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US Funding Initiative for Fighting Poverty in Puerto Rico

Fighting Poverty in Puerto RicoIn a significant effort to boost economic development and fight poverty in Puerto Rico, the U.S. Department of the Treasury has given the green light to allocate $158 million in federal funds for Puerto Rico under the American Rescue Plan’s Capital Projects Fund. 

This substantial investment has a two-fold focus, with $85.7 million dedicated to broadband infrastructure and $64.7 million allocated to multi-purpose community technology centers. This initiative’s primary objectives include combating poverty and nurturing development within the territory by bridging the digital divide that plagues Puerto Rico.

Puerto Rico’s Lack of Connectivity

More than 61,000 homes and small businesses on the island currently lack access to broadband internet. This digital divide has far-reaching consequences, limiting access to critical services such as health care, educational opportunities and employment prospects.

Impacts Across Multiple Sectors

The investment of $85.7 million in broadband infrastructure represents a transformative opportunity for Puerto Rico. This significant funding will connect thousands of households while ushering in a wave of positive changes for the island’s residents.

One of the most notable benefits will be the enhancement of telehealth services. With improved broadband access, residents will have easier and more reliable access to remote medical consultations. This is especially vital for individuals in rural or underserved areas who may struggle with physical access to health care facilities. The statistics suggest a substantial increase in telehealth consultations, ensuring that more Puerto Ricans can receive timely medical care, ultimately leading to better health outcomes.

The investment also opens the door to expanded online education. With faster and more reliable internet connections, students of all ages will have improved access to online courses and educational resources. This is crucial for remote or underserved communities, providing them with opportunities for skill development and academic advancement. The expected rise in online course enrollments is a testament to the potential educational impact.

This infusion of funds will also stimulate remote work opportunities. As Puerto Rico’s digital infrastructure improves, remote job prospects will increase significantly. This is a particularly welcome development, given the flexibility it offers to the workforce. The anticipated growth in remote job opportunities will enable residents to access a broader range of employment options without the need for relocation off-island.

In addition to the broadband infrastructure investment, the allocation of $64.7 million to multi-purpose community technology centers is a game changer. These centers will serve as more than just internet access points; they will become vital community hubs, providing educational resources, training and access to various services. These centers are poised to empower communities by offering essential skill-development programs, digital literacy training and a space for residents to access critical services such as job searches, government assistance programs and more.

The Commitment to Fighting Poverty Globally

This initiative underscores the Biden-Harris Administration’s unwavering commitment to equity and the long-term development of Puerto Rico. Reducing poverty and enhancing economic opportunities represents a significant stride toward creating a more prosperous and interconnected Puerto Rico. In the realm of Congressional politics, several bipartisan bills in the House aim to address global poverty and development. Dedicated representatives who recognize the importance of international cooperation champion these bills.

Multilateral Organizations and Their Role in Fighting Global Poverty

Beyond Congress, big multilateral organizations like the United Nations (UN), the International Monetary Fund (IMF) and the World Bank also play a pivotal role in combating global poverty. Their collaborative efforts with governments worldwide underscore the significance of international partnerships in tackling poverty on a global scale.

The U.S. Treasury’s $158 million initiative for Puerto Rico is a beacon of hope for the island’s residents. By reducing the digital divide, expanding access to vital services and fostering economic growth, it exemplifies the positive impact of strategic investments. Moreover, it aligns with a broader global effort involving both Congress and international organizations, to address poverty and foster development.

– Suhani Bhattad
Photo: Pixabay

Reducing Poverty in Egypt & Organizations to Support

Poverty in EgyptPoverty rates in Egypt are at a high in 2023 and while the country remains successful as a global tourist hot spot, its citizens are struggling to deal with the economic strife. The Guardian stated that the country’s “inflation, austerity measures and military plans edge more Egyptians into poverty.” Measures are being made to reduce poverty in Egypt, however.

The Current Crisis

Currently, Egypt’s inflation rates are at 33%, with the cost of basic goods soaring higher. The World Bank’s data files estimated that in 2019, 29.7% of Egyptians were living near or below the poverty line.

Director of the Tahrir Institute for Middle East Policy, Timothy E. Kaldas stated that “there was a very large part of the population above that line, and undoubtedly many of them have since fallen below it. As inflation continues to grow, more are falling below the poverty line.”

As measured in a research report in 2023, some of the poverty comes from increased cash assistance following Russia’s invasion of Ukraine, due to grain shortages for bread. 

This, as well as austerity measures taken ($12 billion bailout package from the International Monetary Fund in 2016) following reliance on loans for government operations and mega infrastructure projects, plummeted the country into its current financial state.

Stories From Egyptian Citizens

This rise in poverty rates led to higher levels of social deprivation, as exhibited by an average 9.7% drop in general consumption of goods and services, with less spending on items like education, health care and culture. Even those in the middle class in Egypt have to hunt for second jobs and skip meals to endure the rapidly rising costs.

Though working full-time as a professional graphic designer, Ahmed Fawzi told The Guardian that he needs to search for a second job. As a father of three, he is scraping to make sure that he can support his family with a monthly salary of 5,000 Egyptian pounds ($162). He stated, “It feels like the economic crisis is literally squeezing me. Prices are going up every day and there’s no solution to it.” 

The Support Available

CAPMAS (Central Agency for Public Mobilization and Statistics) stated that though Egypt is at the lowest rate of poverty in 20 years, the country is still deeply suffering. Yet there are support initiatives in place to make sure that poverty in Egypt is reduced. In 2022, the International Monetary Fund did provide Egypt with $3 billion, dictating that the government spend it on their citizens, allowing support for 20 million of those in poverty.

How They Are Aiding Poverty in Egypt

But is there support beyond financial means? The emotional strain that the major cost-of-living crisis has put on Egyptians is listened to and supported by organizations alike. CAPMAS said that the organization is “cultivating the fruits” of the economic reforms from projects like Karama supporting the country.

Established in 2005, Karama is a beneficiary program that names itself a “social safety net project that promotes Egyptian women empowerment.’’ Aiming to reduce poverty in Egypt, it helps poor women and children and those with disabilities by providing both conditional and unconditional cash transfers. Focusing on food insecurities, education and health care, Karama is still a successful front to aid poverty in Egypt, increasing emotional prosperity.

UNICEF, in recent months and years, has held regular conferences to address the global poverty rates, including Egypt’s. In September 2023, they focused on speaking with Congress to address health rights for children. 2021 saw UNICEF hold a conference where they discussed an “evidence-informed development agenda for Egypt.”

Egypt has partnered with international beneficiaries to reduce their ongoing poverty. While it is still widespread in the nation, the mission to end poverty in Egypt is progressing, and there are support networks for those living in poverty daily. Assisting vulnerable groups across Egypt through international charities and financial aid gives them a voice and promotes international funding for underdeveloped countries in crisis. 

– Anastasia Brown
Photo: Flickr

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How Migration to Colombia Helps its Economy

Migration to Colombia
Since 2015, Latin America has undergone a remarkable evacuation of migrants from Venezuela instigated by an economic and political crisis within the country resulting in hyperinflation, starvation and crime. In 2020, more than 95% of people in Venezuela were living in poverty, thus many have been forced to leave. The UN has given Venezuelan migrants refugee-like status which has sparked a major migration to Colombia. 

Colombia: The Second Largest Host to a Refugee-Like Population

Colombia has become the world’s largest recipient of Venezuelans as it holds approximately 40% of all Venezuelan refugees. There are an estimated 2.9 million Venezuelan migrants residing in Colombia and they make up around 5% of the population. Colombia has been the main destination for Venezuelans due to Colombia’s proximity and the strong similarity between cultures. 

A large portion of Venezuelan migrants are educated professionals and middle-class young people holding university degrees. However, these migrants who are more educated than local populations experience higher unemployment and have a higher chance of working in the informal sector as many Colombians have negative views toward the migrants. The unemployment rate for Venezuelan migrants is 12.7% for those who have lived in Colombia for over a year and 23% for those who have been in Colombia for less than a year. While many Venezuelans have the skills to be beneficial to the Colombian economy, their potential has been wasted.

According to the International Monetary Fund (IMF), if these migrants can be integrated into the formal economy with positions matching their qualifications, migration to Colombia can increase real GDP by up to 4.5 percentage points relative to a baseline without migration by 2030.

Venezuelan Migration Presents a Big Economic Opportunity to Colombia

By adding to the labor force, the average annual rate of growth could increase 0.7 to 0.9 percentage points according to the World Bank. More migration also increases investment and consumption as well as widens the tax base. If the integration into the formal market can be administered properly, Colombia can obtain macroeconomic gains.

Seeing the development opportunity in the migration to Colombia, the government with the assistance of international organizations like the International Monetary Fund and the World Bank, has created revolutionary open policies for the economic and social integration of Venezuelan migrants. 

Colombia: Global Leader in Venezuela Migration Response

Colombia has become a global leader in its response to Venezuela’s unprecedented migration as the government sets a new example for handling large masses of displaced and vulnerable people.  

Colombia’s policies revolve around three objectives:

  1. Colombia is in the process of expanding access to markets and services such as health, education, jobs and housing, as well as protection services for vulnerable people such as family reunification, child protection and human trafficking victims. 
  2. Colombia’s government founded the Migration Management Office and passed the Temporary Protection Status for Venezuelan Migrants to establish the legal basis for integration through issuing stay permits and setting regulations that ease regularization. The Temporary Protection Status grants migrants a permit to stay and work for up to an unprecedented 10 years without a work visa. This process began in 2021 and already around 2.4 million Venezuelans have gotten this status which has decreased unemployment and increased wages. 
  3. Colombia’s government is working to eliminate prejudice and xenophobia to advance cohesion between Colombians and Venezuelans to create long-term inclusion. The Colombian government with the help of diverse organizations has launched campaigns to promote inclusion and work to address discrimination in the Colombian workforce.

Looking Ahead

While Colombia’s response has helped millions of Venezuelans, it has also brought some challenges. Public hospitals and public schools are being strained and have incurred major debts covering the new migrants. 

The COVID-19 virus exacerbated these challenges as many Colombians fell into poverty and unemployment rose. International cooperation and assistance from international organizations can be crucial in ensuring that integration efforts are sustainable. 

Migration to Colombia has been a struggle but brings a major opportunity for development and economic growth. Despite this economic opportunity, prejudice prevents them from fully integrating into the economy. If Colombia is successful with its efforts to eliminate prejudice and integrate Venezuelans into the Colombian workforce, the country can gain considerable economic advances and provide a new chance at life for millions of people. As Colombia’s presidential advisor said, “We gave Venezuelan migrants a license to dream.”

– Cameron Alcocer
Photo: Flickr

India’s Shifting Population Structure

Population StructureThe United Nations (U.N.) has been recording population data since 1950. Not once has another nation contested with China’s population — until this year. As of 2023, India has become the most populous nation with a population of 1.4286 billion, compared to China’s population of 1.4257 billion — a difference of 29 million. This shift in population bears the question as to whether this is a marker for a change in the global economy or whether this will only exacerbate poverty in India.

Consequences of Overpopulation

India’s vast population has been a continuous cause of poverty due to a strain on resources. More than 60% of India’s population live on less than $3.10 a day, the World Bank’s median poverty line. Furthermore, only 11.3% of children from the age of 6 to 23 live on an adequate diet, and while more than 90% of children attend primary school, less than 40% complete secondary school.

Overpopulation creates obstacles to providing adequate nutritional and medical care, high-level education and economic opportunities to the population as a whole, increasing poverty and income inequality. The population growth initially appears to increase poverty in India, only continuing the trends we have seen in the past; however, additional shifts in India’s population age structure are providing potential for new economic opportunities in India.

Shifts in Population Structure

Although India’s population is growing, fertility rates have declined by nearly 20% in the last decade. While there are more people of childbearing age, they are choosing to have fewer children than in previous decades. This is assumed to be correlated with the increase in education, urbanization, female status and family planning programs, which have been rising in the last 75 years of India’s independence. Now, working-aged people make up more than 60% of India’s population, producing a “demographic dividend,” economic growth potential that results from a shift in population structure.

Results of a Demographic Dividend

India’s new population structure provides the nation with even more human capital. To utilize this strength, India still needs to address its limitations in resources and care, which are the main causes of poverty. Investments in literacy, education and health are necessary for this larger working-age population to thrive. Additionally, the creation of jobs and increased economic opportunities is essential for the growth potential. Past developments in urbanization, increasing female status and caste system convergence could aid this effort.

The International Monetary Fund estimates a 6% medium-term economic growth in India. This estimation is mainly thanks to urbanization developments, such as road pavement, building new airports and expanding electricity and water access. While these developments are aiding in transportation and reducing obstacles to finding work, there appears to be a need to spread this investment toward rural low-income populations. Balancing urban growth with the prevention of increased income inequality could pose another challenge in addressing India’s new demographic dividend.

India continues to face the challenges of a rapidly growing population. As the nation struggles to provide the necessary resources and economic opportunities to support its population, there is a need for efforts that aim to fight poverty in India. On the bright side, India’s shifting population structure could be a catalyst for economic growth in India. With investments in job production and education in both urban and rural areas, there’s potential for India to capitalize upon its bustling population, rather than allowing it to exacerbate poverty.

– Aliya French 
Photo: Pixabay

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Poverty Eradication in Democratic Republic of Congo 

poverty eradication in Democratic Republic of CongoThe Democratic Republic of Congo boasts a generous supply of natural resources and opportunities, including the ability to use hydropower, but the country’s history of political instability and economic turmoil prevents its citizens from utilizing these assets. In fact, it ranks as one of the top five poorest countries and around 60 million, or 62% of its population, Congolese lived on less than $2.15 a day in 2022. Despite these statistics, the government seeks to help its citizens through efforts to further poverty eradication in the Democratic Republic of Congo.

Digital Aid Program

During the pandemic, Togo launched the Novissi program. This initiative was partly led by Joshua Blumenstock, co-director of the Center for Effective Global Action (CEGA), with an aim to identify those affected by poverty using “machine learning combined with mobile phone records and satellite data.” Novissi provided Togo’s poorest with cash transfers as a form of aid as the pandemic ravaged the nation.

Modeling this example, in December 2021, the Democratic Republic of Congo’s government also initiated a COVID-19 relief program. With financial help from the World Bank and technical assistance from GiveDirectly, Congolese citizens receive access to $25 online payments over a period of six months. The transfer of cash and the aspects of financial independence play significant roles in poverty eradication in the Democratic Republic of Congo.

National Development Plan

The International Monetary Fund’s (IMF) National Development Plan (NDP) for 2022-2026 seeks to create “wealth upstream, in order to have, downstream, the necessary levers to deal with the country’s problems.” By focusing on strengthening the country’s economy and enlisting help from foreign aid, this program aims to resolve its most glaring poverty difficulties. It operates on six pillars:

  1. Agriculture – The growth of the agricultural sector in the Democratic Republic of Congo could not only provide a stable source of healthy food for a nation that experiences food insecurity but also expand the economy and increase national growth.
  2. Industry – Similar to the development of agriculture, the growth of an industrial sector could transform the economy by creating new jobs and increasing entrepreneurship.
  3. Special Economic Zones (SEZs) – SEZs “contribute to the intensification of industrial development.” The SEZs could allow the DRC to appear competitive on an international level, thereby increasing the number of exports received while also building domestic entrepreneurship.
  4. Tourism – The tourism sector could attract international attraction by utilizing the country’s natural resources for development. This also includes moving away from the country’s reliance on oil to diversify the economy. Expanding the national economy and implementing new resources serve as essential innovations in poverty eradication in the Democratic Republic of Congo.
  5. Digital Economy – The growth of a digital economy could place the country on the global market, allowing it to experience relative productivity. Digitalization could also provide young individuals with access to new jobs and financial opportunities.
  6. Real Estate Development – The Democratic Republic of Congo’s need for housing and office and business buildings calls for an intensive reconstructive focus on updating real estate properties.

Opportunity International’s Programs

Around 10 million hectares of the Democratic Republic of Congo’s 80 million hectares of plowable land are currently under cultivation, leaving a vast amount of fertile soil bare and untouched. Because of this discrepancy, which leaves families without a stable food supply, Opportunity International, a nonprofit organization that assists individuals in starting businesses, attending school, cultivating farms and reducing poverty, spearheaded the Agriculture Finance program across Africa, including the Democratic Republic of Congo.

This initiative focuses on the market research of crops and collaborating with cooperatives to provide people with financial and agricultural training. Agricultural Finance also opens banking services for farmers and provides them with ready-to-use seeds and fertilizers in addition to enlisting a market of buyers. Positively, this program aided more than 540,000 farmers in sub-Saharan Africa.

Looking Ahead

These crucial developments to further poverty eradication in the Democratic Republic of Congo signal hope for a better future. As things stand, the trends suggest that focusing on technology-based solutions in the financial and industrial markets expands opportunity and paves the path for stability.

– Maddy Grieco
Photo: Flickr

Economic Development in The DRC

Economic Development in The DRC
While the Democratic Republic of the Congo has a history of extreme poverty and political instability, a recent International Monetary Fund (IMF) report stated that growth in the Democratic Republic of the Congo rebounded astoundingly from 1.7% in 2020 to a projected 6.2% in 2021. The projected growth includes impressive metrics considering that the most recent IMF projections for Sub-Saharan Africa predicted 4.5% growth. While the DRC still has improvements to make to infrastructure, public health, literacy, child mortality and access to utilities, recent reforms have proven effective in stabilizing the Congolese economy.

Background

The DRC has a history of political corruption dating back to the nation’s independence in the 1960s, “combined with countrywide instability and intermittent conflict that began in the early-90s.” This has consequently led to “reduced national output and government revenue, and increased external debt.” However, since implementing a transitional government after peace negotiations in 2003, economic development in the DRC has continued to improve, as the country reopened relations with international financial institutions and donors.

While the DRC’s economy contracted by 2.2% in 2021, inflation remained contained at 2% in 2021, despite sharp food price increases that rose by about 3.4%. The decline in oil prices in 2021 originally damaged economic development in the DRC. However, while the war in Ukraine could potentially increase inflation, “high oil prices could potentially boost the economic recovery.” This reality, while devastating to the nation’s poor, could contribute to growth and development in the DRC as the oil sector represents nearly half of the country’s gross domestic product (GDP) and 80% of its exports, making the nation the third largest oil producer in the Sub-Saharan African region. 

Differences in Sub-Saharan Governments and Economies

The primary difference between the DRC and other Sub-Saharan African nations in regard to the economic metrics is government stability. For instance, the United States’ African Growth and Opportunity Act (AGOA), a duty-free trade group, has cut Ethiopia, Mali, Guinea and Burkina Faso “over alleged human rights violations and recent coups.” This exclusion from the AGOA excludes Burkina Faso, Ethiopia, Mali and Guinea from accessing more than 1,800 products, as well as more than 5,000 products suitable for duty-free market access, or non-taxable market access, under the Generalized System of Preferences program.

The state of democracy in the DRC is questionable at best, with the U.S. State Department reporting incidents such as “forced disappearances and abductions by government and armed groups; torture by government; arbitrary detention by the government; [and] harsh and life-threatening prison conditions.” However, the relative stability of the DRC’s centralized constitutional republic has come with privileges. While other Sub-Saharan nations have faced exclusion, the DRC “regained AGOA beneficiary status as of” January 1, 2021. 

Economic Reforms

While the DRC has been in recovery mode from the economic contraction of 2021, the nation has still exceeded projections for economic growth and development due to a number of key strategies. Namely, the country includes the use of “a Fund-supported program” through which, DRC authorities adopted policies to regulate and stabilize inflation and the exchange rate. Also, debt restructuring agreements, increased oil prices and improvements in debt management have decreased public debt, which fell from 113% of GDP at the end of 2020 to 102% by the end of 2021. Ukraine-related inflation has also led to high commodity prices which have supported increased exports, revenues and international reserves.

A Need for Humanitarian Aid

While the IMF projections exceed original GDP-growth projections by the World Bank, which predicted “1.9% in 2022 and 4.1% on average over the period 2023-2024,” the conditions allowing for the DRC’s growth in economic development can be simultaneously harmful to the most vulnerable communities. For instance, the War in Ukraine, while improving commodity prices, has simultaneously led to increases in food prices which has intensified food insecurity. The DRC is also host to a number of social problems.

Infant mortality stands at a rate of 33 deaths per 1,000 live births, and access to electricity stands at 66% of the population in urban areas and only 15% in rural areas. The DRC’s access to clean water is also below the country’s “hydrological potential.” Luckily, groups like USAID offer assistance in such areas as “Agriculture and Food Insecurity, Democracy, Human Rights and Governance, Education and Global Health.” 

USAID has partnered with the government and people to improve citizens’ quality of life and the efficacy of national institutions while fighting for lasting peace. While many other African nations have suffered from the effects of coups, inflation and American sanctions, the DRC’s semblance of state stability and the intervention of humanitarian aid organizations have seemed to elevate the nation past expected metrics. One will be able to more clearly see how stable the DRC’s economy will be soon as economic projections are descriptive and not prescriptive. However, the DRC is currently exceeding predictions of GDP growth and facing less market insecurity than Sub-Saharan African nations that have faced punitive sanctions from Western nations for recent coups.

– Braden Hampton
Photo: Flickr

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Argentina’s Economy Minister Resigns

Argentina’s Economy MinisterOn July 2, 2022, Martín Guzmán announced his resignation from his position as Argentina’s economy minister, which he held since December 2019, through a seven-page letter posted on his Twitter account. The decision arrived amid conflict in the government concerning the country’s current economic crisis and Argentinian Vice President Cristina Fernández de Kirchner pushing for Guzmán to leave his position. Guzmán alluded to recent disagreements “within the government coalition” as a reason for his departure. Many members of his team have also resigned.

Guzmán’s Career

On December 6, 2019, Argentine President (then-president-elect) Alberto Fernández designated Guzmán as Argentina’s economy minister. At the start of this career, the newly appointed Brown graduate had his first bill approved by the Senate just 11 days after his first day in office. The bill imposed tax increases in specific areas of the middle and upper class while providing tax benefits to the impoverished.

In early August 2020, the Argentine economy minister struck a deal to restructure $65 billion in foreign bonds. Most notably, the former minister engineered a $45 billion debt deal with the International Monetary Fund (IMF). The agreement aims to “promote growth and protect social programs” to tackle Argentina’s economic crisis.

Before resigning, Guzmán planned to head to France to discuss a $2 billion debt deal with the Paris Club of sovereign lenders.

Argentina’s Economic Crisis

Argentina’s economy has been suffering for decades. In July 2022, many Argentine sovereign bonds were worth as low as 20 cents on the dollar — a stark difference from higher rates in October 2020. Inflation in Argentina is staggeringly high, moving toward 70% by the end of 2022. As of July 2022, one United States dollar is worth about 126 Argentine pesos and this exchange rate is still increasing.

An economic disruptor includes truck drivers’ strikes, which have halted delivery of grain, “one of Argentina’s main imports,” to ports. In addition to the COVID-19 pandemic, the devaluation of the peso and a sizeable foreign debt of more than $323 billion by 2020 have sent Argentina into further economic turmoil.

Alongside these struggles, Argentina’s poverty levels are sharply increasing. Due to the severe inflation, the poverty rate in urban centers stood at 37% in the latter half of 2021 and is expected to increase to 39% after the first six months of 2022. This would equate to 500,000 more impoverished people.

The Economy’s Future

Guzmán’s resignation has raised concerns over the economy’s trajectory, most fearing it will head in an even worse direction. Other concerns regard Guzmán’s IMF deal and whether Argentina can meet these needs without the architect of the deal.

On July 3, 2022, one day after Guzmán’s resignation, President Fernández named Silvina Batakis Argentina’s new economy minister. Batakis previously served as the Secretary of Provinces in the Ministry of the Interior and as economy minister of the Buenos Aires province from 2011 to 2015. This week, she stated her belief in “fiscal balance” and her intention to follow President Fernández’s economic program.

In June 2022, the deal with the IMF that former minister Guzmán crafted underwent its first review. This is a sign that the deal may indeed make progress and ultimately come to fruition. A press release regarding this step stated that the program’s policies “will be critical to support Argentina’s economic recovery.”

There are other solutions and aids to Argentina’s economic crisis besides the appointment of a new economy minister — foreign aid. Amid this instability, at least 48 NGO projects in Argentina aim to improve the lives of the country’s poor. A notable organization is Fundación Integrar (Integrate Foundation). The foundation helps young Buenos Aires and La Pampa citizens living in poverty complete their higher education by providing financial aid and guidance to students. With the help of donations, the foundation has given higher education scholarships to 140 students to date.

In office, Argentina’s new economy minister Batakis will need to address the nation’s high inflation rate and foreign debt along with an increasing poverty rate. Yet, she is not alone in this fight — a deal with the IMF is underway and tens of organizations are serving the country’s poor.

– Sophie Buibas
Photo: Flickr

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Food, Fuel and Finance Crisis in Sri Lanka

Crisis in Sri LankaSri Lanka is experiencing an economic crisis of massive proportions.  The U.N. has dubbed it a “food, fuel and finance crisis” that is endangering millions of people. This economic crisis has been building since the onset of the COVID-19 pandemic, but it has recently culminated in a massive fuel shortage that has paralyzed the economy. The food, fuel and finance crisis in Sri Lanka is an indicator of a worldwide trend of rising prices, resource shortages and civil unrest.

Desperation and Unrest in Sri Lanka

Countries all over the world, both developed and developing have experienced the economic and social shocks of the pandemic and the war in Ukraine. Many nations are fearing a looming recession, poor health care resources amidst the pandemic and a slowing job market. For developing countries, this means a nearly complete depletion of food, energy, economic stability and COVID-19 response.

The U.N. found that three months of consistent heightened inflation have caused around 71 million people to fall into poverty. The citizens of many developing countries, including Sri Lanka are turning to public political turmoil out of desperation.

Since the end of June, Sri Lanka has been experiencing one of the worst fuel shortages in history. The demand for fuel is so high and the supply is so low that people often have to wait in line for over two days to fill their tanks. One woman said that she spends more than half of her income on fuel.

The Sri Lankan government has demanded that anyone who can must work remotely, schools have been shut down and public transportation services are almost completely stopped, according to The Business Standard. The country has essentially come to a complete standstill.

This fuel crisis comes alongside a prolonged economic catastrophe in Sri Lanka, in which citizens have been facing severe shortages of medicine and inflation that has skyrocketed to 55%. Sri Lankans are also experiencing governmental uncertainty, as their president resigned after a series of protests. The food, fuel and finance crisis in Sri Lanka also comes from a history of debt defaulting and account deficits. Sri Lanka’s economy and exports have been unstable since the 1980s and they are now crumbling as a result of the war in Ukraine, The Business Standard reports.

The Crisis in Sri Lanka is Apart from a Larger Trend

The crisis in Sri Lanka is an indicator of a more widespread food, fuel, and financial crisis that is seriously harming many low-income countries. The U.N. Office for the Coordination of Humanitarian Affairs is claiming that the war in Ukraine is causing a wave of rising prices for essential commodities – food, fuel, medicine and energy – that are plunging millions into a standard of living crisis. The crisis put in danger about 1.6 billion people in 94 countries.

In the Middle East and North Africa, the livelihoods of 2.8 million people are threatened by this crisis and over 500 million people in Asia are exposed to the food and finance crisis, according to the U.N.

International Organizations Attempt to Break the Cycle of Crisis

International organizations like the U.N. and the International Monetary Fund (IMF) are not ignoring the crisis in Sri Lanka and other countries, but they are not doing enough to help either. In order to avoid further civil unrest and slow the growing numbers of people experiencing extreme poverty, international organizations could focus on multilateral investments that pay more in capital and are focused specifically on targeted lending and crisis response measures, the U.N. reports.

The U.N. has employed its Global Crisis Response Group to administer targeted cash transfers directly to the affected countries as a form of direct aid.

Going Forward Amidst a Global Crisis

There has been widespread suffering globally due to the COVID-19 pandemic and the war in Ukraine.  However, low-income and developing countries are experiencing record-breaking levels of hunger and lack of resources. The Secretary General of the U.N. believes that solving the global crisis is not possible without first paying attention to the economic crisis in developing countries.

People in low-income countries are in desperate need of food, economic support, fuel and adequate health care. Hopefully, international organizations and high-income countries can step in and help.

– Ella DeVries
Photo: Flickr

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Tunisia’s Food Crisis: a Tale Of War, Hunger, and Decree

Tunisia’s Food CrisisTunisia, a North African country with a population of 11.8 million, is facing a dire food crisis in the wake of the Ukraine War. Recently, the country has struggled with various political and economic strife, including 14 government changes in the past decade and a slow economic revival. Reliance on foreign grain exports further exacerbates Tunisia’s food crisis. This makes it particularly susceptible to the dangerous effects of foreign conflicts. In addition, the government has issued decrees that imperil citizens’ freedom of expression.

Import Reliance and War

According to a report by the U.N. Food and Agriculture Organization (FAO), moderate to severe food insecurity affected around 25.1% of Tunisians from 2018 to 2020. Government food subsidies protected many Tunisians from the expensive cost of foreign imports and agriculture in the country for products such as vegetables and fruits is self-sustainable.

However, following the COVID-19 pandemic, the government was unable to continue providing sufficient subsidies as the prices of their imports skyrocketed, which led to Tunisia accepting an emergency loan from the International Monetary Fund (IMF) for $750 million.

In addition to the insecurity introduced by COVID-19, the war in Ukraine presents a significant threat to Tunisian’s food supply. Since the Tunisian diet relies heavily on grains and Tunisia imports around 50% of its wheat from Ukraine and Russia, the Ukraine war has disrupted regular imports and accelerated hunger within the country.

Inside Tunisia

Statistics tell researchers about the numerical values of a food shortage. However, they cannot properly show the real living conditions of the crisis. Inside the personal lives of Tunisians during recent times of food shortage, bakers are running out of ingredients for bread and the lines of customers in the bakeries continue growing. Food insecurity in Tunisia has even affected citizens’ religious practices; during Ramadan, feasting happens nightly during iftars, but with supply limitations, it was often a struggle to fulfill them.

On March 20, Tunisian President Kais Saied enacted Decree-Law 2022-14, which sentenced those who hoarded state-subsidized products, such as cartels hoarding flour, to 10 to 30 years in prison. This decree’s goal is to protect against ongoing price gouging of grain products. In addition to the president’s decree, the government has also focused on police raids of warehouses and placing the blame for empty grocery store shelves on small businesses.

Amnesty International, a non-governmental organization that fights for human rights, suggested that President Kais’ anti-speculation decree could endanger citizens’ freedom of expression because it claims to target the spread of misinformation. Instead of simply protecting citizens from misinformation, the decree prevents citizens from speaking out about food shortages for fear of prosecution.

World Bank Loan

On June 28th, the World Bank’s Board of Executive Directors approved a $130 million loan to help alleviate the devastating effects of Tunisia’s food crisis in the wake of the Ukraine war. Emergency support will be provided, such as imports of wheat and barley for dairy production.

In the long run, the loan could assist Tunisia to become more self-sufficient and less reliant on foreign grain imports. This decision also pushes for the reevaluation of weaknesses in the grain value chain, which greatly contributes to food insecurity globally.

– Caroline Zientek
Photo: Flickr

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Increases in Food Prices Cause Concern for the Poor

Increases in Food Prices
The pandemic has been a source of economic stress for several industries globally, resulting in mass inflation and government intervention in order to alleviate the harmful effects of such rises in costs. A global index that the United Nations Food and Agricultural Organization performed found that food prices in January 2022 were at their highest level since 2011 when Egypt and Libya experienced political uprisings. Former Chief Economist at the International Monetary Fund (IMF), Maurice Obstfeld claims that it “wasn’t much of an exaggeration” to say that the world is approaching a significant global food crisis. Developing economies are experiencing some of the most severe increases in prices, which has detrimental effects on populations in poverty. Here is some information about how increases in food prices cause concern for the poor.

About the Food Crisis

Increases in food prices are not limited to one food industry. Foods are experiencing massive increases in prices. Cereal prices have increased 12.5% and dairy has increased 18.7%. From April 2020 to December 2021, the price of soybeans has risen 52% and coffee prices have risen 70% due to the pandemic. Supply chain issues have caused a struggle, especially for economies with high demands that are import-based during the pandemic. Spikes in all costs of goods are related to one another, which is evident in the rising oil prices.

Oil prices have risen to levels comparable to the oil crisis during the 1990s, which has raised food costs due to the energy industry’s involvement in transporting and producing food. Extreme weather conditions could be a factor determining food prices. For example, Brazil has undergone harsh droughts that prevent coffee beans from flourishing. Uncontrollable factors that target the poor have largely driven the food crisis.

How Those in Poverty are Most at Risk

Unfortunately, the nations that the increases in food prices have affected the most are the most vulnerable to economic crises and have large populations in poverty. According to World Vision, food prices rose by an average of 2.9% in the U.K., 3.6% in the U.S. and 4.8% in Japan and Canada between February 2020 and July 2021. On the other hand, prices increased in countries such as Myanmar which had price increases of 54% and Timor-Leste, which experienced increases of 17.7%. The nations have reported high levels of poverty during the pandemic, with more than 3 billion people not having access to healthy foods.

Food insecurity is running rampant in developing countries, while the United States is surviving flawlessly in comparison. One can see such disabilities simply in how the average citizens of each region spend their money. According to the IMF, people in Latin America and Africa are expected to spend 50%-60% of their wages on food while people in the United States spend about one-seventh of their income on food. A rise in food prices means that Latin American and African citizens will have to spend extremely large sums of their income on food.

A Nature food study found that by the end of 2022, more than 283,000 children under the age of 5 years old could perish from malnutrition as a result of this food crisis and 13.6 million children suffer from acute malnutrition. Certain areas in poverty in Asia do not suffer the implications of the increases in food prices because of their plentiful grains. However, Africa, South America and the Middle East region are most likely to feel the effects of food shortages because they are heavily dependent on food imports.

In addition, low-income nations including Brazil, Argentina and Turkey have suffered due to currency depreciation against the dollar, which is the standard for international food commodity prices. In Africa, bad weather and conflicts in the Dominican Republic of Congo (DRC), Ethiopia, Nigeria and more have disrupted transportation routes and risen food prices. Developing nations are most at risk for increases in food prices, disproportionately affecting poorer global populations rather than populations in high-income countries.

Ways to Drive Down Food Prices

The pandemic is a special case of increases in food prices. However, there are at least two meaningful ways that could prevent massive spikes in food prices in the near future.

  1. Change global rules on food trade. Many governments are not as ambitious as they could be in reforming trade policies to prepare for price spikes. Measures that could reform trade include banning export restrictions on food staples while increasing individual government’s support for farmers domestically through new rules that protect producers in other nations. This would benefit food price stability and increase the predictability of the market to better prepare governments for changing prices.
  2. Increase public investment in farming and agriculture. A study from Cornell University found that if the United States increased public investment by $33 billion, hunger could reach a resolution. If other nations contributed to this effort, global poverty rates could swiftly reduce. Africa is especially in need of such kinds of investment, which is one of the nations that increases in food prices have affected.

The global increases in food prices rightly cause some serious concerns about food insecurity, especially for residents of developing nations that are in poverty. There are ways to create positive change to prevent crises from occurring again. Nations should concentrate on providing food to their citizens in need and high-income countries must prioritize the lives of the hungry abroad and domestically.

– Rachel Reardon
Photo: Flickr