gender barriers
Equality between men and women still remains a struggle in the majority of countries around the world, but the fact that removing gender barriers fuels economic growth is becoming more evident in the world’s fastest-growing economies. In addition to fueling the principle of equality, women’s economic participation is a vital, often overlooked, piece to the labor force.

Female Economic Participation

According to the International Monetary Fund, the importance of female economic participation mitigates the shrinking labor force in developing countries. The more opportunities women have increases the likelihood of the gender contributing to broader economic development. Such outcomes are often seen through higher enrollment numbers for education.

Currently, in the Middle East and Northern Africa, women account for 21 percent of the labor force. Often these gaps lead to significant GDP losses. Countries that have acquired such losses include Qatar, Oman and Iran, and all three nations have a projected GDP loss estimated at 30 percent or higher.

Many of these countries pose a legal threat to women — women signing contracts, traveling abroad and negotiating finances are not common. However large the losses, there are significant macroeconomic benefits to eliminating gender barriers. Some of these benefits include:

  • Improvements in financial analytics
  • Economic inclusion and data collection
  • Reformative fiscal policies that integrate equality into law

One U.N. study claims that removing gender barriers fuels economic growth by fostering an additional $89 billion into the Asian Pacific economy per year.

A Rwandan Success Story

Some countries have fought hard to relinquish the negative stigma associated with women in their economies. From innovative coffee plantations in Rwanda to legislative change, alleviation of bias is slowly filtering its way through exclusive boundaries.

For instance, Rwanda has recently become a powerful leader in the gender equality sphere. Policies regarding gender empowerment and budgeting of public services are setting precedents for many Sub-Saharan African countries. In addition, the Ministry for Gender and Family Promotion is the largest gender equality organization in the country. Its commitment is centered on gender-based budgeting and fighting gender-based violence.

Rwanda and Gender

Post-Rwandan Genocide culture opened many doors for women just as World War II did for Americans. President Paul Kagame recognized the need for women’s labor and in 2003 passed legislation requiring 30 percent of parliamentary seats to be reserved for women. Kagame battled to revitalize the torn country with a labor force that was unheard of for many Eastern African countries.

As of January 2018 and thanks to President Kagame, 64 percent of seats in Rwandan legislature were held by women. This is a feat highly praised by most Rwandan women, but still remains a slight issue with Rwandan males and traditional females who choose to ignore the fact that removing gender barriers fuels economic growth.

Though Rwandan history has uniquely paved the way for female empowerment, many countries still lag behind the concept of gender equality. If barriers continue to be eliminated, economic success is sure to follow. Perhaps global powerhouses, like the U.S., can learn from Rwandan history, gender equality and culture, and bring gender equality to the forefront.

– Logan Moore
Photo: Flickr

Poverty Rate in Jamaica
The poverty rate in Jamaica is decreasing due to economic growth. The government wants this trend to continue. It stated in the December 2016 National Poverty Eradication Programme (NPEP) that its vision for every Jamaican is to consume goods and services above minimum acceptable national standards. The government envisions a state where everyone has equal opportunities and support to achieve and maintain income security and improved quality of life.

As with any dream, there are several obstacles to attaining this vision. There are also successes that signal the vision is possible. Here are eight facts about efforts to further reduce the poverty rate in Jamaica.

  1. According to the government’s NPEP, in 2012, 19.9 percent of the population was living at or below the poverty line.
  2. Unemployment rates have fallen in the country. According to the Statistical Institute of Jamaica, the unemployment rate in Jamaica in January 2017 was 12.7 percent, compared to 13.3 percent in January 2016.
  3. While unemployment rates have gone down for the population as a whole, unemployment rates remain high for youth. According to the World Bank, the unemployment rate for youth is 28.6 percent. This is leading to high levels of crime and violence.
  4. According to the World Bank, Jamaica is considered to be an upper middle-income country. The United Nations Development Programme states that Jamaica received this classification in 2010 due to being on track to eradicating extreme hunger and ensuring environmental sustainability.
  5. Even though Jamaica is viewed as an upper middle-income country, it faces many obstacles in economic growth. The World Factbook reports that Jamaica’s economy has grown on average less than one percent per year for the last three decades. Economic growth has been slow due to a high debt-to-GDP ratio and high rates of crime and corruption.
  6. Focus Economics highlights that tourism is helping the Jamaican economy. The island welcomed its one millionth tourist in mid-June 2017, two weeks before receiving a private investment of $1 billion for a chain of hotels and resorts.
  7. According to the World Factbook, Jamaica has made progress in reducing its high debt-to-GDP ratio. In 2012 it was at 150 percent. It is now at 115 percent. Collaboration with the International Monetary Fund made this achievement possible.
  8. Poverty programs are being instituted in Jamaica. Most of these are state-led. In its NPEP, Jamaica outlines its goals for eradicating poverty. Its first goal is to eliminate extreme food poverty by 2022. Its second goal is to get the national poverty line reduced significantly below 10 percent by 2030.

There are several poverty reduction programs currently in place in Jamaica. Further reducing the poverty rate in Jamaica is feasible due to the government’s thorough NPEP. If the government reaches the goals outlined in the policy, poverty reduction will be systemic and all Jamaicans will be able to realize the dream of equitable opportunities. While there are significant challenges, Jamaica’s economic future is promising.

Jeanine Thomas

Photo: Flickr

International Monetary Fund Facts
The International Monetary Fund (IMF), in combination with the World Bank is the world’s largest public lender today.

 

Key Facts About the International Monetary Fund

 

  1. In the 1930’s the world was overtaken with financial turmoil of the Great Depression. Markets all over the world collapsed and countries closed their doors to foreign imports. The IMF was conceived in July 1944 at the United Nations Bretton Woods Conference in New Hampshire, to protect the world from a similar blow and hasten financial recovery in war-torn nations.
  2. The Fund was created to act as a credit union and watch over the values of the world’s currency, and facilitates International Trade, promotes employment and sustainable growth and helps to reduce global poverty. Its main aim is to maintain economic stability and help countries complete financial transactions.
  3. The three main responsibilities of the IMF are: Surveillance — specifically to monitor the economic and financial policies of its members; financial assistance through loans to its members experiencing balance of payments issues; and technical assistance to help members design and implement economic policies that foster stability and growth.
  4. Primary aims of the IMF: Promote international monetary cooperation, facilitate the expansion and balanced growth of international trade, promote exchange stability, assist in the establishment of a multilateral system of payments and make resources available to members experiencing balance of payment difficulties.
  5. The IMF is accountable to 189 member countries. Its Headquarters is located in Washington D.C.
  6. A country’s voting power is based on the size of its economy and the amount of the quota it pays when it joins IMF. The U.S. has the largest share of votes (approximately 17 percent). Decisions require a supermajority– 85 percent of votes.
  7. The IMF advocates currency devaluation for governments of poor nations with struggling economies.
  8.  Largest borrowers of the IMF are Portugal, Greece, Ukraine and Pakistan. The largest number of IMF loans have gone to the African Continent.
  9. The U.S. contributes about 20 percent of the total annual IMF Budget. The largest member of the IMF is the U.S. and the smallest member is Tuvalu.
  10. The fiscal year for the IMF begins on May 1 and ends on April 30.
  11. The head of the IMF staff is the Managing Director. The Managing Director also acts as Chairman of the Executive Board and serves a five year term. The present Managing Director is Christine Lagarde of France. The Executive Board Members monitor the day to day work with the guidance of the International Monetary and Financial Committee.

Studies show that contrary to the criticism of the IMF, it fulfills its functions of promoting exchange rate stability and helping its members correct macroeconomic imbalances.

Aishwarya Bansal

Photo: Flickr


According to The Organization for Economic Co-operation and Development (OECD), in 2015, Japan spent 0.22 percent of its budget, about $9 billion, on development assistance. While developed countries spend an average of less than one percent of their budget on foreign aid, Japan’s generosity made it the fourth most generous nation of 2015.

A 2010 agreement with the International Monetary Fund (IMF), a Trustee of the Poverty Reduction and Growth Trust (PRGT), assures that Japan will lend $2.7 billion to secure a total of $8 billion gathered from other nations in new loan resources for low-income countries. The loan agreement was effective in April of 2017. This will allow the IMF to increase aid to low-income countries hit particularly hard in the current global economic crisis by providing more loans for recently reformed concessional lending facilities.

The PRGT has three facilities that work on the concessional financing framework. There are the Extended Credit Facility to provide flexible longer term support; the Standby Credit Facility to address short-term needs; and the Rapid Credit Facility to provide immediate emergency support. These facilities are in place to help countries with governments with low financial stability and a “protracted balance of payment problems.”

Additionally, a 2017 IMF press release reveals that Japan “agrees to provide additional $2.5 billion to International Monetary Fund’s Trust benefitting low-income member countries, bringing [its] total contribution to $5.2 billion.” This would be Japan’s fourth contribution to the PRGT. This makes Japan one of the first 10 countries to respond with an additional loan under the current campaign.

The money that countries like Japan lend ensures that receiving countries can be financed to fix struggling institutions. The loans enable rebuilding international reserves, stabilizing currency, paying for imports and overall economic growth. What makes the IMF different from other international lending or donating organizations is the fact that it does not lend money for specific projects.

Since 2005, the IMF’s goal has been to re-stabilize the world’s economy, which is in a a state of crisis unseen since the Great Depression. As a result, the IMF has created a flexible credit line for countries that show potential to put their economies back on track and implement strong policies to keep it that way. Countries like Japan can see a return on their investments while developing nations can continue to develop.

Vicente Vera

Photo: Flickr


Egypt’s poorest and most vulnerable people are receiving special care. This is the result of the country’s fundamental economic reforms, made possible with the help of a $12 billion loan from the International Monetary Fund (IMF). Egypt’s economic reforms are creating some short-term difficulties, including high inflation, but ultimately should lead to greater growth and more jobs for the nation.

The reforms are intended to solve long-term economic challenges in Egypt. The challenges include an overvalued exchange rate, large deficits in the Egyptian budget, high unemployment, and slow growth. To address these challenges, Egypt’s government is pursuing economic reforms including a floating exchange rate, a value added tax (VAT) and a reduction of fuel subsidies.

Egypt’s economic reforms should produce long-term benefits for the country, in particular, increasing economic growth and job creation. They should also help limit inflation to single digits.

As anticipated by the government, the reforms are creating immediate challenges for Egypt’s businesses and consumers. Businesses are feeling the effects of the Egyptian pound’s devaluation as production costs have risen sharply. Consumers are being hit with a spike in short-term inflation, along with the new VAT.

Helped by the IMF loan, the government is taking steps to mitigate these short-term effects on Egypt’s poor and vulnerable populations, especially women and children. The Egyptian government has committed to spending an additional percentage point of its GDP — about 33 billion Egyptian pounds — on programs for the poor and vulnerable.

These funds will be used to increase food subsidies, provide for cash transfers to low-income families and the elderly and other targeted social programs. These additional social programs include free school meals, vocational training for youth, and support for children’s medicines and infant milk. Additionally, the government will provide gas connections in poor districts.

As the IMF points out, the government intends for Egypt’s economic reforms to benefit all the people of Egypt. The reforms will cause some short-term disruption and difficulties to them, especially the poor and vulnerable. However, the government is addressing those difficulties by strengthening the country’s social safety net so all Egyptian citizens can make the transition to a better life.

Robert Cornet

Photo: Flickr

Poverty in TunisiaIn June 2016, the International Monetary Fund’s (IMF) online magazine announced that the organization has approved a four-year, $2.9 billion loan program to help alleviate poverty in Tunisia.

This news may come as a shock to some people. The IMF gave financial assistance in the form of a Stand-By Arrangement following the 2010 Tunisian Revolution, and the North African country is considered to be one of the few successes that emerged from the Arab Spring.

While Tunisia has come a long way both politically and economically, the country is still plagued by high unemployment and a lagging private sector.

According to IMF Survey, 15 percent of Tunisia’s population and 35 percent of its youth, are unemployed, contributing greatly to poverty in Tunisia. Civil society representatives, speaking with World Bank Group President Jim Yong Kim during his visit in May, claimed that only 27 percent of the country has access to finance due to strict rules on foreign transactions.

Joblessness and lack of opportunities has produced lackluster economic growth and low government approval ratings. The World Bank reported that only twenty percent of young Tunisians in urban areas trust the government. The figure is ten percent for the countryside.

Regional disparities are also a problem; while the national unemployment rate is high, it is even higher in regions far from the coast. In southwest Tunisia, 26.1 percent of people were unemployed in 2015, according to Tunisia’s National Statistics Institute.

Where unemployment goes, poverty follows. A 2014 World Bank report revealed that the poverty rate in central Tunisia was four times higher than the national average; as high as 30 percent in certain areas.

All of these factors combine to produce a significant number of disgruntled youth that extremist groups seek to recruit.

According to a Voice of America article published on June 6, 2016, over 7,000 people in the country have become fighters for the Islamic State and other jihadist groups. The reason, cited by many, is that the government has failed to integrate a youth population that is in a process of soul-searching, following the democratic uprising of 2010 that lasted into 2011.

In order curb this terrorist threat, which has major security implications for the region and the world at large, economic development and poverty reduction are key. The new IMF program aims to do exactly that.

In an interview with IMF Survey, IMF Mission Chief for Tunisia Amine Mati stated that by injecting more money, the $2.9 billion loan would help maintain the overall stability of the country’s economy.

As civil society representatives and young Tunisian entrepreneurs have made clear, labor market, private sector and structural reforms are also needed. According to Mati, the program will also assist government efforts in creating a more dynamic economy and ensuring growth is distributed across the country.

Tunisia has great potential. Its democratic government is committed to solving the country’s problems. Foreign aid will help accelerate the progress already made in reducing poverty in Tunisia.

Philip Katz

Photo: Pixabay

Poverty in Greece
For the past few years, Greece has required heavy subsidies from the International Monetary Fund (IMF) in conjunction with the European Union (EU) to avoid collapse. However, despite these heavy subsidies, the Greek economy continues to contract, and poverty in Greece is maintaining concerning rates.

The New York Times has compared this crisis to the infamous Great Depression in the United States during the 1930s. When these two timelines of GDP decline are placed in conjunction the economic descents of the two countries follow the same trajectory.

The single difference between these two scenarios is that after four years the U.S. economy began to progress upward again. Inversely, the Greek economy has maintained constant economic contraction, averaging a negative growth of 25 percent GDP for the last four years.

Since the beginning of the crisis, the IMF and neighboring nations of the EU have poured over €260 billion into the flailing economy and have pledged an additional 86 billion euro to mitigate the extreme poverty that is spreading throughout the country. But even with these efforts, the Greek economy continues to shrink.

The effects of the steadily contracting economy have resulted in over a quarter of the population being unemployed, over 30 percent of the population living below the national poverty line and nearly one-fifth of the adult population not being able to feed their children. Charity organizations are running at full throttle, and some have worried at times if there will be enough food to go around.

The North American economist, Daniel Altman, has observed the fiscal problems that are being faced by Greece and has proposed several unpopular but effective ways in which the economy and reduction of poverty in Greece could make a rebound. He affirms that his prescribed measures would not be easy, but they would be possible to implement.

The first action Altman recommends is to default officially. The trade from Greece has been resulting in very low ingression of profit, and the governmental debt is continuing to accumulate in the background. Though defaulting on their debt would mean years of frozen access to global markets, it would also stop the progressing debt in the long run.

Secondly, the euro should be eradicated from the Greek economy. As it stands, the government cannot use inflation to its advantage since the euro is a transnational currency. A return to the Greek drachma would almost assuredly necessitate the aforementioned default and an initial scare would be probable, but in the long term a return to domestic currency would set Greece in a position for economic progression.

In addition to these suggestions are the procedures for tax elevation and a decrease in public budget. Altman affirms that these are never popular choices, but they are necessary for recovery. Many of these actions are already being imposed as necessary conditions for the reception of bailout funds from the IMF and the EU.

Additionally, an innovative way in which Greece could reduce the public debt and put its economy back on track would be through liquidation of land assets. Greece has thousands of islands and large portions of ethnically Turkish, Albanian or Macedonian lands that could be sold.

Altman affirms that neighboring countries would pay large amounts to acquire lands that are largely inhabited by their people, thus alleviating poverty in Greece and putting a dent into the national debt.

Regardless of how this issue is approached, it seems that poverty in Greece is not going to be reduced without any sacrifices.

Preston Rust

Photo: Spiegel

ukraine
This past March, Ukrainian Finance Minister Natalie Jaresko and Prime Minister Arseny Yatseniuk succeeded in securing an impressive amount of aid from the International Monetary Fund, but their work to bring Ukraine to financial stability has only just begun. The restructuring that the IMF and Ukraine agreed on calls for Ukraine to save $15.3 billion over the next four years, a number that would only be attainable if some of Ukraine’s creditors forgave a portion of their principle. So far, nobody seems willing.

After the violence last year sent Ukraine’s economy into a tailspin of high interest rates and dwindling federal bank reserves, the international community stepped in to lend Ukraine a hand – and several billion dollars.

Last April, the IMF approved a two-year loan of $17 billion to Ukraine, but soon deemed the plan insufficient to build reform while the government was busy fighting pro-Russia separatists in eastern Ukraine.

This March, the IMF approved a loan that would deliver $17.5 billion over the next four years, with $10 billion of the money being delivered this year. An official statement by IMF Managing Director Christine Lagarde in Berlin called the program “very strongly front-loaded during the first year.” She went on to express optimism about the plan, saying, “Ukraine has satisfied all the prior actions that were expected and required of it in order to start running the program. … We are off to a good start.”

‘Front-heavy’ loans like this are supposed to kick-start the rebuilding process and bring faltering economies out of their downward spirals. That money was combined with an additional promise of $7.5 billion from other international organizations and an expected $15.3 billion in debt relief.

Even with this assistance and the optimism of the IMF, the Ukrainian economy is expected to contract by 5.5 percent in 2015, before rebounding and growing by an estimated two percent in 2016. While the outlook of the IMF and the Ukrainian government is cautiously optimistic, their goal remains lofty. By 2020, they aim to reduce Ukraine’s debt down to $56.1 billion, from the estimated debt in 2015 of $74.9 billion.

Ukraine’s debt can be broken into four very rough categories: there is debt to international organizations like the IMF, which is unlikely to change. There is debt to friendly governments like the United States, which would also be hard to change. The remaining two kinds of debt are Ukraine’s $17.3 billion in sovereign Eurobonds, and $31.4 billion in domestic debt. These are the debts the Ukrainian government has the best chance of re-negotiating, but simple interest alterations won’t be enough. To meet its goal, the Ukrainian government will have to reduce the principle of these debts.

This will not be a task for the faint of heart. The largest private bondholder, asset management company Franklin Templeton, has hired heavy-hitting consulting group Blackstone to advise them during talks, a sure sign that they don’t plan to surrender much. However, the toughest creditor is probably Russia, who holds $3 billion of Ukraine’s Eurobond debt, and has proven intractable to negotiation about restructuring so far.

If Prime Minister Yatseniuk and Finance Minister Jaresko can negotiate a manageable plan for debt repayment, Ukraine’s economy has the potential to make an impressive comeback.

– Marina Middleton

Sources: IMF, Bloomberg 1, Bloomberg 2, Reuters
Photo: Flickr

causes-of-poverty
Poverty is a global endemic, caused by a variety of factors that interact with one another. There are three types of poverty: extreme, moderate and relative. Extreme poverty entails lack of basic resources for survival including food, water, shelter and sanitation. There is a dire lack of education and health care among extreme poverty as well. Persons of moderate poverty have access to the basic means of survival, but just barely. Relative poverty entails low income compared to the national average income, and is highly prevalent in more developed territories. While poverty is experienced differently across time, space and culture, there are several causes that often overlap and create dire consequences.

Individuals are a noteworthy source of poverty. This is not to place the blame upon an individual who is born into or experiences poverty; “individuals,” in this context, refers to poor government practices, sadistic leaders, exploitation by peoples and governments and lack of collection individual actions. Social perceptions of individuals contributes to poverty, for cultural ideas about the relative worth of “others” places individuals in different social categories at birth which often determines the opportunities available to individuals in each group.

Causes of poverty that are primarily caused by people also includes corruption and decentralized civil society. Corruption is particularly harmful, for it inhibits development when leaders award themselves money that would otherwise be used for development projects. A history of colonization is a critical cause of poverty.

“Natural” causes of poverty include agriculture cycles, droughts, flooding, natural disasters and warfare. These phenomenons contribute to hunger and especially effect farmers. Limited resources and infrastructure to respond to such crises in developing countries also perpetuate inequality. Warfare has historically contributed to poverty, as it diverts resources from addressing poverty and structural issues to maintaining a robust military.

According to Global Issues, a significant cause of poverty is structural adjustment. Structural adjustment policies, influenced by globalization, are enacted by actors such as the International Monetary Fund and World Bank and prescribe conditions for loans. These policies cause a “race to the bottom” in which developing countries are forced to open their markets and compete with industrialized, developed economies. A reduction of resources for health, education and critical social services have increased poverty and inequality for people around the world.

Inadequate liberal practices contribute to poverty as well. According to Global Issues, “Free, subsidized, or cheap food, below market prices undercuts local farmers, who cannot compete and are driven out of jobs and into poverty … Many poor nations are dependent on farming, and so such food aid amounts to food dumping.” A lack of cohesion among aid, international organizations and the opinions of local culture is a significant cause and perpetrator of poverty.

In order to combat the root causes of corruption, numerous actions need to be enacted simultaneously. There ought to be an improvement in the government capacity to provide universal access to essential goods and services to an area, such as potable water, affordable food, healthcare, education, housing and other social services. In addition to rooting out corruption, there needs to be broadened access to education and technology among marginalized groups, especially among girls and women.

Neti Gupta

Sources: GDRC, Global Issues, Poverties.org
Photo: Flickr

Ghana
The Western African country of Ghana recently announced that it will seek the assistance of the International Monetary Fund in order to help bolster the country’s currency.

Although the country was once a beacon of hope for strong economies in Africa, it is currently struggling with high rates of inflation — with the current rate at 15 percent. A high inflation rate means that prices of goods are increasing too fast for people’s incomes and standards of living to keep up.

The cedi, Ghana’s currency, has fallen 40 percent against the U.S. dollar this year, moving it to the forefront of one of the world’s worst-performing currencies.

While the country is a major exporter of gold, oil and cocoa, Ghana continually struggles with budget and account deficits. President John Dramani Mahama stated that his government is open to assistance, but emphasized that it is not a bailout.

The country’s finance minister was similarly defensive. In an interview with BBC, the minister said that Ghana could fix its own currency problems and that receiving funding from the IMF was a last resort.

The country could tackle inflation by freezing wages, although this is an unpopular solution among citizens.

The IMF assistance is forecast to help boost investor confidence as the government prepares to sell as much as $1.5 billion in Eurobonds by the end of August.

The country last went to the IMF for aid in 2009, when it secured a $600 million package over three years. The government also has received assistance in the past from a campaign to help poor countries, wherein the majority of its debt was written off.

Michael Kafe, an economist from Johannesburg noted in an interview with BBC that the recommended three year program from the IMF is disappointing.

Kafe explained Ghana’s continued need for support, “This likely points to greater focus on short-to-medium-term solutions for the country’s foreign-exchange issues and not what we see as necessary medium-to-long-term solutions required to deal with chronic balance of payments imbalances that have historically stoked cedi weakness.”

-Caroline Logan

Sources: BBC, Bloomberg
Photo: AFKinsider