The economic fallout from the coronavirus pandemic could push half a billion more people into poverty unless urgent action is taken to bail out developing countries, said Oxfam today. The agency is calling on world leaders to agree an ‘Economic Rescue Package for All’ to keep poor countries and poor communities afloat, ahead of key meetings of the World Bank, International Monetary Fund (IMF) and G20 Finance Ministers’ next week.

Oxfam’s new report Dignity Not Destitution presents fresh analysis conducted by researchers at King’s College London and the Australian National University which suggests between six and eight per cent of the global population could be forced into poverty as governments shut down entire economies to manage the spread of the virus. This could set back the fight against poverty by a decade, and as much as 30 years in some places such as Africa. Over half the global population could be living in poverty in the aftermath of the pandemic. 

An ‘Emergency Rescue Package for All’ would enable poor countries to provide cash grants to those who have lost their income and to bail out vulnerable small businesses. It would be paid for through a variety of measures including:

• The immediate cancellation of US$1 trillion worth of developing country debt payments in 2020. Cancelling Ghana’s external debt payments in 2020 would enable the government to give a cash grant of $20 dollars a month to each of the country’s 16 million children, elderly and people with a disability for a period of six months. 

• The creation of at least US$1 trillion in new international reserves, known as Special Drawing Rights, to dramatically increase the funds available to countries. This would give the Ethiopian government access to an additional $630 million – enough to increase their health spending by 45 percent. 

Jim Clarken, Oxfam Ireland Chief Executive, said: “We know that if left unchecked, without rapid, decisive and collective action, this virus could have taken as many as 40 million lives. And while we struggle to cope with the widespread loss of life and human suffering it is causing, at Oxfam, we’re urgently calling for similar decisive and collective action to prevent a global economic fallout that would devastate and threaten the lives of the world’s most vulnerable people. 

“One man – Micah Olywangu, a taxi driver and father of three from Nairobi, Kenya, who has not had a fare since the lockdown – told us that “this virus will starve us before it makes us sick”. And his is not the only family facing this terrifying reality – for poor people in poor countries who are already struggling to survive there are almost no safety nets to stop them falling into further poverty and destitution.

“G20 Finance Ministers, the IMF and World Bank must give developing countries an immediate cash injection to help them bail out poor and vulnerable communities. They must cancel all developing country debt payments for 2020 and encourage other creditors to do the same, and issue at least US$1 trillion of Special Drawing Rights.”

Existing inequalities dictate the economic impact of this crisis. The poorest workers in rich and poor nations are less likely to be in formal employment, enjoy labour protections such as sick pay, or be able to work from home. Globally, just one out of every five unemployed people have access to unemployment benefits. Two billion people work in the informal sector with no access to sick pay —the majority in poor countries where 90 percent of jobs are informal compared to just 18 percent in rich nations.

Women are on the front line of the coronavirus response and are likely to be hardest hit financially. Women make up 70 per cent of health workers globally and provide 75 percent of unpaid care, looking after children, the sick and the elderly. Women are also more likely to be employed in poorly paid precarious jobs that are most at risk.  More than one million Bangladeshi garment workers – 80 per cent of whom are women– have already been laid off or sent home without pay after orders from western clothing brands were cancelled or suspended.