Posts

Poverty Rate in MadagascarThe African island nation of Madagascar is among the poorest countries in the world. The extreme poverty rate in Madagascar was nearly 78 percent of the population in 2012, and that high rate has likely continued into the following years. Around 19 million Malagasy live on less than $1.90 a day.

Due to the severely high poverty rate in Madagascar, improvements are a long, uphill battle. A recent report found obstacles to poverty reduction include a lack of infrastructure, poor access to markets, land degradation and volatile food prices.

Unproductive micro-enterprises are another barrier. Small businesses cannot grow and create more jobs because of a low demand for non-agricultural products. Widespread poverty constricts Madagascar’s consumer base.

The government of Madagascar is not idly standing by while millions suffer in poverty. President Hery Rajaonarimampianina made poverty reduction, infrastructure development and educational attainment national priorities following his election in 2014. The government is adhering to these goals through several national strategies and multiparty agreements.

In cooperation with the United Nations, Madagascar adopted a national biodiversity plan that includes the Agriculture Livestock and Fisheries Sectorial Program. This program should ensure economic growth through investments in agriculture and export sectors. It also resolves to reduce poverty by improving farm productivity and household income through crop diversification.

Another method through which the poverty rate can decrease is Madagascar’s work to improve education. One tactic Madagascar has implemented in this regard is building literacy centers for people to learn reading, writing and math necessary for further technical training.

The government is also trying to eliminate gender discrimination with land ownership law enforcement and awareness workshops concentrated in the most rural, impoverished regions. Dispelling customary notions that prevent women from inheriting land will allow more women to support themselves and their families.

In April, Madagascar outlined its poverty reduction strategy in an economic development report submitted to the International Monetary Fund. In it, the government vows to prioritize social and poverty-related spending in the federal budget. Contained within that promise is the continuation of integrating teachers into the civil service and distributing school kits. Those two practices will lessen the financial burden on families and local organizations that have to pay for children’s education.

Madagascar’s national strategy also calls for macroeconomic stability and a strong financial system. This would ensure a healthy reduction in inflation and stable prices that guarantee sound purchasing power for consumers.

Madagascar is not battling its high poverty rate alone. The African Development Bank, the World Bank Group and the United Nations Development Programme pledged $6.4 billion to Madagascar for its 2017-2020 development projects.

Madagascar’s economy is gradually improving. Its GDP growth rate was 3.3 percent in 2014 and is projected to reach 4.5 percent this year, which should stimulate job growth and pull people out of poverty.

The poverty rate in Madagascar can decrease if the government follows through on its many objectives to improve the lives of its people.

Kristen Reesor

Photo: Flickr

Why is Tunisia Poor

Tunisia is a country of around 11 million people in North Africa. In the past decade, it has emerged as the only success story of the Arab Spring, a revolutionary and democratically-minded movement that swept the Arab world in the early 2010s. So why is Tunisia poor?

In the decade before 2010, Tunisia managed to halve its poverty rate, dropping from 35 percent to 16 percent. This success came from certain important social achievements. Universal access to electricity, high enrollment in primary education and reductions in child malnutrition were significant factors. However, these trends seemed to stall after 2010, and the poverty rate has remained fairly stagnant.

Despite the poverty reduction and economic growth, inequality has also increased. Many investments in the early 2000s moved from high-skill jobs to low-skill ones. Tunisia also lacks a significant social security system and unemployment insurance. Investments typically happen in coastal regions, which increases regional wealth disparities.

In central Tunisia, poverty and and unemployment rates are several times higher than the national average. Some experts worry that the lack of infrastructure and jobs will create a breeding ground for extremism that could threaten Tunisia’s progress.

But why is Tunisia poor in certain areas? Several factors contribute to overall unequal opportunity in Tunisia. Where you live and the circumstances you were born into can determine how long you attend school and whether you have access to water. Additionally, Tunisia falls behind most other Middle Eastern and North African countries when it comes to sanitation.

Certain facts about an individual household in Tunisia can determine whether the family is impoverished. The educational attainment of the head of the household and the ratio of male to female employees are some indicators. Additionally, the ratio of the food budget spent on inexpensive cereal products can also indicate a level of poverty. Finally, households with fewer children are also less likely to be impoverished.

Thankfully, with successes both in reducing poverty in the past and in the Arab Spring, the people of Tunisia have proved that they can achieve incredible social victories. The International Monetary Fund has also recently lent Tunisia $2.9 billion to help address the issue of poverty.

Brock Hall

Photo: Flickr

Causes of Poverty in GreeceIs there poverty in Greece? Yes. Among the countries riding the rising EU economy, Greece finds itself adrift with high unemployment and rampant poverty.

Since the 2008 financial crisis, several countries including Greece, Ireland, Cyprus and Portugal have relied on the EU and the International Monetary Fund (IMF) for bailouts. All are rebounding except for Greece, which is now on its third bailout and has yet to see a decrease in its 14 percent poverty rate.

Many Greeks say the bailouts are not enough. With the highest unemployment rate in the EU at 23 percent and youth unemployment at nearly 48 percent, many Greeks believe that the causes of poverty in Greece include the bailouts themselves.

The EU and IMF have been cautious issuing the Mediterranean nation new bailouts, requiring the Greek government to enact several austerity measures. These measures have ranged from increasing taxes and cutting pensions to scaling back all government spending.

Austerity and Poverty in Greece

Many believe that these austerity measures are the causes of poverty in Greece. Increased taxes and pension cuts leave citizens with less disposable income, and in Greece’s case, nearly no disposable income. Being a largely service-oriented economy, consumer spending is the most important economic driver.

As spending falls, businesses tighten the belt and hire fewer or lay off workers. The first to suffer are young and inexperienced Greeks. Due to the inability of the Greece’s youth to find employment, many families subsist on parents’ or grandparents’ pensions, which are to be cut this year as part of the new round of austerity measures.

Many young Greeks have left the nest to head to the cities, where incomes are higher, and poverty is less prevalent. Greece’s rural population has experienced a contraction as a result, and food assistance lines in the city have grown.

There is some good news on Greece’s horizon. As part of a program to incorporate Syrian refugees into mainstream Greek society, the EU is planning on giving Greece 209 million euros. The money will help refugees with rent and living expenses and the new cash infusion could help move the economy forward, only time will tell.

The Greek government has also decided to issue bonds on the market. Finding a buyer for Greece’s risky debt will prove challenging, but if done, will prove to the EU that the economy is turning a corner.

The causes of poverty in Greece are many and systemic. After the global financial crisis of 2008 and the following austerity measures, Greece has had it rough in the last decade, but many can see a light at the end of the tunnel.

Thomas Anania

Photo: Flickr

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

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

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

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

Jeanine Thomas

Photo: Flickr

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

Key Facts About the International Monetary Fund

 

  1. In the 1930’s the world was overtaken with financial turmoil from 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, while facilitating International Trade, promote employment and sustainable growth and help 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 the 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.  The 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. while the smallest member is Tuvalu.
  10. The fiscal year for the IMF begins on May 1 and ends on April 30.
  11. The head of the IMF staff is the Managing Director. The Managing Director also acts as Chairman of the Executive Board and serves a five-year term. The present Managing Director is Christine Lagarde of France. The Executive Board Members monitor the day to day work with the guidance of the International Monetary and Financial Committee.

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

Aishwarya Bansal

Photo: Flickr


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

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

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

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

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

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

Vicente Vera

Photo: Flickr

Poverty in Tunisia

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

Continued Struggles Post-Revolution

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

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

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

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

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

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

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

IMF to Counter Terrorism

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

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

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

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

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

Philip Katz

Photo: Pixabay

Poverty in Egypt
For years, poverty in Egypt has been no anomaly. Over a quarter of the population lives below the national poverty line, and many have found it difficult to secure work in a turbulent economy.

From 1995 to 2000, poverty in Egypt began to recede. The percentage of the population living under the national poverty line decreased from 23% to under 17%. However, progress began to reverse itself. In 2010, over 25% of the population was living under the national poverty line.

This rate has failed to drop since the Arab spring in 2011.

However, the Egyptian government and various international organizations have not been idle in addressing this problem. In recent years, millions of dollars have been donated to instill sustainable growth and development and to chip away at the current percentage of those living in poverty.

The United Nations Development Programme (UNDP) is at the forefront of international organizations helping Egypt achieve economic stability and poverty reduction. It has created a plan called the UNDP Strategic Plan 2014–2017 for Egypt. The plan prioritizes the elimination of poverty in Egypt.

UNDP’s strategies are wide-ranging and beginning to gain a great deal of traction due to Egypt’s recent governmental transition.

Human development, gender equality, environmental development, transparency and sustainable development are some of the many focuses that the UNDP has for the Egyptian people in an effort to make them self-sufficient in the long term.

The Egypt Network for Integrated Development (ENID) is a pilot program the UNDP is testing in Egypt. The premise of the program is to empower individuals in rural areas by upgrading public services and providing more efficient agricultural and off-farm occupations.

Through these efforts, people can build and grow their own businesses. This will promote sustainable economic growth and development in these areas long after ENID discontinues aid.

ENID has given a special focus to women through the course of its debut. Seventy percent of the 573 individuals employed by ENID’s activities between 2012 and 2014 were women.

Outside rural areas, the UNDP is also creating jobs in the most impoverished govern-orates for young men and women. The majority of these new jobs are for women.

These programs are working wonders among the Egyptian people, but unfortunately they are not free to operate. The Egyptian Government foots the bill of the majority of these programs, followed by Japan and a collection of European states and organizations. The total amount of contributions from these organizations is just over $280 million USD. In a country of nearly 90 million residents, this amounts to roughly $3 per person.

Tackling Poverty in Egypt

Despite great progress towards poverty reduction in Egypt, there must be bigger changes. Just recently, Egyptian President Abdel Fattah El Sisi emphasized the need for foreign investment in large and small Egyptian enterprises. President Sisi pointed out that the government has made stellar improvements to the national infrastructure, but it still needs aid in developing businesses to use these new resources effectively.

By 2030, Egypt hopes to be well on its way toward sustainable development and a transparent governmental system. Though the country still needs help to develop its domestic affairs, many are optimistic that Egypt will be able to stand on its own within a decade.

Preston Rust

Photo: Flickr

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

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

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

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

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

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

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

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

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

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

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

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

Preston Rust

Photo: Spiegel

new_development_bank
After three years of negotiations, officials from the world’s five major emerging national economies, Brazil, Russia, India, China and South Africa (BRICS), have officially unveiled their new collective multilateral development bank.

Considered a potential rival to the global influence of U.S.-led institutions like the World Bank and International Monetary Fund (IMF), the Shanghai-based New Development Bank (NDB) is the second multilateral bank poised to begin operations in the near future, along with the Asian Infrastructure Investment Bank (AIIB), which announced its launch earlier this year. Both banks will aim to provide increased funding for large-scale infrastructure development projects in poor and developing regions.

The leadership of the $100 billion NDB will come in the form of a rotating five-year presidency, with the inaugural term going to K.V. Kamath, an Indian banker who had previously worked at multilateral development institutions like the Asian Development Bank.

Experts anticipate that the emergence of the NDB and AIIB will mark a new era of development that will greatly complement Western-led development efforts. An increase in the level and diversity of multilateral investment will help to combat extreme poverty in more effective and creative ways.

“I’m optimistic that we are going to get a very different era when it comes to development cooperation. We’re at the beginning of the end of aid-led, Western-funded, post-colonial development,” said Civicus secretary-general Dhananjayan Sriskandarajah in an interview with Devex. “It’s not just about the rich giving charity to the poor through aid. It is about new forms of cooperation.”

In an open statement to the NDB, 44 civil society groups and social movements declared their hopes that the bank will deliver inclusive and participative development, prioritize poverty-focused goals and emphasize human rights and the environment. The signees claimed that these aims are critical if multilateral development institutions are to realize effective results in the coming years.

“Investment cannot bring development if it does not meet people’s needs. The NDB should support inclusive, accessible, participative development that is driven by communities, addresses poverty and inequality, removes barriers to access and opportunity, and respects human rights,” reads the statement. “If the BRICS can help create an institution that lives up to the above principles, they will have done the cause of international cooperation a great service, true to the name ‘New Development Bank’.”

Development experts note that many of the anti-poverty policies currently touted by leading institutions – austerity, privatization and liberalization, to name a few – have not yielded the results that poor and developing countries have hoped for. The emergence of alternative development institutions like the NDB and AIIB could challenge those long-prescribed economic policies.

According to the chief executive of ActionAid International Adriano Campolina, increased competition among multilateral development institutions will only increase the scale and effectiveness of anti-poverty projects in the regions that desperately need them. However, he noted that these institutions must strive to make poverty-reduction policies a focus on infrastructure development.

“Both industrialized and developing economies have been seeing a rapid increase in inequality,” he wrote in an article for Devex. “Development must also, therefore, prioritize policies like fair and equitable land tenure, creation of decent jobs, strong social protection and free access to quality education that have been proven to reduce inequality.”

Campolina and other experts note that in order for the New Development Bank to successfully differentiate itself from existing institutions, it must prioritize the aims of people in poor and developing countries, not those of itself and of its own donors. If it succeeds, it may well contribute to the absolute elimination of extreme poverty and help to develop the infrastructure required for poor countries hoping to make substantial steps in economic development.

Zach VeShancey

Sources: Devex 1, All Africa, Devex 2
Photo: Merco Press