanka’s fuel crisis. In the longer term, the country is working towards a future less reliant on fossil fuels, with Ideal Motos having recently unveiled a domestic electric vehicle that can charge from solar roofs. These developments could help Sri Lanka get back on its feet and mobilize its economy.

– Ashwin Telang
Photo: Flickr

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How the US is Providing Aid During Argentina’s Economic Crisis

Argentina’s Economic Crisis
Despite being one of the richest countries in South America per capita in 2020, Argentina is currently grappling with poverty and an economic crisis. Argentina’s economy has been dramatically up and down for decades but the COVID-19 pandemic and the war with Ukraine and political instability have recently worsened it. Because of these combined factors, Argentinians are currently dealing with rising energy and food prices, state bankruptcies and reduced wages. Inflation is above 70% and could reach 90% before the end of the year. Today, 40% of Argentines live in poverty and about 10% of them could not afford “a basic basket of only food” in 2021. Here is some information about Argentina’s economic crisis as well as how the U.S. is providing aid.

An Alliance

The United States and Argentina have an alliance based on trade and shared priorities. These priorities include “democracy and human rights, counterterrorism and rule of law, improving citizen security, science, energy and technology infrastructure, people-to-people ties, and education.”

In recent years, the U.S. has been assisting with COVID-19 recovery, renewable energy development and promoting women-led small businesses. These measures aim to address as many factors as possible that led to the economic crisis and tackle them one by one.

Since the pandemic broke out in 2020 up until April 2021, the U.S. military has given $3.5 million in recovery aid to Argentina. According to U.S. Southern Command Admiral Craig S. Faller, this aid includes “protective equipment, medical supplies, and monitoring and screening tools.”

National Security

Another way the United States is improving Argentina’s economic crisis is by improving national security. In 2020, the U.S. Department of State gave $3.1 million to Argentina for counterterrorism efforts, including military education and training, improved worker’s rights, reduced child labor and job creation. The U.S. also helped develop the Western Hemisphere Counterterrorism Ministerial (WHCM), an alliance dedicated to reducing terrorism in western hemisphere countries and Argentina has been “a leading participant” and hosted a second ministerial in 2019. In the same year, Argentina became the first country in Latin America to declare Hizballah a terrorist group. In 2020, the U.S. made plans to strengthen security in Argentina through “legal, financial and law enforcement tools,” the U.S. Department of State reported.

Women in Business

Having more women entrepreneurs is critical to the well-being of the economy. In 2019, a “high-level U.S. interagency delegation” came to Argentina to support and grow women-owned businesses, which are “essential for creating economic growth and security,” the U.S. Department of State reported. This visit sparked the launch of the Academy of Women Entrepreneurs in 2021, an online and in-person program that focused on helping 30 Argentine women expand their businesses.

Through poverty, pandemic and inflation, the United States is improving Argentina’s economic crisis by extending COVID-19 relief, improving national security, expanding job opportunities and training and empowering women. In fact, Argentina’s poverty rate dropped by about three percentage points from the first half of 2021 to the latter half of the year. There is still a long way to go, but this alliance has been making progress.

– Ava Ronning
Photo: Unsplash

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How the Economic Crisis in Sri Lanka is Exacerbating Poverty

Economic Crisis in Sri Lanka
Surrounded by the Indian Ocean in Southern Asia, the island nation of Sri Lanka is currently facing its worst economic crisis in history. While the country once held great promise with the Sri Lankan Ministry of Foreign Affairs hailing it as “Asia’s fastest growing economy” in recent years, the country has faced a great economic decline. A combination of extreme corruption, political instability and deficit borrowing has led to an economic downtrend that the ongoing Russo-Ukrainian war recently heightened. As a result of this political and economic unrest, poverty rates are rising. This is how the economic crisis in Sri Lanka is exacerbating poverty within the country. 

Poverty in Sri Lanka

Compared to other countries in the region, poverty rates in Sri Lanka are not as bad. For example, pre-pandemic poverty rates in surrounding countries such as Bangladesh and India were more than 20%, but Sri Lanka’s rates never passed the 10% mark. However, the most recent data regarding the state of poverty in Sri Lanka from the World Bank reveals that there are more than 847,100 people in Sri Lanka living below the poverty line. This means that there are currently more than 847,100 people without access to education, food, water and shelter in Sri Lanka.

The Impact of the COVID-19 Pandemic on Poverty

Historically, Sri Lanka has been especially dependent on government-guided market investments and tourism to keep its economy afloat. Most recently, with the onset of the COVID-19 pandemic, the latter industry felt the greatest impact. Losing a great percentage of tourism meant the country had to exhaust its foreign currency reserves, leading to further disaster in May 2022 as the country began to default on public debt payments. This led to a rise in inflation and as a result, more Sri Lankan families were borderline in poverty.

Russo-Ukrainian War Exacerbating the Issue

Economic conditions were already poor pre-war, but the greatest rise in poverty rates happened recently as Putin enforced a blockade of wheat exports. Several impoverished Sri Lankan families relied on wheat to provide stable, relatively affordable food to their loved ones, but with the removal of this option, families had to either consistently go hungry or abandon their children.

 The Current State of Sri Lanka

According to the U.N., an estimated 10,000 children already rely on some form of institutional care due to poverty. The number of these children requiring assistance from these institutions is rapidly increasing as a consequence of increasing poverty rates due to the economic crisis. Unfortunately, these institutions lack the resources necessary to provide for these children. Additionally, this has caused student enrollment to decrease and, conversely, caused child abuse rates to increase. Both factors have contributed to increased rates of general poverty over time.

What Does This Mean?

The economic crisis in Sri Lanka is especially troubling and not only raises concerns about malnutrition, disease and death in the country but also extends to other areas of the world as similar patterns are present in other Asian and African countries. There is hope, however, as Sri Lanka has the potential to serve as a cautionary tale for other countries to prepare their economies for potential, post-pandemic deficiency. Additionally, financial aid from bordering countries, such as India, promises Sri Lanka a degree of stability as they work through this trying time. India has provided Sri Lanka with $5 billion in assistance throughout the crisis along with food and fuel supplies. Furthermore, India has opened the Tamil Nadu borders to Sri Lankan refugees seeking additional support.

– Aarika Sharma
Photo: Flickr

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Inflation in Turkey

Inflation in Turkey
Turkey is one of many countries that the consecutive crises the world is facing, from the COVID-19 pandemic to the Russian invasion of Ukraine, have affected. Each crisis has its consequences on Turkey’s economy. The Turkish government has also taken actions that have led to the devaluation of the lira, which has contributed to rising inflation rates in Turkey. In fact, Turkey’s inflation rate for the month of May 2022 reached 73.5%, the highest rate in 24 years. Similar to other countries, inflation in Turkey sparked an increase in the prices of basic resources, leading to a significant impact on the impoverished. These circumstances force the government to implement reforms to protect Turkey’s most vulnerable people.

Causes of the Inflation in Turkey

Even before the coronavirus outbreak and the war in Europe, inflation in Turkey was slowly taking place as the state grappled with significant debt amid the Turkish lira progressively losing its value. The citizens of Turkey consider the Turkish president responsible for the degradation of the nation’s economic situation, given that he insists on keeping interest rates low, according to the New York Times.

The onset of COVID-19 led to further degradation of the economic situation in Turkey due to the disruption in the supply chain. However, Turkey successfully managed this crisis and stood among the few countries noting a positive growth rate for the year 2020.

On the other hand, the recent war between Russia and Ukraine had a serious impact on the Turkish economy. Turkey has important economic ties with both countries and sees its economy affected not only by the increase in the price of energy products but also by the impact this crisis has on agricultural trade, tourism and construction projects in which Turkey is involved.

Poverty and Inflation

The unconventional strategies that the Turkish president adopted, in addition to the two major crises the world now faces, strongly impact inflation in Turkey. Unfortunately, the rise in the prices of food and energy affects low-income households most, according to the World Bank.

A poll indicates that in May 2021, just 53.6% of the Turkish population could meet their basic needs. High inflation and the devaluation of the Turkish lira are “fast eroding the purchasing power of the minimum wage, public-sector salaries and pensions.” In fact, prices are skyrocketing. Electricity bills are reaching unprecedented cost levels and the price of a kilogram of flour has doubled in less than four months, dramatically rising from 110 lira in January 2022 to 220 lira in April 2022, The Guardian reported. Inflation also harshly impacts farmers as they struggle to keep up with large industrial corporations, “with the prices of agricultural producers falling well behind those of industrial producers,” leading to decreased revenues.

Solutions

The methods of the Turkish President Erdoğan, in the form of lowering interest rates, have not been effective in reducing inflation in Turkey. In fact, economic experts consider Erdoğan’s strategy economically unorthodox.

Nevertheless, to ease the economic situation for citizens, in February 2022, the Turkish government decided to address rising inflation by reducing the value-added tax (VAT) on basic food items from 8% to 1%. In March 2022, the government reduced the VAT on a number of other essential products too. In agriculture, the government reduced VAT “on all kinds of certified seed, seedling and sapling deliveries” to 1%. The government also reduced the VAT on certain hygiene products from 18% to 8%.

In addition, in 2021, the government provided the most impoverished with energy bill subsidies to the value of $12.2 billion. The government is thus aiming to support 50% of the price of natural gas and 25% of the price of electricity. In December 2021, the government also rose the minimum wage by 50% to help struggling citizens enduring the impacts of high inflation rates.

Looking Ahead

With a government following unusual economic policies and global crises affecting the proper functioning of the economy, inflation in Turkey continues increasing, exacerbating situations of poverty. Despite all that, Turkey has a strong economy capable of exporting large quantities of diverse products, which helped the nation surpass many challenges in the past. With the gradual lifting of COVID-19 restrictions, the country can fully reopen its doors to tourists, which will also give the nation an economic boost during this crisis.

– Youssef Yazbek
Photo: Flickr