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Renewable Energy in AlgeriaThe Algerian economy is highly dependent on its natural resources. Exporting gas and oil is a lucrative business and in recent history, the country has benefitted from periods of price increases. However, volatility in prices makes macroeconomic stability hard to achieve.

In 2022, the Russian-Ukraine conflict raised the prices of hydrocarbons, due to a decline in supply. As a result, European countries are looking at North African countries including Algeria to meet their energy needs. However, at present, Algeria’s energy sector is unable to meet this demand.

The Need for Renewable Energy

Since the COVID-19 pandemic, many Algerians struggle with rising inflation and a lack of economic opportunities. According to the IMF, “inflation and volatility of hydrocarbon prices” are vital issues that require attention, in order to guarantee a more stable macroeconomic environment. These issues are commonplace globally and affect the most vulnerable members of society. Unemployment has been on the rise since the pandemic and according to recent data, the country’s poverty figure is 14.6%. of note, there is a large disparity in poverty based on location, with rural areas being “highly deprived compared with urban areas.”

The Potential for Renewable Energy

The prospect for renewable energy in Algeria is tremendous as the country is situated in the Sahara Desert, boasting plentiful sunlight year-round. The potential energy production from sunlight is estimated to be 14TWh per year. To put this into perspective, currently, the country uses around 70.11TWh per year to meet its energy needs. If Algeria manages to source more of its energy from renewables, the government budget could be less susceptible to price volatility, creating greater macroeconomic stability. In line with this expectation, the government has set out a plan to increase access to renewable energy in Algeria.

Algeria’s Renewable Energy Plan

Algeria has set a target of 15,000 megawatts from solar by 2035. This is in hopes of increasing the percentage of energy derived from the sun, which currently sits at 3%. Furthermore, off-grid installations are to produce 1,000 megawatts, which is likely to benefit rural communities, according to the International Energy Forum (IEF). Alongside increased investment domestically, the country is looking at outside investment to bolster its initiatives. The new legislature is also focused on setting requirements for foreign investors, in the hopes of diversifying the local economy. Of note, Genevieve Verdier led an IMF mission to Algeria and noted that the new legislative framework “could facilitate the transition to a low-carbon economy.” As part of the new laws, foreign investors will need to use equipment manufactured in Algeria. The country has solar panel factories and aims to increase its manufacturing power, by making it mandatory to utilize Algerian supplies.

Rural Applications

The Algerian plan is promising, but it will take some time to deliver large-scale results since rural communities sporadically use solar energy. In an interview with Euronews, a local nomadic breeder showcased a few solar panels near his home. The farmer spoke of the positive impact of his solar power kit, explaining that it powers his lights and allows him to live a more comfortable life. Similarly, in the small town of Aine Madhi, a school recently installed a solar water heater.

Overall, cheap, renewable energy in Algeria could make big changes in rural communities while large-scale investments would provide macroeconomic stability to the nation, diversify its economy and create job opportunities across the country.

– Matteo Pennarts
Photo: Flickr

poverty level in IndiaThe measurement of the poverty level in India has been the subject of much debate over the past decade, especially because of the lack of reliable figures and data. This year, following two articles on poverty in India published by the International Monetary Fund and the World Bank, a new debate on poverty in India emerged — the “Great India Poverty Debate 2.0” in reference to the “Great India Poverty Debate 1.0” that existed after the liberalization of India in the 1990s.

Difficulties in Assessing Poverty in India

Since the Indian government has not published any National Sample Survey (NSS) results since 2012, which includes the national statistics regarding poverty in the country, researchers began studies to determine the amount of poverty within India, particularly extreme poverty.

The studies employ different methods to measure the poverty level in India in order to provide more recent estimates. Both studies, the first by Bhalla, Bhasin and Virmani and the second by Roy and van der Weide, arrive at “dramatically different conclusions.” Although each approach has its shortcomings, Ideas for India says the studies “highlight that the real poverty that lies behind the Great Poverty Debate 2.0 is the poverty of data.”

When it comes to assessing poverty in India, despite the lack of official recent statistics on poverty rates, one may consider elements that link to poverty, such as literacy rates or food insecurity, to paint a picture of a country’s overall poverty conditions.

Illiteracy and Food Insecurity as Indicators of Poverty

Indeed, illiteracy is linked to poor financial conditions as poverty often means low-income families are unable to afford quality education for their children. In India, according to 2017-18 data from the National Statistical Office (NSO), the latest literacy rate in India overall stands at about 77.7%. This means the national illiteracy rate stands at 22.3%, which means, in a population of about 1.4 billion people, a significant portion of people cannot read or write. Such a high illiteracy rate correlates to high poverty rates in India.

Regarding food insecurity rates in India, according to the Global Hunger Index (GHI) of 2022, India has regressed by six positions since 2021, ranking 107th out of 121 countries in terms of hunger levels. India scored 29.1, which equates to a “serious” level of hunger. According to data from 2019-2021, 16.3% of India’s population suffers from undernourishment. Furthermore, around 35.5% of Indian children under 5 suffer stunting, a form of malnutrition with detrimental consequences.

End Poverty

End Poverty is an Indian NGO established in 2009 to develop innovative and creative solutions to address poverty in India. Though mandated to work across India, End Poverty currently works in seven Indian states: Rajasthan, Madhya Pradesh, Haryana, Karnataka, Uttar Pradesh, Uttarakhand and Goa.

End Poverty directly supports and empowers the poorest by providing them with opportunities to attain an education, develop skills and secure employment opportunities in order to rise out of poverty. End Poverty has three core programs in place: rural development, dairy development and sustainable agriculture.

The rural development program is important because about 68% of India’s people live in rural areas, according to 2011 data, and poverty is more pronounced in rural areas. The rural development activities include establishing infrastructure and schools, providing opportunities for income generation, strengthening access to education and providing water, hygiene and sanitation services.

Despite the lack of official recent statistics on poverty in India, one can use other indicators, such as the illiteracy rate, to assess the poverty level in India. Moreover, the important work of researchers contributes to a better understanding of the country’s socioeconomic conditions. But, regardless of the precision of statistics, the efforts of organizations help counter poverty by improving the standards of living among the most disadvantaged people.

– Evan Da Costa Marques
Photo: Unsplash

Fiscal policy
In developing nations, as well as nations recovering from a crisis such as the COVID-19 pandemic,
fiscal policy is an instrumental tool in revitalizing the economy and alleviating poverty levels. The policies are more than simply “good” or “bad” economics as they are key indicators of a nation’s true political priorities.

In low and middle-income nations, foreign aid and debt relief are invaluable in uplifting their economies. On the other hand, the contributions cannot be fully effective without an effective fiscal system. According to the United Nations, a good fiscal policy centered around poverty reduction, reconstruction and growth will focus on raising the growth rate and fostering lasting economic stability. 

Rising Growth Rate

The International Monetary Fund (IMF) emphasizes that “economic growth is the single most important factor influencing poverty, citing a recent study of 80 countries that revealed that the income of the bottom one-fifth of the population increased in exact proportion with the overall growth of the economy as measured by per capita GDP. In countries recovering from crises, a rising growth rate is one of the most effective ways for an economy to bounce back.

Key Fiscal Policies that Can Promote Economic Growth

  • Shifting Government Spending Away from Subsidies: The World Bank categorizes subsidies as a short-term solution and has indicated that they are typically politically popular because the benefits distribute widely. On the other hand, the World Bank reported that “about half of spending on energy subsidies go to the richest 20%,” as they tend to consume more energy and receive more benefits, leaving the lower-income households with little to show.
  • Investment in Cash Transfers as an Alternative to Subsidies: There is increasing data showing that direct cash transfers are a better solution to important long-run investments within households, such as education. These transfers are more beneficial to the bottom 40% and can stimulate economic activity within communities, and indirectly increase government revenue in both the short and long-term through higher tax revenue. 
  • Implementing a Progressive Tax Structure: A progressive tax structure enables governments to increase welfare benefits, such as unemployment, food stamps and housing benefits to the poor. Tax revenue sources do not change rapidly and improved progressivity in personal income tax, corporate, property, health and carbon taxes offer feasible ways to raise revenue without worsening conditions for the poor. Furthermore, nations may consider indirect taxation, as some of the above methods may not be as effective due to the informality of work in certain economies. Progressive tax structures are most effective in upper-middle-income countries. 
  • Having a National Minimum Wage: National Minimum Wages directly benefit the lowest-paid workers in an economy and reduce wage inequality. A universal basic income (UBI), wherein all citizens receive a weekly benefit to ensure a minimum income guarantee may also be effective.

Economic Stability

Prioritizing spending with long-term impacts is vital in creating a self-sustaining economy that alleviates poverty. Good policies will vary in different country contexts while acting with the future in mind even in crises, despite the fact that the benefits will come to fruition later. Below are some fiscal concepts to stabilize a nation after a crisis and to better prepare for any future challenges. 

  • Debt management is essential to maintain the “fiscal space” for crisis recovery and stabilization. Regulatory reform for financial markets, debt transparency and the implementation of a common blueprint for debt relief and restructuring are useful tools for properly managing national debt. 
  • There are many elements that can equip countries with a strategic plan for an unknown future crisis. First, expanding the reach of automatic stabilizers, such as employment guarantee schemes in nations with a large informal sector, in case of crisis. Setting up adaptive cash transfer programs that can be scaled up when necessary is also a good preparatory measure. 
  • Research and improved data, particularly on the costs and ramifications of certain policy implementations, are essential to maximizing the effectiveness of these policies. Long-term evaluations and research can provide decent indications of long-term outcomes, which is important in deciding which policies are best for unique country circumstances. 
  • In developing economies, a focus on education and diversification of the economy from agriculture to manufacturing fosters a more independent and stable economy. Increased government spending on education cultivates a higher-skilled workforce, and a push towards manufacturing pushes economic development, though proper skills and infrastructure are necessary to accomplish this.

Looking Ahead

Fiscal policy shaped around economic growth and the reduction of inequality has the potential to make great strides toward minimizing poverty. There are limits to the types and degrees of these policies in each country. Therefore, other national policy reforms implemented in tandem with economic policies lead to the best outcome in stimulating growth. Regardless of fiscal policy, foreign aid and international cooperation are invaluable in reducing poverty levels in low-income nations and around the globe.

– Carly Ryan Brister
Photo: Flickr

Impact of COVID-19 on Poverty in Denmark
The impact of COVID-19 is something many still feel across the globe. Each country had its own ways of handling the pandemic, but the impact of COVID-19 on poverty in Denmark was negligible due to Denmark’s existing policies, the way the Danish government navigated lockdowns and an important cultural element: social trust.

Existing Poverty Rates and Social Welfare Programs

According to the most recent data available from the World Bank, the poverty rate in Denmark in 2019 was 0% for individuals who make $6.85 a day. When looking at the rate of extreme poverty in the country (less than $1.90 a day), the rate was 0.3%. Denmark’s poverty rates are so low because of the country’s social welfare programs.

These social welfare programs are what leads to quality living in Denmark. The country is No. 2 on the World Happiness Index, received No. 12 on the World Economic Forum competitiveness ranking in 2018 and has one of the lowest wealth inequality scores in the world.

Danish social policies apply to all citizens from cradle to grave, and some of them include paternity or maternity leave up to a full year, municipalities guaranteeing and paying for schooling and nurseries, tuition-free education for college students and generous allowances for families.

Dr. Peter Abrahamson, a sociologist at the University of Copenhagen, described the important element that allows all of these policies to be possible. “Everyone is working,” he said. These social welfare programs allow citizens to become part of the labor market, which helps pay for the high taxes that fund these programs in the first place.

Quick to Close, Early to Reopen

People saw Abrahamson’s statement in action with how the government handled the pandemic, reducing the potential impact of COVID-19 on the poverty rate in Denmark. Denmark’s population is relatively small (5.8 million compared to about 332 million in the U.S. in 2020) and it faced a relatively low death count. The country went into lockdown starting with the Danish Prime Minister ordering all schools, nurseries and universities to close on March 16 (Denmark implemented the order on March 11, a day before France placed the order).

Denmark also asked citizens to start respecting the pandemic protocols as soon as possible, and many embraced them before the lockdown began on March 16. According to a 2020 article from the National Library of Medicine, Denmark had a total of 9,311 cases and 460 deaths in May 2020, whereas other countries such as Switzerland, with roughly similar size and population, had already accumulated three times more cases and deaths. While other countries remained under strict lockdown, Denmark had already begun to reopen its society and industry, allowing people to go back to work.

In 2020, KPMG took a look at some of the financial measures the Danish government implemented in response to COVID-19 once businesses started opening back up. Some of these measures included compensation of 90% of the revenue that self-employed people lost with a fixed cap per month, setting aside 60 million DKK (Danish krone) to improve qualifications for the unemployed, extending unemployment benefits and subsidizing between 25% to 80% of a company’s fixed costs if company revenue was to decline significantly as a result of COVID-19 (the amount subsidized depended on the expected percentage of lost revenue).

Trust in the Government and in Others

The lockdown policies and quick reopening of the country would not have been as smooth as they were without the Danish people’s trust in the government and themselves. Trust is an important element of Danish culture and is what allows citizens to live their lives as they do. According to Christian Bjørnskov, a professor of economics at Denmark’s Aarhus University, a combination of trust, confidence in the government and others and strong economic developments are what makes Danes happy, not the social welfare programs. The Danes understand that the services their government provides are a contribution to their efficient labor market.

The Danes also trust their government to deliver what they need. Denmark’s Happiness Research Institute, for example, looks for what people and allows politicians to be able to deliver on that. As for the pandemic, Denmark applied the same type of trust between the government and the people.

According to an article from the International Monetary Fund (IMF), more than 75% of eligible citizens were fully vaccinated as of October 2021 and more than 60% of the adult population underwent testing each week. Testings were free to schedule as well, and citizens saw them as a way to keep others safe and to do their part rather than as an infringement of rights.

Through existing social welfare programs, clean handling of the pandemic and the social trust that exists between citizens and government, the impact of COVID-19 on poverty in Denmark was able to be negligible. Based on previous data trends from the World Bank, one can assume that Denmark will continue to see very low poverty rates as the world adjusts to a post-pandemic world.

– Matthew Wikfors
Photo: Unsplash

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

Moldova is Helping Ukrainian RefugeesA former republic of the Soviet Union, Moldova is one of Europe’s poorest countries, with a poverty rate of 26.8% as of 2020. After the collapse of the Soviet Union in 1991, Moldova faced economic hardship, widespread corruption and political instability, but made progress between 2006 and 2015 toward national poverty reduction.

However, since early 2020, Moldova has experienced a series of intense economic shocks beginning with the COVID-19 pandemic that led to an estimated loss of nearly 8% of jobs across the nation, disproportionately affecting young workers. In 2020, Moldova also experienced one of the worst droughts in recent decades, which reduced agricultural production by 34%. In late 2021, the European gas crisis adversely affected the nation for several months, which increased gas prices by 400%, until Moldova’s government signed a new contract with a Russian-controlled gas company. By February 2022, Moldova was beginning to recover from these shocks, but the sudden outbreak of war when Russian forces invaded Ukraine threatened Moldova’s immediate economic recovery and future trajectory.

How Moldova is Helping Ukrainian Refugees

Despite the nation’s challenges, Moldova’s government and citizens have made remarkable efforts to help Ukrainian refugees. Since the start of the war, more than 460,000 Ukrainian refugees fleeing the invasion have traveled through Moldova, with nearly 100,000 refugees choosing to remain in the nation. The Moldovan government immediately set up facilities for refugees, offering medical and psychological assistance at the war’s onset. Officials also extended the right to live and work in Moldova to Ukrainian refugees, along with access to health care services and education. Notably, 95% of the refugees are staying with Moldovan families.

Humanitarian Organizations Supporting Moldova’s Efforts

UNHCR, the U.N.’s Refugee Agency, has assisted the Moldovan government through a series of measures, expanding its staff by nearly 100 members in the nation since the crisis began. The agency is helping Ukrainian refugees and supporting the work of local authorities in Moldova by offering access to information, health and legal services, child protection services, initiatives to prevent human trafficking and gender-based violence as well as offering transportation to European Union countries. A core component of the UNHCR’s response effort is a cash assistance program that allows Ukrainian refugees to receive around 2,200 Moldovan Lei (equivalent to $120) each month. The process is facilitated through enrollment centers and mobile teams that help refugees enroll, and the program has already helped more than 50,000 refugees in Moldova receive cash.

The World Bank has also implemented initiatives to help Moldova build economic resilience and mitigate the impacts of the war in Ukraine. In June 2022, the World Bank allocated $159.24 million to Moldova as part of an Emergency Response, Resilience and Competitiveness Development Policy Operation (DPO). Moldova’s government remains committed to its social and economic developmental reform agenda, and this relief funding will allow the government to support the country’s immediate needs while also providing momentum for long-term recovery efforts.

– Oliver De Jonghe
Photo: Flickr

Help Pay Ukraine’s Health Care WorkersOn July 12, 2022, the U.S. and World Bank announced the provision of $1.7 billion in aid to help pay Ukraine’s health care workers and supply “other essential services.”

Ukraine’s Health Care Workers

Despite the ongoing Russian offensive, many Ukrainian health care workers have opted to remain in the country, performing their duties under extreme strain and hardship. These individuals are key to Ukraine’s continued resistance, providing essential medical services for soldiers and civilians alike. Ukraine’s minister of health, Viktor Liashko, expressed that “the overwhelming burden of war” has made it more difficult to pay health care workers, emphasizing the urgency of continued financial support.

Importance of Humanitarian Assistance

The latest aid package brings the total U.S. budgetary assistance to Ukraine, via USAID, to $4 billion as of July 2022. Ukraine has used this aid to maintain essential social services, such as ensuring schools and medical facilities receive gas and electricity, providing basic humanitarian supplies and supporting civil servants. USAID Director Samantha Power expects that Ukraine’s dependence on foreign aid will continue as the Russian offensive continues targeting Ukraine’s public services.

The importance of supporting Ukraine’s hospitals cannot be overstated. Russia’s offensive strategically targets health care institutions alongside other public works. Ukraine noted 269 attacks on Ukraine’s public health institutions as of June 2, 2022. Russia’s strategy has decimated vital supply lines and infrastructure. The recent U.S. aid to help pay Ukraine’s health care workers is a step in the right direction, however, continued international support for Ukraine’s humanitarian services remains essential.

Additional International Support for Ukraine

The U.S. has sent the most aid to Ukraine since the start of the war, however, many other countries have also stepped up to support Ukraine’s humanitarian and military needs in this time of crisis. As of July 4, 2022, the U.K. had committed about $3.5 billion and the European Union had pledged nearly $1.5 billion to the cause. The IMF and World Bank have also sent multiple aid packages worth several billion U.S. dollars since the conflict began. The private sector is also a valuable source of aid for Ukraine, with major corporations such as IKEA, Adidas and Google pledging millions of dollars worth of assistance.

Fund-tracking platforms such as Devex estimate that there are a total of about $100 billion in aid commitments to Ukraine as of July 2022. Unfortunately, only about $8.5 billion will be allocated toward humanitarian aid, with the remaining funds being tied up in military packages or loans that cannot be allocated toward emergency services.

The $1.7 billion in U.S.-World Bank aid to help pay Ukraine’s health care workers and sustain essential services will bolster Ukraine’s health system and public institutions. As Russia’s offensive grows more protracted, the continuance of such humanitarian assistance is crucial.

– Mollie Lund
Photo: Flickr

Pakistan Cuts Fuel and Energy Subsidies
Pakistan is cutting fuel and energy subsidies that the recently ousted PM Imran Khan instituted. These cuts have come at the request of the International Monetary Fund (IMF), as they do not align with an agreement that occurred in 2019 wherein the country would receive necessary bailout funds to help its struggling economy.

The IMF’s Role in Subsidy Cuts

The IMF claims the fuel and energy subsidies did not receive proper funding and therefore were creating an even larger financial burden for the already struggling country. Former PM Imran Khan initially instituted the subsidies in February 2022. They were successful in lowering the price of fuel while also causing the government to take on an estimated potential debt of 260 billion rupees ($1.289 billion).

Although it was a tough political decision to make, the newly instituted Prime Minister Shehbaz Sharif announced that the government would be ending the subsidies and that fuel prices would sharply increase. If PM Sharif had not cut the fuel and energy subsidies, the country would have lost out on billions in necessary bailout funds from the IMF. Pakistan finds itself in a dire economic situation with its funding gap, which American bank Morgan Stanley speculated to be near $8 billion. A gap that substantial means these funds are absolutely necessary to keep the country afloat economically and stable politically.

Economic Impact

Inflation rates have hit double digits while the country faces a default on its debt without the IMF’s bailout funds. With respect to the potential default, the cutting of fuel and energy subsidies appears to be absolutely necessary. However, PM Sharif’s administration still hesitated at the decision due to the potential loss in political capital and the further financial burden it will place on Pakistanis across the country. The rupee declined in value by a whopping 7% in the month of May, the largest decrease since March 2020, according to Al Jazeera. The rise in inflation has put a lot of stress on a country already struggling with 21.9% of the population living below the national poverty line as of 2018.

Just a week prior to the announcement of the subsidy cuts the country had already raised fuel prices by 20% as the first step after a meeting with the IMF in Doha. The prices then increased a further 17% after the fuel and energy subsidy cuts to a price of 209.86 Pakistani rupees ($1.06) per liter of petrol. As fuel prices rise, so will inflation rates, exacerbating the dire economic situation in the short term. Yet, the cuts are absolutely necessary for Pakistan’s long-term outlook. Without the fuel and energy subsidy cuts, Pakistan would default on its debt essentially throwing it into economic chaos. The IMF’s bailout funds offer the country a little more time to figure out how to curb inflation rates and reassess its fuel price crisis.

Political Unrest

The current political turmoil enveloping the country made PM Sharif’s decision to cut the fuel and energy subsidies even more difficult. Pakistan only ousted former PM Khan from power in April 2022 after a vote of no confidence in the Pakistani parliament. Currently, the country’s parliamentary elections will not occur until 2023. That has not stopped PM Khan from gathering his supporters with claims that the Parliament wrongly removed him from power. In late May, he even led his supporters to the capitol building in Islamabad where a conflict with police broke out.

Many political strategists within Pakistan feared that if Pakistan cuts fuel and energy subsidies, it could exacerbate the current economic situation and further motivate former PM Khan and his supporters to push for a new election. Despite Pakistan’s recent financial and political turmoil, the hope is that the newly installed government’s cooperation with the IMF will help stabilize the country.

– Devin Welsh
Photo: Unsplash

Everything to Know About Poverty in Lebanon
It has been almost three years since Lebanon, previously labeled as the “Switzerland of the Middle East,” began to slowly drown in poverty. As the ESCWA report stated, 82% of the Lebanese and non-Lebanese population lives in multidimensional poverty while 40% of them live in extreme multidimensional poverty. Those numbers result from an unprecedented economic crisis that started in October 2019 and kept on worsening with the COVID-19 outbreak, the Beirut Port explosion, the ongoing corruption and the war in Ukraine. Here is everything to know about poverty in Lebanon.

Health Care

One of the most important and dangerous symptoms of the poverty increase in Lebanon is the degradation of the health care system. The Lebanese lira has lost more than 90% of its value since 2019, making it impossible for many health care professionals (nurses and doctors) to live decently with their salaries, thus leading them to leave the country for better opportunities abroad. In addition to that, the country imports many medical care products and medicines, leading to a huge increase in their prices, making them unaffordable for many. Lebanon has the means to produce its drugs, an action that the actual government is encouraging while it still needs time before being fully implemented.

Public Utilities and Food Security

Another dimension to know about poverty in Lebanon is the lack of public utilities available to the people. The most famous, touching a majority of people, is the lack of electricity the state provides, forcing the Lebanese people to reach out to owners of private generators to have a few hours of electricity a day. However, this alternative has a considerable cost to Lebanese households. The fuel that powers the generators comes from abroad, requiring payments in USD and making it impossible for many to subscribe to this service amidst the severe economic crisis the country is going through.

A more recent issue Lebanon must face as a result of the War in Ukraine is the wheat crisis and with it a risk of shortage in bread production. The country imports more than 60% of its wheat from Ukraine. The urgency of this new issue also depends on the government’s capacity to secure enough quantities before any increase in the price of wheat.

Education

The numerous challenges Lebanon has faced over the past three years have also had their effect on education. According to UNICEF, 260,000 Lebanese children risk interrupting their education. Whether it is the COVID-19 pandemic that forced the students to stop their studies because of the lack of means to pursue them online, the destruction of some schools in Beirut after the port explosion and the economic crisis forcing some schools and universities to increase their tuitions making them unaffordable for many.

Efforts to Help Lebanon

A year ago, the World Bank approved a $246 million project to provide 147,000 households with basic needs as well as cash transfers. More recently, the International Monetary Fund (IMF) reached an agreement of $3 billion with the Lebanese government to help Lebanon get out of the crisis. On another note, local NGOs are playing an important role in helping people in need. Private actors are also taking initiatives to benefit from this situation, by enhancing made in Lebanon products, thus relying less on imports.

Hence, having presented everything to know about poverty in Lebanon, shows clearly that the country is not in its best phase. However, hope is always there with small steps taken towards a better future and especially with a young generation who is learning from the mistakes of the older. Helping Lebanon is therefore helping a country full of potential and showing once again that it will rise despite all.

Youssef Yazbek
Photo: Flickr

Remittances to Venezuela
The International Monetary Fund (IMF) defines remittances as “money transfers from citizens working abroad” as a contribution to the household income of their families in their home countries. The IMF sees remittances as a “lifeline for development,” especially in impoverished countries such as Venezuela. In Venezuela, the influx of remittances is growing rapidly and represents a large source of foreign income for Venezuelans. While remittances typically take the form of cash transfers, crypto remittances to Venezuela are playing a larger role in facilitating international transactions and becoming a vital source of income for Venezuelans, especially during the COVID-19 pandemic while the country faces hyperinflation and U.S. economic sanctions.

The Role of Remittances in Global Poverty Reduction

Remittances directly bolster the income of households that receive these payments and provide essential resources for the impoverished. The value of remittances lies in the fact that governance issues often linked to “official aid” do not impact remittances. Instead, remittances are able to circumvent “red tape” because the money goes directly into the pockets of the impoverished. According to the World Bank, “a 10% increase in per capita official remittances may lead to a 3.5% decline in the share of [impoverished] people,” further showing that remittances play a key role in poverty reduction. Harnessing technology and non-traditional approaches for remittances allow Venezuelans the opportunity to send and access this funding in a faster and more efficient way.

The Resiliency of Remittances

Experts expected remittances to decrease due to job insecurity abroad as a result of the pandemic. However, the flow of remittances remained resilient. According to the World Bank, remittances to developing countries only dropped 1.6% in 2020. Digitization of payments allows for a steady flow of remittances to countries like Venezuela —  according to a report by Global System for Mobile Communications, “international remittances processed via mobile money increased by 65% in 2020.” In 2018, United Nations member states adopted the Global Compact on Safe, Orderly and Regular Migration, which recognizes the importance of remittances in the development of poverty-stricken countries such as Venezuela.

Cryptocurrency in the Context of Hyperinflation

As the bolivar continues to depreciate in Venezuela, cryptocurrency functions in a way that circumvents hyperinflation. Cryptocurrency is a decentralized form of currency, where its value does not stem from fiat currency or natural resources, but instead, derives from user demand. In 2021, the Venezuelan government introduced the 1-million-bolivar bill, which is equivalent to about $0.52, in an attempt to remedy the impacts of hyperinflation and economic sanctions. Venezuela has experienced hyperinflation due to falling oil prices, resulting in the government printing vast quantities of currency as a potential solution, but this only further devalued the bolivar. Increasingly, residents are turning to digital forms of payments. For example, street vendors in the Venezuelan capital of Caracas are accepting digital coins as a form of payment.

5 Benefits of Crypto Remittances to Venezuela

  1. Stability: Cryptocurrency remains steady compared to fiat currency, especially during times of inflation.
  2. Lower Fees: Commission fees for crypto remittances are lower in comparison to international transfer fees from companies like Western Union.
  3. Money and Time-Saving Costs: Research shows that crypto remittances “produce a 1% saving of income” because of the reduction of travel and wait time when sending remittances.
  4. Safety: Because Venezuela stands as “one of the most insecure [nations] in Latin America,” residents face the risk of theft when traveling with cash. Digital currency offers a degree of security and protection for people as their funds are stored on their devices.
  5. Continuing the Flow of Remittances: As the Maduro regime takes steps to further regulate remittances while rejecting foreign humanitarian aid, decentralized currencies could allow residents to continue receiving essential monetary flows.

Remittances to Venezuela’s Unbanked Population

According to the Global Findex Database, in 2017, close to 73% of Venezuelans had bank accounts and digital forms of receiving money are increasing each year as inflation devalues fiat currency and hyperinflation threatens the affordability of basic needs. More than 50% of transactions in the country use the U.S. dollar, and in 2020, experts projected that annual remittances would climb to $4 billion. The viability and sustainability of digital remittances, specifically cryptocurrency forms, are becoming more popular.

GiveCrypto Uses Cryptocurrency to Provide Aid to Venezuelans

As Venezuela continues to experience a financial crisis, cryptocurrency, such as Bitcoin, offers a degree of stability as an inflation-proof asset. Many nonprofits implement cryptocurrency in their strategies to bring aid to Venezuelans. In 2019, U.S.-based charity, GiveCrypto, “provided temporary assistance to hundreds of vulnerable families in Venezuela through weekly crypto deposits worth around $7,” which is equivalent “to the monthly minimum wage” in the country. This aid helped families purchase food and other essential goods.

In addition to aid, the organization provides resources that educate people about crypto apps to ensure that people have complete control of their digital currency. Efrain Pineda, the program manager, says, “We want to show that people who are not techies or investors can also benefit from this technology. Anyone can use crypto to protect themselves from inflation and make their daily life easier.”

Cryptocurrency Offers Hope for Venezuelans

With little end in sight for hyperinflation, Bitcoin is gaining traction as an alternative as traditional payment methods become regulated and overloaded. Venezuela ranks fourth globally for Bitcoin trade, and as more people flee Venezuela, digital forms of remittances continue to be an invaluable source of income for residents who remain.

– Jennifer Hendricks
Photo: Flickr