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Progress in Benin
Despite a low unemployment rate of one percent and a GDP growth rate that increased from two percent to over five percent from 2015 to 2017, progress in Benin has been slow and it is still a poor country in West Africa. With more than a third of the over 11 million population living below the poverty line, it is difficult for Beninese to live without a feeling of unease. Three major reasons Benin has a rising poverty rate is because of over-reliance in Niger’s economy, the largest exporter, reluctance for Benin to modernize its own economy and climatic shocks, particularly massive floods.

Agricultural Productivity and Diversification Project

The agriculture sector employs over 70 percent of Beninese. In an effort to boost the economy, the Republic of Benin is investing in improvements in the agriculture sector. The Agricultural Productivity and Diversification Project began on March 22, 2011, with a budget of $61 million and ends on February 28, 2021. Its purpose is to repair major damage caused during Benin’s 2010 flood and improve productivity in certain export-oriented value chains, such as aquaculture, maize, rice, cashew and pineapple.

One component of this project is improving technology and restoration of productivity. The devastating flood in 2010 destroyed over 316,000 acres of cropland and 50,000 homes. The project began after the major flood and takes into account the need for drainage systems to stifle rising waters during floods. Small-scale irrigation infrastructure repair and improvement are issues that the project faces and hopes to correct in the timeframe. Climate-smart production systems are another investment that the country is developing to prevent widespread destruction to cropland when a natural disaster threatens to destroy homes and crops. The project is also set to create new jobs by investing in small and medium enterprises (SMEs), especially for youth and women.

Improving the Business Environment

Although flooding caused several Beninese people to lose their homes and cropland, there is one impediment that halts economic development: corruption. President Talon became the President of Benin in 2016 and stated in his inaugural address that he would “make the fight against corruption an ongoing and everyday struggle.” A 29 percent electricity access is another issue that prevents developmental progress in Benin, but since 2016 blackouts have reduced and electricity generation has improved significantly.

Economic Diversification

The last major impasse that prevents development in Benin is over-reliance in Nigeria, Benin’s major exporter. Current IMF Managing Director, Christine Lagarde, announced a call for economic diversification in Benin. Lagarde believes diversifying is one way to reduce the high poverty level of 36 percent. Due to the country’s economic reliance on the agricultural sector and economic conditions in Nigeria, it is difficult to grow if a recession, such as the 2017 recession in Nigeria, occurs. In her speech at the Chamber of Commerce in Cotonou, Benin, Lagarde discussed how Benin could strengthen land tenure, increase food security in rural areas and invest more in education and health, and improve transparency in the government so that outside investors would find investing in Benin appealing.

Rate of Progress in Benin

There is room for growth, though the poverty-stricken nation has had success in certain areas, such as the average life expectancy that rose from 50 years in 2000 to 62 in 2018. With the creation of the Agricultural Productivity and Diversification Project, improvements in agriculture and infrastructure are already underway. The estimated rate of urbanization is fairly high at 3.89 percent from 2015 to 2020. At this rate of progress in Benin and under the leadership of President Talon, the country will continue its headway in development so that the percentage of Beninese in poverty will gradually drop in the coming years.

– Lucas Schmidt
Photo: Flickr

Media Misrepresents India
India is a vast South Asian country, not only with diverse terrain stretching from the Himalayas to the Indian Ocean Coastline but also with significant socio-economic contrasts. It is understandable how the media misrepresents India because it tends to shed light only on the rural and urban poor and the struggling.

With a population of more than 1.3 billion, there are stories of unfortunate and inhuman events that occur in the country but those events don’t represent India, as a whole. India needs to be looked at through fresh lenses to dispel the following ideas.

How the Media Misrepresents India

  1. Poor India: India is a developing country with 22 percent of its population living in poverty, but only about 5 percent of the Indian population lives in slums. The International Monetary Fund confirmed that India will be the fastest-growing major economy with a growth rate of 7.4 to 7.8 percent in 2019. In terms of GDP, India is now the world’s sixth-largest economy. 
  2. Uneducated Nation: This is another example of how the media misrepresents India, as an uneducated country. India has more than 1.5 million schools with more than 260 million students. Currently, India produces about 9 million graduates and 26.5 million students enrolled in Indian higher education per year. The country is set to produce the world’s largest number of engineers. The first ever Global Report commissioned by the Queen Elizabeth Prize has revealed that 80 percent of Indians aged 16 and 17 have shown interest in engineering, compared to 30 percent in the U.S. and 20 percent in the U.K.India is also the only country after the U.S. and Japan to build a supercomputer independently. Indian Space Research Organization (ISRO) also became the first country to orbit around Mars on its first attempt at a cost of just $74 million, which is just a fraction of what other nations have spent.  
  3. Dirty and chaotic: The media overlooks the fact that the country has luxury malls and hotels too. The number of malls has increased drastically in the past few years. With no malls in 2002 to 308 malls in 2017, India has improved a lot. The Government is also taking various actions like Swachh Bharat to bring out a better and clean India.
  4. Bollywood is a Zumba class: The Indian film industry is actually the largest film industry in the world, releasing more than 1,000 films each year. In 2015, there were two thousand multiplex theaters and the following year, 2.2 billion movie tickets were sold, which makes the country the leading film market in the entire world. Indian movies are not Hindi movies alone, but a variety made in different states and in different regional languages.

These are just a few examples of how the media misrepresents India. Hopefully, in the coming years, the media will shed more light on the brighter side of the country.

– Shweta Roy
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


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

Sarah Emerson is the Director of Women Empowered Initiative at PCI Global and is the driving force behind the idea that women’s participation in the global economy can allow them to live up to their full economic and social potential while reducing global poverty.

According to the International Monetary Fund (IMF), more than 27 percent of gross domestic product in developing countries is lost each year due to women being denied entry into the global economy.
Women like Emerson are driving change while empowering other women to do the same. These women are lifting their families out of poverty and transforming businesses and economies around the world.
PCI Women Empowered Group a project with PCI Global has been a mechanism that has empowered over 400,000 women around the world to pool their resources and become active participants in their communities while addressing food insecurity and reducing the impact of poverty.
The initiative is funded in part by USAID and focuses on self-sustaining women’s savings groups by building self-worth and not just capital. The initiative also builds leadership skills like goal setting, action planning and decision making about investments. These skills allow women to take the lead in the most important areas of their lives.

PCI Global believes that women are the solution to poverty and have the ability to bring about economic and social change to transform the lives of those living in extreme poverty.
Emerson continues to bring change to poverty while addressing many other economic issues through her campaigns and future development programs launched all over the world including San Diego. San Diego is the home for many former refugees, resettled by the U.S. State Department, who need further aid to help to empower them and take them out of poverty.
PCI Global focuses on women located on the Pacific coast of California who struggle with meeting the basic needs for survival. It also provides empowerment opportunities to low-income ethnic groups who require food, housing and access to medical care to create better standards of living.
PCI Global believes that the initiative has the trajectory to bring change to poverty, one woman and one community at a time.

Rochelle R. Dean

Photo: Flickr

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

Eurozone
The European Union has been struggling to lift itself out of an eight-year economic crisis and the end of 2014 proved no different. After teetering back and forth for several months, EU stocks rose steadily for a period of four days last December, during which they reached their highest levels since November 2011.

Unfortunately, this short uptick failed to last and the Eurozone market slunk back on a downward trajectory.

However, despite the ongoing crisis, Germany shows its resilience to the debt crisis over and over again. Unemployment decreased and is at its all-time-lowest rate of 6.5 percent. “The labor market has developed in a positive direction, despite weak economic incentives,” said labor office President Frank-Jürgen Weise.

Germany’s situation is markedly better than Greece’s economy. Greece’s unemployment rate sits at just over 25 percent of the population. The International Monetary Fund implemented heavy austerity measures after a recent economic bailout, and Greece is expected to leave the euro behind sooner rather than later.

If a new government is elected and Greece decides to exit from the euro, the currency would be expected to take yet another hit. Currently, the economy in Greece is Europe’s most regulated due to the strict austerity measures implemented by the IMF and World Bank.

In Europe, the common market currency has fallen to its lowest value against the dollar since 2006. As a result, the overall unemployment rate in the EU settles at around 11.5 percent with youth unemployment at 23.7 percent.

With the economies in Europe beginning to stabilize, countries are more likely to leave the single currency and explore other alternatives. This could further destabilize the euro and throw the Eurozone into another crisis. Even so, Germany’s growth provides a glimmer of hope to Europe’s uncertain economic situation.

Maxine Gordon

Sources: Taipei Times, DW Germany, Trading Economics, Bloomberg View, Business Insider, The Guardian
Photo: Express

rural poverty and urban poverty rural poor definition
Poverty is not made up of a cut-and-dry set of circumstances. Rural poverty and urban poverty differ on many levels, with distinctive, environment-based issues that characterize quality of life.

There are similarities, of course, that span both rural and urban poverty. The International Monetary Fund (IMF) states that poverty usually entails deprivation, vulnerability and powerlessness. However, these issues are sometimes inflicted on certain individuals or groups more than others. For example, women and children are more likely to experience poverty more intensely than men and minorities tend to suffer more greatly than other groups.

The IMF reports that 63 percent of the world’s impoverished live in rural areas. Education, health care and sanitation are all lacking in rural environments. This causes many of the rural poor to move to cities, which often leads to a rise in urban poverty.

 

Compare and Contrast: Rural Poverty and Urban Poverty

 

The rural poor are divided into further subsets based on profession: typically, cultivators who own land and noncultivators who do not. Cultivators are slightly better off, as they are able to make some money operating farms and charging tenants for using their land. Noncultivators, however, are extremely poor, working as seasonal laborers on farms. Their pay is both low and erratic, as it is based on the schedules of farm owners and the other few employers available. The rural poor often suffer more than the urban poor because public services and charities are not available to them.

Several factors tend to perpetuate rural poverty. For example, political instability and corruption, customs of discrimination, unregulated landlord/tenant arrangements and outdated economic policies often make it impossible for the rural poor to rise above poverty lines.

While generally considered less severe, urban poverty provides the poor with a host of separate issues. The World Bank found that urban populations in developing countries are growing rapidly, at a rate of 70 million new city-dwellers per year. Former residents of rural areas are typically drawn to the city for the perceived wealth of economic opportunities, but often, those dreams fall short.

Compared to rural villages, there are indeed more job opportunities in urban areas. However, many migrants lack the skillset to take on many jobs, and positions for unskilled laborers fill up quickly. This shortage of jobs leaves new residents without a steady income, which creates a series of new problems in the city.

Without an income, the urban poor often find themselves in inadequate housing with poor safety and sanitation. Additionally, health and education packages are limited. Crime and violence are also much more rampant in urban settings than in rural ones, threatening the authority of law enforcement and the peace of mind of city dwellers.

Health is quite variable throughout rural and urban settings. While the rural poor lack access to urban health care programs, they sometimes benefit from the distance between the country and the city. In the close quarters that characterize city living, it is easy for disease to spread.

Additionally, communal resources in cities can actually lead to health problems. According to The Guardian, families usually have their own personal latrine, so if a health problem starts among the family, the latrine can be closed off and the health risk minimized. However, in cities where many people on a daily basis use public restrooms, disease can spread rapidly and tracking down the source can be nearly impossible.

Though rural poverty is currently higher than urban poverty, research shows that soon, urban areas will become home to the majority of impoverished people. The perception of greater opportunity leads the rural poor away from the countryside and into the cities, where they often end up in even further poverty. An overhaul of urban development programs is necessary to combat the issues with sanitation, safety and hunger that propagate urban poverty.

Bridget Tobin

Sources: World Bank, The Guardian, International Monetary Fund
Photo: Brommel

International Monetary Fund
Growth does not happen instantaneously and, oftentimes, catalyzing economic growth is a decades-long venture. No one expects positive results immediately, but people do expect a fair approach to promoting wealth. In times of crisis, most countries answer to the same worldwide organizations dedicated to ameliorating economic recession. Primarily, the International Monetary Fund (IMF).

Founded shortly after World War II, the IMF’s mandate was to promote international trade and economic cooperation by aiding countries in times of crisis, vis-a-vis loans and budgetary advice. It is predominantly counseled by six nations according to a weighted voting system. Germany, France, Japan, Britain, China and the United States control over 50 percent of the organization’s voting power. This is an important consideration when one considers that small, poverty-stricken countries, like those in Africa or Latin America, have absolutely no say in the IMF’s policies in comparison to a few powerful member states.

While the IMF may masquerade as an institution seeking to mitigate poverty, its economic decisions stem from countries that prioritize their own power and wealth. Noam Chomsky, a prominent political analyst and professor emeritus at MIT, described the works of the IMF and its top-member nations as “Designed for capital, not people.”

Most loan agreements from the International Monetary Fund come with harsh conditions that encourage the eventual triumph of capital while simultaneously removing social safety nets. Stipulations on loan agreements require severe cutbacks on wages and welfare in order to receive critically needed funds. Invariably, these loan conditions target the programs used by the working class majority.

News outlet Global Exchange (GE) documents the history of IMF protocol, reporting that “The IMF and World Bank frequently advise countries to attract foreign investors by weakening their labor laws – eliminating collective bargaining laws and suppressing wages.” Rather than encouraging domestic development, the IMF enforces economic policies that favor en mass, cheap exports operated through low wage labors costs and weakly regulated industries.

The results of Latin America’s arrangement with the IMF is indicative of the results of a “capital over community” approach. Argentina, once considered the model of financial prowess by the IMF, has steadily declined following the organization’s intervention during the late 90’s. According to University of Washington professor Victor Menaldo, “Public investment is the lowest it has ever been, less than 2 percent of GDP. Taxes on capital gains are less than 5 percent as of 2000. Lastly, along with Argentina, Brazil and Mexico are experiencing the highest amount of foreign debt in their histories.”

For many developing nations and countries under recession, poverty can be right around the corner. The way international organizations and enterprises collaborate in dealing with such potential poverty will determine whether a nation prospers or stagnates. Eliminating poverty is dependent on adjusting the failures of mainstream economics. This means stepping away from the IMF, preventing reductions in labor laws and not withholding loan agreements on conditions—such as eliminating bargaining rights or striking pensions—that have shown to only hurt economies in both the short and long term.

— Michael Giacoumopoulos

Sources: Global Exchange, The Tech, The Washington Post
Photo: NSZ

G20_global_banking_system_and_poverty
Last February, a group of G20 ministers met in Australia to evaluate and establish global growth goals for the next five years. In this meeting, they reasserted their countries’ commitment to “carefully calibrated and clearly communicated” monetary policy settings. According to a communique published following the meeting, G20 members will not allow for complacency when it comes to fostering growth measures. While specific plans have yet to be developed, the main goal is to raise the global GDP by 2 percentage points in the next five years, which promises to create millions of new jobs.

Supporting these plans, the International Monetary Fund (IMF) issued a report outlining strategies to raise the global GDP by 2.25 percent.

Accordingly, it states that while this established goal is ambitious, it is not unrealistic. However, as recovery from the 2008 recession remains disappointing, the global economy “remains far from achieving strong, sustainable and balanced growth.” Coupled with issues of demand and high levels of debt, one element of weakness remains the volatility of the financial system.

In another report, the IMF has announced that regulators have not done enough to stabilize the global banking system and protect taxpayers from another “too big to fail” situation. Banks and investment firms remain too big and too intertwined, risking another episode similar to the 2008 crisis. The risk of big banking bailouts using taxpayers’ money remains very much alive.

According to the report, regulations implemented by western governments could be “mutually destructive” and undermine their ability to address future bank failures. Moreover, policymakers have failed to make banks stand on their own. Through implicit subsidies and coordinated rescue plans, big financial institutions remain tethered to the government. In fact, accounting for the various subsidies these institutions perceive, brings the total bill close to the 2008-09 government bailouts. While in the U.S. these implicit subsidies have been limited to 70 billion a year, in the Eurozone they reach 590 billion.

The IMF acknowledges that there is substantial progress towards making the global banking system more secure, especially by forcing them to hold more capital. However, to prevent another crash, this should be coordinated along more structural reforms across countries. If not, the IMF predicts that another financial crisis could cost the Eurozone another 300 billion in bailout and the rest of the world much more in a weakening economy.

In a world where state economies are highly interconnected and interdependent, this translates in funds being diverted away from foreign assistance. While governments have to be ready to spend billions of dollars to remedy a failure in the financial system, foreign aid funding is in constant danger of being reduced. Indeed, the U.S. foreign aid budget has been reduced by almost 20 percent in the last 15 years.

To put things in perspective, between 2008 and 2009, bailouts of various banks and investment firms reached a total of 204 billion dollars, out of which only 90 billion has been repaid. This is equivalent to the annual budget of the Gates Foundation, USAID, UNICEF, PEPFAR, UNDP, World Food Program, UNCHR and the Millennium Challenge Corporation all together.

G20 member countries remain committed to creating a climate of economic stability. In preparation for the Brisbane summit next November, they aim to specifically map out reforms in response to the 2008 global financial crisis. This would entail more resilient financial institutions, ending “too big to fail,” and making the world of derivatives safer.

– Sahar Abi Hassan

Sources: The Guardian (1), The Guardian (2), CNN Money
Photo: Modernize Aid