More than half of the poorest countries will have to reduce public spending in the next five years due to rising debt interest rates, Oxfam has warned, suggesting a wealth tax.
In a study published today, the humanitarian organization states that currently low- and lower-middle-income countries will be forced to pay almost $500 billion (€434 billion) per day in interest and debt payments until 2029.
To meet their commitments, they will have to make spending cuts worth 229 billion dollars (217 billion euros), he estimated.
Oxfam regrets that these countries, where 2.4 billion people live, spend four times more on paying debts to creditor countries than on health care.
As the annual meetings of the World Bank and the International Monetary Fund (IMF) begin in Marrakech, the non-governmental organization criticizes these institutions for encouraging struggling countries to cut public spending, fire public officials and focus on the payment of external debt.
“The World Bank and the IMF are returning to Africa, for the first time in decades, with the same old failed message,” lamented Oxfam International acting executive director Amitabh Behar.
The organization said it analyzed 27 loan programs negotiated with low- and middle-income countries since 2020 and concluded that the IMF encouraged governments to cut six-fold the amount budgeted for public services.
“The IMF is forcing the poorest countries on a starvation diet of spending cuts, increased inequality and suffering,” Behar said.
Instead of more austerity policies and more debt, Oxfam advocates a 5% tax on fortunes exceeding $5 million.
This tax on the rich would allow Egypt to double its spending on healthcare, Jordan to double its education budget, and Lebanon to increase spending on healthcare and education sevenfold.
Morocco alone could raise $1.22 billion as it faces a $11.7 billion repair bill due to the recent devastating earthquake, Oxfam said.
“The IMF and World Bank must allow governments to pursue economic policies that redistribute income and invest in public goods to dramatically reduce the gap between the rich and the rest,” argued Behar.
Source: TSF
