POVERTY: Obscene Salaries Dominate at Int’l Development Banks

May 25, 2011  Richard Pollock

Dominique Strauss-Kahn's lavish lifestyle is no anomaly: the U.S. taxpayer-funded IMF, World Bank, and others are handing out blood-boiling salaries and perks. [Update: Congress may probe IMF’s $250K golden parachute for DSK.]
Many of Washington’s 2,600 technocrats working at the International Monetary Fund do not regard Dominique Strauss-Kahn’s lavish lifestyle as an anomaly.
Privately they admire it, recognizing it as a description of their own standard of living. They call their many unseen perks “golden handshakes.” At the World Bank, Inter-American Development Bank, the African Development Bank, and at the IMF, you find extravagantly paid men and women who masquerade as anti-poverty fighters for the Third World. As one World Bank vice president said upon his resignation: “Poverty reduction is the last thing on most World Bank bureaucrats’ minds.”
These global institutions are supposed to act as non-profits, but big salaries and big perks rule as the norm. And you’re paying for them: as the largest single contributor, American taxpayers pick up the tab.
By now everyone knows about DSK’s extravagant $420,000 employment agreement that included an additional $73,000 for living expenses — a provision explained thusly by the IMF: “To enable you to maintain … a scale of living appropriate to your position.” Most of the non-profit development world remained silent when the Fund announced a $250,000 “golden parachute” severance for the indicted managing director.
A PJM survey found that a common annual compensation package for senior management at the anti-poverty banks exceeds $500,000 — tax-free. World Bank President Robert Zoellick currently receives $441,980 in base salary and $284,500 in other benefits. Strauss-Kahn’s deputy, John Lipsky, receives $384,000 in base salary plus “living allowances.”
Some may argue as the IMF did that global financial leaders — even from governmental organizations – should be highly compensated. But the IMF and World Bank payments for their executives are three times the annual salary for U.S. Federal Reserve Chairman Ben Bernanke, and four times the salary of America’s Federal Reserve governors: Bernanke’s gross annual salary is set at $199,700; his governors receive $179,000.
The global banks’ stratospheric governmental salaries are not limited to chief executives. Ten of Zoellick’s deputies receive tax-free base pay of $321,00 to $347,000, plus enjoy an additional $210,000 in benefits. Even mid-level World Bank employees earn well into six digits: the average salary for a professional manager is $181,000, plus $97,000 in benefits. A senior adviser receives on average $238,000 plus $127,000 in benefits. A vice president receives $286,000 plus $153,000 in benefits.
The biggest hidden benefits are the off-the-book perks called “living allowances.” These perks can nearly double a stated salary. Of the 2,600 IMF and 10,000 World Bank full-time employees, all receive some form of supplemental living allowances in addition to their base pay. These include home leave grants, dependent allowances, travel perks, and education “grants” for their children to attend private schools. In addition, they offer generous pensions and health insurance policies.
According to a U.S. General Accounting Office study, the average cost for these additional perks added $197,300 per employee cost beyond their base pay in 1994 dollars.
The public was awed by Strauss-Kahn’s ability to secure 24-hour standby first class travel, but he has a lot of company at the IMF. In fiscal year 2010 the IMF chalked up $169 million alone in airline fees. If every single employee traveled, that would be $61,000 in travel costs per employee. By 2013 the IMF estimates their air travel budget will escalate to $191 million.
As the United States is the single biggest contributor to the IMF and the World Bank, these salaries and benefits are paid for by the U.S. taxpayers. In 2009, when the IMF increased its lending capacity to $750 billion, the U.S. increased its contributions by $100 billion. In the final U.S. fiscal year budget, while there was a 2% across the board cut in federal spending, international expenditures to the banks rose 4%.
Congress has been passive. Although the U.S. executive directors to the Bank and the IMF are nominated by the president and confirmed by the Senate, the Senate has not insisted on bringing salaries in line with U.S. norms.
U.S. Senator Mike Johanns (R-NB), the ranking Republican member on a Senate subcommittee overseeing international finance, said U.S. policymakers should at the very least review U.S. contributions to the IMF in light of the allegations surrounding Dominque Strauss-Kahn.
A 1977 U.S. law does mandate that the president “take all appropriate actions to keep the compensation for IMF employees at a level comparable to the compensation of both private business and the U.S. government in comparable positions.” The law has never been enforced.
Complaints about lavish payrolls have been present for a long time. In 1990 when Martin Irwin resigned as a vice president from the World Bank, he wrote a scathing paper titled “Banking on Poverty.” Prominent among the deficiencies he identified was that Bank employees were fixated on personal salaries, perks, and benefits, and little on the fate of the poverty-stricken:
The institution is plagued by massive overstaffing, bureaucratic gridlock, and staff preoccupation with further salary and benefit hikes. Public proclamations to the contrary, poverty reduction is the last thing on most World Bank bureaucrats’ minds.
1995 was the last year the GAO examined the IMF compensation structure. They concluded:
They exceed the pay rates in the public sector in all surveyed markets, as well as in the United Nations.
Last year, the U.S. Senate Foreign Relations Committee slammed all of the development banks, describing them as “international bureaucracies answerable to no one government or constituency.”
In 2007, blogger Sameer Dossani reminisced about growing up in a World Bank household — both parents worked for the World Bank:
As a child I heard snippets of conversation about West African travels and poverty around the world. I also picked up talk of “golden handshakes” and benefits such as my own private school education being subsidized by the Bank.

http://pajamasmedia.com/blog/the-business-of-poverty-obscene-salaries-dominate-at-intl-development-banks/?singlepage=true

POVERTY: The World Bank VS poverty: a game played by its own rules

05 May 2011

The top management of the World Bank, including its president Robert Zoellick, is seriously concerned about the threat of a global food crisis. The financier says that if there is a crisis it will be much more severe than all the preceding food crises ever seen.



Zoellick’s pessimistic expectations are based on the pace at which food prices are currently growing around the world. According to him, there has been a 38% price increase in the global food market, nearly reaching the critical level of 2008.
According to Robert Zoellick, such a situation may increase the poverty around the world. Masterforex-V Academy experts note that it is the World Bank (headed by Mr. Zoellick) that mainly influences the poverty levels of numerous countries by decreasing or increasing their ratings. Consequently, the World Bank and the IMF not only form their monetary and credit policies but also influence the international image of a country and its attractiveness for international investors.
 The WB can announce that the number of the poor in a certain country has dramatically increased and can offer the country’s government a loan, recommendations and instructions on how to make reforms. Ukraine may serve as an example: the WB experts directly influence the pension reform in Ukraine.
The WB can announce a decline in the amount of the poor as the result of its [WB] help. In this case that will be a signal for the country’s government to cooperate with the WB and the IMF. Tajikistan is a striking example: according to the WB, the poor people make up 47.2% of the entire population (it used to be 72%), implying that the poor are those who live on $2.5 a day.

What are Zoellick’s fears based upon?
1. The threat of another global crisis. According to Zoellick, the growing prices on food and crude oil as well as the instability in the Middle East well may lead to another global crisis. Such a statement was made after the meeting of the WB and the IMF in Washington. Any considerable shock is enough to start a crisis. However the major concern is the food price growth.
2. More people around the world find themselves living below the poverty line. According to the WB, since June 2010 the amount of such people has increased by 44M people, which means they cannot spend on food more than $1.25 a day.
3. Continuous price growth. If the prices on food around the world gain 10% more. The amount of those living below the poverty line will be increased by 10M people.
4. Food supply problem. Robert Zoellick says that the problem is urgent and needs to be solved as soon as
possible. Over 1 billion people are currently starving all around the world. Yet the amount grows by 68 people each minute.

What solutions are offered by the WB and IMF?
· First of all they say one shouldn’t trust the macroeconomic indicators of some specific countries. According to Dominique Strauss-Kahn, Managing Director of the IMF, these days many countries are showing sound economic recovery, however it doesn’t mean that the living standards in those countries are improving. For example, Tunis and Egypt were showing economic recovery but the people didn’t feel that their living conditions were somehow changing for the better. It appears that some international financial institution will be determining a country’s living conditions with all the ensuing consequences. Especially notable is that the WB is going to initiate a series of reforms in the Middle East supposedly in order to not lose the young generation of the region.
· In order to do that the WB and the IMF are going to promote the creation of new jobs (in the Middle East and North Africa)
· Monetary policy. Both the institutions are going to directly participate in the development of the countries’ monetary policies.
· They are going to help the developing countries. The G20 Finance Ministers also promised to allocate $35B to help the counties of the Middle East and North Africa. In the short run the IMF and the WB may announce a decline in the poverty level in Egypt, Tunis, Yemen and even in the Eastern (rebellious) part of Libya.
So, the real and urgent problem of global poverty, which by the way has been partially caused by the IMF and the WB’s activity, is under the risk of turning into an efficient tool for political manipulation and speculation. At least it is difficult to believe in the IMF and the WB’s sincere desire to feed the hungry.

http://www.profi-forex.us/news/entry4000001393.html

POVERTY: More developing countries closer to achieving Millennium Development Goals: World Bank

 2011-04-16
WASHINGTON, April 15 (Xinhua) -- Two-thirds of developing countries are on track or close to meeting key targets for tackling extreme poverty and hunger, but more work remains to be done, the World Bank and International Monetary Fund said Friday.
Among developing countries that are falling short on the Millennium Development Goals, half are close to becoming on-track. With improved policies and faster growth, these countries can still achieve the targets in 2015 or soon after, according to the two Washington based international institutions' Global Monitoring Report 2011: Improving the Odds of Achieving the MDGs, which was released during the ongoing IMF and World Bank spring meetings.
"Reaching the MDGs is a significant achievement for developing countries. But there still is much to do in reducing poverty and improving health outcomes even in the successful countries," said Hans Timmer, director of development prospects at the World Bank. "Donors should build on this success and help countries make the next step through investments in effective service delivery."
The report showed that on the whole, the fight against poverty is progressing well. Based on current economic projections, the world remains on track to reduce by half the number of people living in extreme poverty.
The number of people living on less than 1.25 dollars a day is projected to be 883 million in 2015, compared with 1.4 billion in 2005 and 1.8 billion in 1990.
The report noted that much of this progress reflects rapid growth in China and India, while many African countries are lagging behind: 17 countries are far from halving extreme poverty, even as the aggregate goals will be reached.
Developing countries will also likely achieve the MDGs for gender parity in primary and secondary education and for access to safe drinking water, and will be very close on hunger and on primary education completion.
But progress is slow and targets may be missed on others. Among developing countries, 45 percent are far from meeting the target on access to sanitation; 39 percent and 38 percent are far from the maternal and child mortality targets, respectively.
"Good macroeconomic policies remain crucial to progress toward the MDGs," said Hugh Bredenkamp, deputy director of the IMF's Strategy, Policy, and Review Department. "The challenge in low income countries is to sustain and accelerate growth through better policies that will create jobs and greater opportunities for the private sector."
http://news.xinhuanet.com/english2010/world/2011-04/16/c_13831353.htm

POVERTY: Food prices: World Bank warns millions face poverty

14 April 2011
The World Bank has warned that rising food prices, driven partly by rising fuel costs, are pushing millions of people into extreme poverty.
World food prices are 36% above levels of a year ago, driven by problems in the Middle East and North Africa, and remain volatile, the bank said.
That has pushed 44 million people into poverty since last June.
A further 10% rise would push 10m more below the extreme poverty line of $1.25 (76p) a day, the bank said.
And it warned that a 30% cost hike in the price of staples could lead to 34 million more poor.

'Protect the poor'
The World Bank estimates there are about 1.2 billion people living on less than $1.25 a day.
"More poor people are suffering and more people could become poor because of high and volatile food prices," said World Bank president Robert Zoellick.

 Food price changes Q1 2010 to Q1 2011 : Source: World Bank Development Prospects Group
Maize: 74%; Wheat: 69%: Palm oil: 55%; Soybeans: 36%; Beef: 30%; Rice: -2%

"We have to put food first and protect the poor and vulnerable, who spend most of their money on food."
Mr Zoellick was speaking before IMF and World Bank spring meetings later this week.
The gatherings will be attended by finance ministers and central bankers including Chancellor of the Exchequer George Osborne, and Governor of the Bank of England, Mervyn King.

Nutrition
The World Bank says prices of basic commodities remain close to their 2008 peak, with the prices of wheat, maize and soya all rocketing.
The only exception is rice, which has fallen slightly in price in the past year.
The bank suggests a number of measures to help alleviate the impact of high food prices on the poor.
They include encouraging food-producing countries to ease export controls, and to divert production away from biofuels production when food prices exceed certain limits..
Other recommendations include targeting social assistance and nutritional programmes to the poorest, better weather forecasting, more investments in agriculture, the adoption of new technologies - such as rice fortification to make it more nutritious, and efforts to address climate change.
It also said financial measures were needed to prevent poor countries being subject to food price volatility.
http://www.bbc.co.uk/news/business-13086979

POVERTY: Pakistan: Asian Development Bank said economy faces considerable challenges

Peer Muhammad : April 7, 2011

An ADP report, Asian Development Outlook 2011, has termed recent fiscal developments as worrisome – the rollback in oil price rises, a partial increase in electricity tariffs, delays in carrying out revenue-increasing measures, broad tax exemptions for residents of flood affected areas, and continued heavy fiscal support to state-owned enterprises will add to pressures on the fiscal deficit.



Addressing a press conference on the launch of the report, ADB Country Director Rune Stroem said Pakistan’s GDP growth for fiscal 2011 would be around 2.5 per cent, while inflation would remain high due to rising international oil prices.
Stroem informed that the bank’s total disbursements to Pakistan during calendar 2010 stood at $799.18 million – 17 per cent higher than the $683.28 million projected.
Pakistan has made a modest recovery in 2010, while strong fiscal pressure has continued due to an underachieved revenue target, and significantly lower external financing inflows, coupled with higher expenditures, he explained.
The government should implement structural policy measures to support long-term growth by enhancing revenue generation, broadening the tax net, containing circular debt in energy and commodity sectors, and reducing the burden of losses from state-owned enterprises, said Stroem.
He warned that the government’s fiscal deficit of 5.5 per cent during the current fiscal year was unrealistic and would increase further if rectifying measures were not taken.
He called on the government to raise the tax-to-GDP ratio, which stands at 9 per cent, in to double figures in order to generate revenue.
Inflationary pressure is still dominant and could cross 16 per cent in the next few months. The government must address inflationary pressures from both, the demand and supply sides, as global oil price increases risk higher inflation.
Stroem said repayment of the International Monetary Fund (IMF) loan from next year would also build pressure on the exchange rate, and stressed on greater private investment in infrastructure and the manufacturing sector.
“Shortage of energy alone is causing a two per cent reduction in the GDP growth rate; however, it is not the right time to privatise loss-making, state-owned enterprises, and the government should induct professional management to make them profitable,” explained Stroem.
Responding to a question, he said that further loans were dependent on negotiations between the government of Pakistan and IMF.
“There is a link between political reality and economic progress. Overall revenue collection is slipping away compared with the target, whereas total expenditures to the security arrangements are increasing,” said Stroem.
He pointed out that food inflation and fuel costs were increasing gradually, but expected Pakistan’s economy to build on initial signs of recovery, while calling for proper documentation of the economy.
http://tribune.com.pk/story/144558/adb-report-paints-grim-poverty-fiscal-deficit-picture/

POVERTY: World Bank pledges to back Tanzania’s anti-poverty drive

24 February 2011  Al-amani Mutarubukwa
Dar es Salaam: The World Bank has pledged to support Tanzania’s National Strategy for Growth and Reduction of Poverty (Mkukuta II), saying the programme was vital in accelerating sustained growth and reducig income poverty especially in rural areas.
The decision was reached following the discussion by the World Bank’s Board of Executive Directors and a Joint IMF-World Bank Staff Advisory Note (JSAN).
“The World Bank stands ready to support the government in strengthening the Mkukuta II strategy during its implementation to ensure an effective policy framework for poverty reduction," said John Murray McIntire, World Bank Country Director for Tanzania, Uganda, and Burundi in a statement emailed to The Citizen yesterday in Dar es Salaam.
“The forthcoming World Bank Country Assistance Strategy for Tanzania will outline our strong support in selected areas to help implement the Mkukuta II,” he added.
Mkukuta II, which covers the period 2010/11-2014/15, focuses on three clusters: accelerating economic growth to reduce poverty; improving the quality of life and standard of living; and improving governance and accountability.
It calls for a shift towards a greater role of the private sector in economic growth.
Mkukuta II was developed through a broad-based consultation process led by the government of Tanzania and involving many stakeholders.
The JSAN provides analysis and advice to strengthen Mkukuta II. One of its key recommendations is to urgently address infrastructure bottlenecks and improve the investment climate.
It particularly highlights the importance of reducing market distortions in the agriculture sector, given its importance for poverty alleviation.
“Mkukuta II is an ambitious strategy to reduce poverty,” noted Yue Li, the World Bank’s Task Team Leader for the JSAN.
http://thecitizen.co.tz/business/-/8526-wb-pledges-to-back-tanzanias-anti-poverty-drive

POVERTY: South Korea to provide $777 mn to IMF poverty fund

(AFP) – Feb 16, 2011
WASHINGTON — South Korea has agreed to provide a loan of $777 million to the International Monetary Fund for lending to the poorest IMF member states, the multilateral organisation said.
Seoul will provide the funds to the IMF as trustee of the Poverty Reduction and Growth Trust for "new loan resources for low-income countries," the IMF said in a statement Wednesday.
An IMF effort announced in July 2009 seeks more than $1.6 billion for the program, created in 1999 with a goal of poverty reduction in its poorest member countries.
http://www.google.com/hostednews/afp/article/ALeqM5jtCUuHOYcpYKPHka9PuTL09FOXmg?docId=CNG.0b5216fef0bdcfc296e2d896f0f136e6.01

POVERTY: COTE D'IVOIRE: Cocoa ban latest worry for growers

 Photo: Monica Mark/IRIN
Growing conditions have been ideal for a good harvest

ABIDJAN, 17 February 2011 (IRIN) - An embargo on the export of cocoa beans in Côte d’Ivoire is curbing income for the country’s 900,000 growers, the latest to be caught in the crossfire of the political fallout.
Presidential claimant Alassane Ouattara on 23 January called for a month-long ban on cocoa exports, one of several tactics being deployed by his internationally recognized government to increase pressure on Laurent Gbagbo, who refuses to quit office.
Analysts say most of the estimated US$120 million needed to run a skeleton economy - paying salaries at the expense of infrastructure and development - usually comes from the key sectors of cocoa and petroleum. Cocoa brought in US$1 billion in foreign exchange receipts in 2006, versus $1.3 billion from oil and other refined products, according to the International Monetary Fund (IMF).
About six million Ivoirians rely on cocoa production to survive. The country exported 1.2 million tons last year, roughly 40 percent of global supply, according to the International Cocoa Organization (ICC). But as the Ivoirian economy continues to be hit by political turbulence, any targeted financial measures will require a delicate balancing act to avoid squeezing vulnerable farmers.
Many growers said they support the ban, but remained anxious about how long it would last. Although the main cocoa harvest is collected from September to March, another smaller crop is gathered between March and August.
“The majority of us are smallholders from the north or centre of the country. These are the people who feel the ban is all part of the process of a revolution,” Maurice Savadogo, a cocoa farmer in the eastern town of Abengourou, told IRIN.
It’s just a shame that ordinary citizens have to suffer the brunt of a political crisis that should have been over by now
Ouattara’s popular support is strongest in the north of the country. His November win was the result of an alliance with former president Henri Konan Bédié, who garnered large pockets of votes in central-eastern regions of the country.
“But if the ban is extended until March, things will be enormously difficult for us. At the end of the day we are just planters; we feel very vulnerable,” Savadogo said.

Latest headache
Gbagbo’s government has described the ban as an attempt by Ouattara’s government to illegally impede growth in a vital industry where production is on the rise. “Forecasts for this season’s harvest could top 1.2 million tons,” Gbagbo spokesperson Ahoua Don Mello told reporters, saying Ouattara’s request to ban cocoa exports was “disastrous”.
The current financial squeeze means growers have not been able to benefit from the tail end of a bumper crop forecast this year. Cocoa beans registered for export at the country’s ports were up 16 percent year-on-year, reaching 905,000 tons in the week ending 30 January, figures from the cocoa and coffee board (BCC) show.
“Growing conditions this year have been ideal for a good harvest”, farmer Blaise Ouraga from the western growing belt of San Pedro told IRIN. “But the cost of fertilizers and weed-killers is unaffordable for us these days. And that’s not surprising when you see that the cost of transport, food, everything has gone up in the last couple of months. A ban is the latest headache.”

Black market
Meanwhile, middlemen who buy the beans from farmers have used the ban to undercut the BCC recommended farmgate price - the price farmers are paid for their produce, set at roughly two US cents per kilo. A black market has sprung up for those wanting to cash in on the jumbo crop, Fulgence N’Guessan, president of the Union of Cooperatives of Côte d’Ivoire (Ucopexi), told IRIN.
N’Guessan said 2,000 tons of cocoa had been transported out of the bush in the last two weeks, with farmers being forced to accept prices of around one US cent per kilo of beans.
“Farmers don’t have the conditions to keep beans for more than about three weeks. Some prefer to sell at a low price rather than risk not being able to sell mouldy beans at all later.”
“And the buyers factor in the risk they are taking, the fact they’re using their own personal money and so on, to push down the prices,” N’Guessan, who also runs export company Kavokiva, told IRIN.
Official BCC figures put average farmgate prices at 1.7 US cents per kilo for the week ended 31 January.
In Abidjan’s usually bustling port, dozens of lorries are parked - the most visible sign of European Union financial sanctions. Their drivers, who transport produce inland as well as to landlocked neighbouring countries Burkina Faso, Mali and Niger, sleep underneath the vehicles as they wait for business to pick up again.
“It’s just a shame that ordinary citizens have to suffer the brunt of a political crisis that should have been over by now,” said Adamu (not his real name), an official at an international cocoa company, gesturing at the eerily quiet port. Most multinationals have respected Ouattara’s request and are laying low, he added.
“The industry is worth billions, so of course beans are still being bought. There are big warehouses at the port that can store beans for a long time, but because it’s all unofficial farmers aren’t being paid a good price.”
Cocoa continues to leave the country via established smuggling routes to the east in Ghana or northwards to Burkina Faso, Adamu added, echoing reports from other farmers and cooperative owners.
“It is those farmers who are feasting at the table of those dominating politics who are benefiting from this situation,” said a grower in Daloa, the heart of the cocoa belt. “They’re a minority, but they’re the ones crying loudest for the ban to end while benefiting,” he told IRIN.

http://www.irinnews.org/report.aspx?ReportID=91950

POVERTY: tough loan conditions imposed by IMF has led to health aid being diverted for other uses

Larry Elliott, Economics editor The Guardian, Monday 17 January 2011

Poor countries with IMF loans 'divert aid from public health'Oxford University-led research finds signs that tough loan conditions imposed by IMF has led to health aid being diverted for other uses
 

  The United Nations' millennium development goals for health include a two-third reduction in infant mortality and a three-quarter decline in maternal mortality. Photograph: Martin Godwin for the Guardian


Poor countries that borrow from the International Monetary Fund are spending just one cent in every dollar received in health aid on improving the medical care of their populations, according to new Oxford University-led research.
The study, published in the International Journal of Health Services, said there were signs that the tough loan conditions imposed by the IMF were leading to health aid being diverted for other uses.
In an investigation of more than 100 low and middle-income countries, the report sought to explain why increased aid spending had left many countries well off track to hit the United Nations millennium development goals (MDGs) for health, which include a two-thirds reduction in infant mortality and a three-quarter decline in maternal mortality.
They said one likely explanation was that the curbs on public spending stipulated by the fund were encouraging governments in poor countries to use health aid for other needs. Countries that did not borrow from the IMF were found to have channelled 45 cents into health systems for every dollar of aid received.
The study by Dr David Stuckler of Oxford, Dr Sanjay Basu at the University of California, San Francisco and Professor Martin McKee at the London School of Hygiene and Tropical Medicine looked at 34 low and middle-income countries that borrowed from the fund and 101 countries on a similar income that did not rely on IMF support.
Their analysis showed that health spending in countries borrowing from the IMF in the decade from 1996 to 2006 grew at half the rate of countries that did not have IMF programmes.
Stuckler said: "Countries seeking IMF support are likely to differ from countries that are not and a request for an IMF loan is often associated with severe economic problems. Nonetheless, even in such circumstances, it is reasonable to expect aid from donors to have at least some positive impact on health funding, especially given that health needs are often greatest at such times.
"This study suggests that countries relying on IMF loans are not spending the aid in the way it was intended. A change in loan policies is needed to lift the existing restrictions on finance ministers so they are no longer prevented from spending health aid on the people that urgently need medical help."
According to the research, countries borrowing from the IMF tended to do so when their economies were struggling and needed health aid the most. It concluded that changes are needed to loan conditions so that finance ministers in poor countries had more "fiscal space" to use health aid for its intended purposes – tackling disease and supporting public health projects.
The report's authors said the study was limited to measuring pledges of aid rather than a full picture of what was actually paid. But they said the findings offered a "new rationale that reconciles the failure to achieve the MDGs despite increasing amounts of aid."
Aid channelled through governments was associated with lower public spending than relief through private non-governmental organisations, they said.
http://www.guardian.co.uk/business/2011/jan/17/imf-health-aid-millennium-development-goals

POVERTY: Poverty reduction is not development

10 January 2011: guardian.co.uk
Posted by

Rick Rowden  [Rick Rowden is the author of The Deadly Ideas of Neoliberalism: How the IMF has undermined public health and the fight against AIDS (Zed Books, 2009). He is currently doing a PhD in economics at Jawaharlal Nehru University in New Delhi]


Poverty reduction is not development: If poor countries are unable to adopt the policies they need to transform their industries and diversify their economies, how will they ever get off the foreign aid bandwagon?

 Photograph: Dado Galdieri/AP
Aymara indigenous people in Bolivia carry bundles of corn. Moving from primary agriculture and extractive industries into manufacturing and services is essential for development.

The focus on aid effectiveness and poverty reduction, established by the millennium development goals (MDGs) and the Paris Declaration on Aid Effectiveness and Accra Agenda for Action, perpetuates a bloated aid industry that doles out millions of dollars each year to legions of contractors and NGOs to carry out projects in dozens of poor countries. But one should ask if there isn't more to economic development than just better aid effectiveness, country ownership, donor co-ordination, and monitoring and evaluation.
In recent decades, earlier notions of development economics have been replaced with meeting the MDGs. But poverty reduction is not development. We seem to have suffered collective amnesia about the history of development, which used to be widely understood as industrialisation – in which poor countries undergo a transformative process out of primary agriculture and extractive industries into manufacturing and services industries with higher value-added over time.
But the idea of industrialisation was jettisoned from the official aid agenda in the 1980s with the onset of the free-market creed that has become established in the Washington consensus approach, which calls for minimal government intervention. Because of the belief that the unfettered market would solve everything automatically, the aid industry had only to concern itself with ameliorating suffering and focusing on basic human needs, which led to the logic of the MDGs and "poverty reduction" discourse.
By the 1990s, ideas about "national" economic development were abandoned in favour of "integration with the global economy" as the route to development. Industrial policies in which the government supports the emergence of new industries with publicly financed research and development to acquire new technologies, with subsidies, trade protection, subsidised credit and other mechanisms, had long been part of mainstream development economics until they came under sustained attack from free-market advocates in the 1980s. Today, such terms are met with derision and disdain, and go unspoken in centres of power like Washington or London.
But the absence of knowledge about industrial policies is pernicious. As the Norwegian historian of economic policies Erik Reinert has lamented, there is no discipline called the history of economic policies; students learn quite well what Adam Smith said England should do, but they learn virtually nothing about what England actually did. Others, such as MIT's Alice Amsden and Cambridge's Ha-Joon Chang, have tried to resurrect this forgotten historical record, but they are up against two or three generations that have only learned neoclassical theory. Indeed, the Nobel laureate Joseph Stiglitz has advised developing countries: "Don't do as the US tells you, do as the US did."
In fact, the process out of primary agriculture and extractive industries into manufacturing and services is essential for development. Of course, today all countries must approach industrialisation differently, and shift to environmentally sustainable industrial policies based on low-carbon technologies, and shift to low-carbon food production, with gender justice, greater ecological balance and equity, and a new economics that places the environment at its centre.
Aid advocates interested in fostering such transitions should call on their donor governments to cease and desist with attaching Washington consensus policies as conditions on most new IMF and World Bank loans and instead support viable alternatives for more successful economic development, including policies to target higher employment and public investment, enhance domestic productive capacities, and mobilise more domestic resources.
They should call on governments to renegotiate the General Agreement on Trade in Services (Gats) and Non-Agricultural Market Access (Nama) arrangements at the World Trade Organisation, as well as the many free-trade agreements and bilateral investment treaties. Under many such agreements, rules stipulate that governments may not be able to adequately re-regulate their financial sectors to ensure stability, may not be able to implement capital controls, or use adequate levels of trade protection for their nascent manufacturing industries, thus blocking their capacity for economic development.
There are, however, other voices that could be considered in the discussions of foreign aid reform, such as the Group of 77 (G77), a group of 130 developing countries that has called for a host of policy and structural reforms to foreign aid and the global economic architecture that would allow for greater economic justice and "policy space". Aid advocates could also look to the Group of 33 (G33), a group of 46 developing countries currently engaged in the agriculture liberalisation talks within the WTO who are advocating for the right to use temporary increases on tariffs when their domestic producers are threatened by floods of cheaper imports, or the Nama 11 countries, another group of developing countries opposed to the dramatic cuts in trade protection on manufactured goods currently being demanded by the rich countries in the Nama talks.
The very notion that development as industrialisation has been eliminated from the discussion of foreign aid is unacceptable. If countries are unable to use the industrial policies they will need to transform their domestic industries, diversify their economies and build up their own tax bases over time, how will they ever get off the foreign aid bandwagon? Here the "poverty reduction" discourse is misleading; it neglects to ask how countries are supposed develop without industrialising.
It's a difficult question that most policy-makers won't wish to answer. If they say "development" doesn't include industrialisation, they will be hard pressed to explain how a country like Malawi can be "developed" while remaining essentially a tea and tobacco plantation. If they say it does include industrialisation, they will be hard pressed to explain how a country is expected to industrialise under Washington consensus rules and trade and investment agreements that have eliminated or outlawed most of the basic industrial policy tools and tactics that would be needed. Nevertheless, aid advocates have an obligation to ask.
http://www.guardian.co.uk/global-development/poverty-matters/2011/jan/10/poverty-reduction-industrialisation

POVERTY: South Africa nervous as Swaziland is tottering into poverty

January 16 2011: James Hall Manzini

 Photo: AP
As the Swaziland government faces a crunch time, the IMF has recommended a reduction of the government workforce by a third, about 10 000 people. However, Prime Minister Sibusiso Dlamini cautions that such a reduction will bring civil unrest. Every Swazi worker supports 10 dependents, according to the Central Statistics Bureau, and the rate of unemployment is already at 40 percent.
Former US ambassador to Swaziland John Sprott felt the need to justify the existence of a fully staffed embassy in the tiny country rather than a mere consulate when a large US embassy was in Pretoria just three hours away.
“I told state (the US State Department) that if there is a collapse in Swaziland there will be a major refugee problem in South Africa and a problem for the region,” Sprott said.
That was almost 15 years ago, when the situation in the kingdom was relatively sanguine. But a steady economic decline since then documented by the International Monetary Fund (IMF) in periodic warnings has since last month shown signs of a worsening slide.
Unpaid government suppliers fear that their business may have to close, government vehicles lack petrol, and a massive loan to government coffers from the central bank to cover short-term necessities like civil servant salaries all suggest an accelerating crisis.
Should South Africans fear an influx of Swazi economic refugees? South Africa’s government has expressed no alarm about Swaziland’s economic crisis, but a potential tsunami of Swazis seeking jobs (while their domestic unemployment escalates) and health services (while the underfunded local health care system fails) would not be heading Mozambique’s way for relief.
“Although we deal with incoming refugees and not outgoing – we had many refugees in Swaziland from South Africa and Mozambique in the 1990s – Swazis (seeking employment) will go to those neighbouring countries,” said Mildred Lukhele, a financial officer for the refugee aid organisation Caritas, located in Manzini and financed by the UN High Commission on Refugees.
South Africa has always drawn Swazis seeking jobs, from a century ago when Queen Regent Labotsibeni urged Swazi men to find employment in South African mines to earn money to buy back lands confiscated by British colonial authorities. The 11 border crossings offering egress to South Africa are perpetually busy.
Trade and human traffic has always been controlled and manageable. But what will happen when the occasional individual jumping a border fence multiplies by the thousands? The IMF recommends a reduction of Swaziland’s government workforce by a third, by about 10 000 people. Prime Minister Sibusiso Dlamini cautioned that such a reduction would bring civil unrest.
Every Swazi worker supports 10 dependents according to the Central Statistics Bureau, and unemployment is already at 40 percent.
Government’s compromise is to cut 7 000 public sector jobs next year. Government is Swaziland’s largest employer, but also the essential customer for dozens of businesses.
“It is appreciated that government is facing a problem, but unfortunately some businesses, especially the SMEs (small and medium enterprises) are likely to close their operations if the problem persists,” said Ambrose Dlamini, the president of the Federation of Swaziland Employers and Chamber of Commerce.
With private property scarce in the kingdom, investors with ambitions larger than renting office space or a shop must negotiate for use of the huge tracts of land controlled by the government.
However, this week the ministry of housing and urban development suspended the sale or lease of all government land indefinitely.
“Whether they realise it or not, or care or not, with this decision they have also suspended foreign direct investment into Swaziland indefinitely,” said a US business executive whose planned investment depends on the lease of a government-owned structure.
If the government’s inability to honour commitments to its health and social services partners continues, a breakdown in these services is inevitable.
“Swazis can be passive and I fear many will simply die if they can’t get treatment here, but there are thousands who will go to the facilities in South Africa. The South African hospitals can’t turn them away, because it is a humanitarian crisis,” said Alex Mnisi, an HIV testing and counselling officer who works in Manzini.
You won’t find information about the money crunch on the government’s website. This week the internet server that manages the site yanked it from the web because of an unpaid R100 000 bill.
“It’s not a cash flow problem, like government says. It’s a structural problem. The public payroll is bloated way beyond what this country needs, as the IMF has been saying for years,” said an economist attached to the Mbabane branch of a South African bank. “The banking sector is still inaccessible to a majority of Swazis who can’t avail themselves of financial services, and spending on non-essential big-ticket projects is still prioritised.
The eventual end of the global recession will not remedy Swaziland’s economic crisis and the concomitant scenario of Swazis seeking jobs and humanitarian relief in South Africa. The IMF has noted that Swaziland’s economic decline pre-dates the current global slump by years, while other SADC (Southern African Development Community) countries were seeing robust gross domestic product (GDP) and foreign direct investment growth rates.
“When the rest of sub-Saharan Africa was growing over the past decade, the economy of the Kingdom of Swaziland stagnated,” the IMF reported.
“Swaziland’s real per capital GDP growth declined from an annual rate of 2.5 percent during 1980/94 to 0.7 percent since then.
“In contrast, real growth in all of sub-Saharan Africa has averaged 1.5 percent annually since 1995, and in other lower-middle income countries growth averaged 7.5 percent,” the IMF noted.
As culprits the IMF points to, among others, the government’s non-essential spending priorities and the inability of the export sector to boost the economy.
Even if government can curb excess spending, causes for economic underperformance will not have been addressed.

How will jobs be created? How will social services be funded?
Will the response of South Africa be a rollout of the welcome mat, or some other reaction? – Independent Foreign Service

http://www.iol.co.za/business/international/sa-nervous-as-swaziland-is-tottering-into-poverty-1.1012427

POVERTY: SWAZILAND: Facing up to a financial crisis

MBABANE, 12 January 2011 (IRIN) - While Swaziland’s government considers recommendations from the International Monetary Fund (IMF) aimed at staving off economic disaster, the impacts of a growing financial crisis are already being felt by the country's poor. Thabsile Ndlovu, a widower in the mountainous northern Hhohho region has not been able to pay her children's school fees because she cannot travel to town to sell vegetables from her garden.
"The buses are not coming to my area because the roads are now so bad,” she said.
Recent heavy rains have made some roads impassable but the government announced this week that its fleet of road graders was inoperative because it lacked money to buy spare parts.
“At the start of the financial crisis government told us that education and health would not be affected, but we find there are many ways these can be affected,” said Stanley Dube, a financial consultant in the central commercial town of Manzini.
He noted that while government clinics may still be providing basic health services, many patients are finding it difficult to reach them.
Local humanitarian NGOs are also feeling the pinch following a government decision to cut financial support to such organizations by 14 percent.
“Just as prices are going up, government support is going down,” Thembi Nkambule, director of the Swaziland Network of People Living with HIV and AIDS (SWANEPHA), told IRIN.

SACU revenue down
Swaziland is among several smaller countries in the region that have benefitted from a boom in revenue payments from the Southern African Customs Union (SACU) in recent years.
SACU, which comprises Botswana, Lesotho, Namibia, South Africa and Swaziland, applies a common set of tariffs and disproportionately distributes the revenue to member states. It has provided an economic lifeline to Lesotho and Swaziland, in particular, which have small impoverished populations, large numbers of HIV-infected people, and few or no natural resources.
In 2009, SACU revenue accounted for about 20 percent of Swaziland's gross domestic product (GDP). However, the global economic crisis saw SACU revenue drop by about 70 percent in 2010 and further drops are expected over the next few years.
The IMF recently released a report proposing various fiscal adjustment strategies the governments of Botswana, Lesotho, Namibia and Swaziland should adopt in the face of lower SACU revenues.

Job cuts
One of the key recommendations for Swaziland was to dramatically reduce its disproportionately large public sector wage bill. The government has responded by announcing that 7,000 public service jobs will be cut in 2011, a move that may save money but is also likely to compromise public service delivery and further contribute to an unemployment rate that already stands at 40 percent.
Other fixes announced by the government have included the suspension of new hiring, cosmetic cutbacks like an end to the purchase of biscuits for bureaucrats’ afternoon teas, and short-term borrowing.
The IMF report predicts that if government does nothing to confront its economic problems public debt will jump from accounting for 19 percent of GDP in 2010 to 31 percent in 2011, eventually constituting 75 percent of GDP by 2015.
“That’s a doomsday scenario; no country can survive with such a debt load,” said an economist with the Swaziland branch of a South African bank who did not wish to be named.
However, he was unconvinced by IMF recommendations such as introducing value added tax (VAT) to raise revenue to replace lost SACU receipts.
“In a country where two-thirds of people live in absolute poverty... where are the consumers who can pay VAT?” he asked.
He was also skeptical that Swaziland's private sector would be able to attract enough investment to mitigate the effects of the financial crisis.
“While this would be ideal, private investment in Swaziland was on the decline even before SACU receipts were cut and the global recession occurred,” he said.
NGOs to seek more foreign aid
On 12 January, government officials were due to meet key industrial players to discuss ways to raise revenue. A corporate chief executive officer invited to the meeting told IRIN that a proposal to increase mining activity was on the agenda.
However, according to the IMF report, mining revenues, like SACU revenues, are on a declining trend even in countries like Namibia and Botswana which have considerably more mineral wealth than Swaziland. The authors urged governments to consider "measures to bring down the level of spending... before relying on measures to enhance revenue".
Several NGOs working to meet Swaziland’s considerable humanitarian needs, told IRIN they will be seeking more foreign assistance to address expected disruption to government services.
“We do have foreign donors who are sympathetic but because of the world economic situation they are cutting back. It’s a dilemma,” said SWANEPHA’s Nkambule.
http://www.irinnews.org/report.aspx?ReportID=91609

POVERTY: In poverty-struck Yemen, al-Qaida a low priority

Dec 22, 2010 : SANAA, Yemen (AP)
A doctor would have recognized the signs of chronic malnutrition immediately in the 7-month-old girl — the swollen stomach, the constant cough. Her mother, though, had only traditional healers to turn to in her Yemeni mountain village, and they told her to stop breastfeeding.
Her milk had spoiled, they said. Their solution: stuff the baby's nose with ghee.
When that didn't work, the young mother, Sayeda al-Wadei, made the arduous 60-mile journey through the mountains to the closest hospital with facilities to treat her daughter, in the capital Sanaa.
More than 50 percent of Yemen's children are malnourished, rivaling war zones like Sudan's Darfur and parts of sub-Saharan Africa. That's just one of many worrying statistics in Yemen.
Nearly half the population lives below the poverty line of $2 a day and doesn't have access to proper sanitation. Less than a tenth of the roads are paved. Water is running out. Tens of thousands have been displaced from their homes by conflict, flooding into cities. The government is riddled with corruption, has little control outside the capital, and its main source of income — oil — could run dry in a decade.
As a result, al-Qaida is far down on a long list of worries for most Yemenis, even as the United States presses the government to step up its fight against the terror network's affiliate here.
Donor nations are meeting in February in Riyadh, Saudi Arabia to gather millions of dollars for development in Yemen. Aid groups, economists and officials are scurrying to develop poverty reduction and economic restructuring plans for this nation of 23 million.
The United States has already dedicated $150 million in development money, alongside its counterterrorism aid to fight al-Qaida, which is to grow to from $150 million to $250 million over the next year. Other donor countries have given millions more, acknowledging that the terror network cannot be uprooted unless Yemen is pulled out of poverty.
"The neighboring countries and Europeans and U.S. have a lot at stake, not only in Yemen, but in the Middle East. I don't think anyone wants to see Yemen failing," said Benson Ateng, the World Bank's Yemen country manager.
Some aid workers fear that the government, which clings to power through patronage, will direct aid to allied tribes while leaving others out in the cold, fueling resentment. A focus by donors on steering aid to areas with a known al-Qaida presence, not necessarily the poorest zones, may also backfire.
"Donors are focusing on development as a tool to address security issues, and not as an end in itself," said Ashley Clements, Oxfam representative in Sanaa. "There is a risk that the tendency will increase over the years. Focusing on one issue alone will be to the detriment of the well-being of Yemen's people."
Malnutrition typifies how overlapping problems lead to crisis. Much of Yemen's agriculture — and 30 percent of its water — has turned to cultivating qat, the mildly stimulating leaf that Yemenis addictively chew, leaving the country a net food importer with little cash to pay for it. At the same time, health infrastructure and education is lacking, the rate of breastfeeding for children under six months is only 10 percent.
Moreover, the rise in malnutrition was able to pass largely unnoticed because the weak government was not keeping valid statistics and had no commitment or ability to head it off.
"There is no single other country in the world where we ever have seen such high levels of malnutrition," said Greet Cappelaera, Yemen country director of UNICEF.
At the Sanaa hospital, al-Wadei's daughter Maram has recovered after treatment. But another of her four children — a 2 1/2-year-old daughter — can barely stand, another malnutrition symptom, and the family can't afford to treat her.
"I don't want kids anymore," mourns al-Wadei. "I don't even want myself."
Yemeni officials say their resources are strained by security challenges, including a northern rebellion, a southern separatist movement and al-Qaida.
"If there is no security and stability, there will be no development, no poverty alleviation and no investment," said Hesham Sharaf, deputy minister of planning and international cooperation.
Oil revenues make up at least three-quarters of the government budget, but oil production is steadily declining. Yemen could become a net importer in the next five years and its oil reserves could run out completely by 2021, according to IMF and World Bank estimates.
What development there is in Yemen is a patchwork, depending on where the government has thrown its limited cash. Oil money has fueled a consumption boom among a small slice of the population. In Sanaa, new hotels and restaurants have arisen, along with shopping complexes boasting Baskin Robbins branches and Porsche and BMW dealerships. Large video billboards advertise new housing projects.
But just beyond the capital's edge, rural Yemen immediately emerges, with little infrastructure. Donkey carts replace SUVs, and government authority largely vanishes, replaced by highly independent local tribes.
In Wadi Dhaher, a village just 10 kilometers (6 miles) outside Sanaa, floods have left mud houses partially demolished and deserted. Muddy roads lead to the village's qat plantations, which consumes most of the village water.
For water, Wadi Dhaher relies on a local well dug 400 meters (yards) deep to search for disappearing ground water, despite a national law limiting wells to 60 meters (yards) to prevent overconsumption.
Its residents belong to the Hashed tribe, which is nominally pro-government but brooks little interference from authorities.
"We are self-sufficient here," said Abdullah Muhsen, a 27-year-old who operates the village bath. "Our authority is the (tribal) sheik. Even the president needs his approval."
In a country with the seventh highest population growth in the world — 2.9 percent a year — the tens of thousands of Yemenis entering the work force each year find few opportunities. Many pour into Sanaa for jobs, straining the infrastructure.
Mourad Hamoud dropped out of high school in the southern town of Taiz and moved to Sanaa, hoping for a government job. But he found such jobs go mainly to northerners, so he opened a barber shop. "I couldn't keep up with studying and working," he said. "If things were right, I wouldn't have to leave studying to work."
Mohammed Abdel-Malik Mutawakel, a Sanaa University political science professor, said the danger is that Yemen's youth find "the economy is closed to them."
"So they will only think of a political struggle," he said. "If that also is closed. they will fight then, either through al-Qaida, the southerners, or any other way."
http://www.google.com/hostednews/ap/article/ALeqM5iQ6hw5wspWi_HY_V7APhNnca4yqQ?docId=7db7afc8f64940d7a7bb1b2abba20345

POVERTY: SWAZILAND: A poorer government means more poor people

  Photo: IRIN: A sugar cane cutter at work


Staff at Tikhuba Clinic in Lubumbo region of eastern Swaziland measure out a corn soya supplement that is given to poverty-stricken patients on ARV treatment


Mbabane, 7 December 2010 (IRIN) - Swaziland's declining revenue and a refusal to shelve prestige projects in the face of growing unemployment is exerting pressure on public health services and food production.
The government recently conceded that unemployment was running at 40 percent, despite doggedly maintaining for many years that it was 26 percent, but economists expect this to rise, pushing up already high poverty levels - about two-thirds of Swazis live in chronic poverty.
Subsistence farmers on communal Swazi Nation Land, where about 80 percent of the country's one million population reside, use government tractors for ploughing, but government fuel depots have run dry and the machines are standing idle.
"This is planting season. It is December now, and for six weeks we have not been able to get seeds in the ground," Joshua Mnisi, a farmer in the central Manzini region, told IRIN.
Renting a government tractor costs about US$19 an hour, but private contractors charge twice as much. The extent of the impact on food production will only be known once a food assessment survey is undertaken in 2011.
Swaziland has the world's highest HIV prevalence rate - 26.1 percent – so one in four Swazis between the ages of 15 and 49 is living with the virus, and about half of those infected, or 110 000, are on antiretroviral (ARV) drugs, which can prolong a person’s life.
Prime Minister Sibusiso Dlamini told the National Emergency Response Committee (NERCHA) that the budget for HIV/AIDS would be cut by 10 percent in 2011, just as efforts to intensify the roll-out of ARVs gets underway.
"The ARV rollout is a big budget expense, and the focus of our efforts. What happens now that government has less money to spend on life-saving measures?" said AIDS activist Vusi Kunene.
Public worker retrenchments
A spate of company closures from timber plantations to garment factories resulted in widespread retrenchments in 2010. The government is the country's largest employer, but a drop in revenue from sources such as the Southern African Customs Union (SACU) of about 70 percent compared to 2009, led Prime Minister Sibusiso Dlamini to warn that the financial squeeze could lead to public workers’ salaries not being paid.
SACU - the world's oldest customs union, comprising Botswana, Lesotho, Namibia, South Africa and Swaziland - applies a common set of tariffs and disproportionately distributes the revenue to member states and has provided an economic lifeline to both Swaziland and Lesotho.
The International Monetary Fund (IMF) recommended that the government cut its workforce by a third, or 10,000 employees, because the number of workers on the payroll was disproportionate to the country's size. Political opposition groups have blamed patronage and nepotism for the inflated payrolls.
Government has announced a reduction of 7,000 public service jobs in 2011.
As more business shut and public sector workers are laid off, it is inevitable that more people will join the ranks of the poor
The lay-off of public workers is expected to be cushioned by retirement packages, but the impact of such a substantial number of people being retrenched will have a ripple effect throughout the economy.
"This will result in the consumption rate of our goods and services falling due to less demand, and we will be affected one way or the other," said Fikile Nkosi, managing director of a major bank.
According to the government's Central Statistics Office, one employed person supports, on average, 10 others.
"The customary method of integrating former civil servants into private life is for them to use their government retirement pensions to open small businesses," said Amos Ndwandwe, an economist at a bank in the capital, Mbabane. "It takes years to make a successful business and many fail under normal circumstances, but it is complicated now because higher unemployment means fewer customers."
Numbers of poor increasing
However, government spending on non-essential programmes has not been cut. A recent request by the finance minister for an additional $50 million towards the building of an international airport was approved by parliament and the airport's final cost is expected to be in the region of $1 billion.
Cabinet officials have also awarded themselves substantial pay rises, and have extended retirement benefits to former government officials, contrary to IMF recommendations that public sector wage raises be curtailed. Swaziland is ruled by sub-Saharan Africa's last absolute monarch, King Mswati III.
"For decades government has paid lip service to poverty eradication while concentrating on investment in capital projects. The result is that while a Swazi middle class has expanded, this is just inertia brought on by population growth, because the number of poor has expanded also,” Ndwandwe said.
"In terms of proportion, the numbers are the same as what the UNDP [UN Development Programme] reported in the 1990s - about two-thirds of the people live on one dollar a day - there has not been a dent really in those who live in chronic poverty,” he noted
"All indications are that the percentage is going to change - as more business shut and public sector workers are laid off, it is inevitable that more people will join the ranks of the poor."
http://www.irinnews.org/report.aspx?ReportID=91311

POVERTY: Poverty reduction falls victim to crisis: World Bank

Nov 19, 2010
WASHINGTON (Reuters) - The World Bank disbursed some $80.6 billion in 2009 and 2010 to soften the blow from the economic crisis but warns that increased poverty stemming from the downturn will be a major future problem.
In a lengthy report on member banks' response to the crisis that began in 2008, the World Bank said that 64 million more will fall into extreme poverty by the end of this year than would have been the case.
The bank defines extreme poverty as life on less than $1.25 a day, a challenge faced in many developing countries that suffered further setbacks because of the crisis that originated in wealthy countries, principally the United States.
It will be hard to reverse the bulge in global poverty.
"Even with rapid economic recovery, some 71 million people will remain in extreme poverty by 2020 who would have escaped it had the crisis not occurred, coupled with unemployment rates that remain high in several countries," the bank said.
The World Bank set up a group to appraise the effectiveness of its response to the global downturn that stemmed from a U.S. collapse in subprime mortgage markets, triggering a credit crisis and eventually sending markets plunging globally in rich and poor countries.
It said there were "notable variations" in how well the various members that make up the World Bank Group responded.
"The World Bank (consisting of the International Bank for Reconstruction and Development and International Development Association) while responding to the crisis with some delay, has demonstrated preparedness based on its knowledge of poverty impacts, long-term dialogue with country authorities and ability to expand lending," the report said.
It said the International Development Association had offered "moderately higher financing" and the International Finance Corporation and Multilateral Investment Guarantee Agency had responded adequately.
But the report cited some areas of concern, noting the World Bank must boost its ability to act quickly in the event of crises and bolster its preparedness for intervening in the financial sector when that becomes necessary to stabilize markets.
For example, it said the International Finance Corporation was creative in soliciting funds to help clients deal with the effect of the crisis. "But opportunities were missed, and the effectiveness of the initiatives has been diluted by design and implementations weaknesses -- such as the time needed for fund-raising and internal capacity building," the report said.
Given that the crisis originated in the financial sector of developed countries, the World Bank's sister organization, the International Monetary Fund, had a more natural role in sounding the alarm about and leading in efforts to deal with it, the report said.
The report deplored the lasting damage done by the crisis to already-poor countries the World Bank tries to help with low-interest loans, interest-free credits and grants to boost investment in health, education and development.
"The crisis reversed the decline in poverty of the last decade," the report said. It said the World Bank "was not ready when the crisis struck" and now needs to do a better job of sharing information among its members to improve its ability to respond more swiftly if it must do so in future.
http://af.reuters.com/article/topNews/idAFJOE6AI01Y20101119?sp=true

POVERTY: The Mystery of Economic Growth

AKASH KAPUR October 21, 2010
EDAYANCHAVADI, INDIA — Around here, in rural South India, development over the last few decades has been an uneven process.
Some people rise, others fall. Some get rich, some stay poor.
The rich build concrete houses, buy motorcycles and send their children to private schools. The poor live in thatch huts, work part-time as agricultural laborers and pull their children out of school young.
Development is an unpredictable business. The rich and poor often grow up in the same village. They are beneficiaries, or victims, of the same government policies. Their lives are determined by the same weather patterns and infrastructural constraints.
One of the central questions facing India — and, indeed, the developing world as a whole — is why some people, or countries, move ahead, while others fall behind.
An answer to this question would have huge implications for public policy. In India, torn between an attachment to socialism and a new infatuation with capitalism, it could help find a balance between the state and markets in poverty alleviation schemes.
More generally, as India continues to grow rapidly, a better understanding of its path to development might be applied to other regions of the world, where poverty is proving less tractable.
For all its temptations, however, the search for a policy toolkit toward development is fraught with pitfalls. Over the last 60 years or so, the international development community has come up with model after model, theory after theory, in search of just such a toolkit.
It has, at various times, promoted the benefits of huge, often conditional, inputs of foreign aid, the rigors of shock therapy, the virtues of free trade and the promise of the Washington Consensus (a set of policies prescribed and often imposed by agencies like the World Bank, the International Monetary Fund and the U.S. Treasury).
Yet for all the efforts to come up with a general theory of development, the truth is that economic growth remains something of a mystery. This is the conclusion of a recent anthology, “What Works in Development?”, published by the Brookings Institution. The essays lead to the conclusion that there is no clear way to ease poverty, and — as the editors, William Easterly and Jessica Cohen, state in their introduction — “no consensus on ‘what works’ for growth and development.”
Mr. Easterly, a former World Bank economist, has elsewhere shown that there is little correspondence between a nation’s economic growth and the extent to which it follows international development prescriptions. Analyzing data for 1980 to 2002, he found that countries that grew the fastest received considerably less foreign aid and spent less time under I.M.F. tutelage than those that grew the slowest. This doesn’t mean that following the orthodoxy harms development, but it does suggest that rapid growth is possible without international aid or advice.
Part of the problem, it turns out, may be the very attempt to follow a model. Progress — economic or otherwise — is a notoriously subjective phenomenon. It is context sensitive, and highly dependent on local conditions. It is, in particular, resistant to the uniformity implicit in even the most sophisticated models.
This view, once held by a fringe, is entering the mainstream. It was given voice last month by none other than Robert B. Zoellick, president of the World Bank, when he spoke of the need for “rethinking” development economics and “a questioning of prevailing paradigms.”
Facts speak for themselves. It has become increasingly evident that many of the most successful growth stories have resulted not from slavishly following an external set of policy directives, but from pursuing unconventional — and locally attuned — solutions.
The rise of Southeast Asia (and more recently China), for example, represented a repudiation of textbook views about the proper role of the government and of the relationship between markets and the state.
India’s recent growth, too, can be seen as a result of a determination to follow its own path. While it is true that the country began its climb out of socialist torpor under World Bank and I.M.F. supervision, many aspects of its growth since then contravene the conventional model. A notable example is the country’s refusal to fully liberalize its capital markets or allow unrestricted foreign investment. This refusal, lamented by advocates of the Washington Consensus, is now credited with having spared India the worst of the recent financial crisis.
Jessica Wallack, an economist who heads the Center for Development Finance, a research organization in Chennai, suggests, also, that India may have benefited in some ways from moving slowly toward the privatization of public assets (again, a contravention of development orthodoxy). She argues that, given social inequality, corruption and limited institutional capacity, rapid privatization could, much as in the former Soviet Union, have “resulted in greater concentration of wealth in a few people’s hands.”
A further example might be the nation’s Mahatma Gandhi National Rural Employment Guarantee Act, a major public works program that has dismayed those who advocate market solutions to unemployment, yet that is undeniably easing poverty in much of rural India.
Each of these policies has a price. But their salient feature (and, arguably, the reason for their relative success) is a sensitivity to context — the fact that they are responses to genuine needs, and that they are designed taking into account particular local conditions, such as the reality of corruption.
Ultimately, it is this sensitivity, this ability to accommodate context and local detail, that works best in development. The type of grinding, sweaty work it implies — time in the field, in villages and on farms, learning about cultures and social structures — is certainly less glamorous than designing overarching theories to rid the world of poverty.
But poverty is an unglamorous business. It is only fitting that the most effective way to address it would be through small, low-key and often backbreaking interventions.
Join an online conversation at http://www.akashkapur.com/

http://www.nytimes.com/2010/10/22/world/asia/22iht-letter.html

POVERTY: U.N. goals to slash poverty, hunger achievable

Louis Charbonneau
UNITED NATIONS, Sep. 9, 2010 (Reuters)
A set of U.N. goals aimed at drastically reducing poverty and hunger worldwide by 2015 are achievable, despite setbacks caused by the global financial and economic crises, a draft document said.
The 27-page draft declaration on the U.N. Millennium Development Goals is expected to be formally adopted at a September 20-22 summit meeting at the United Nations which U.S. President Barack Obama and other world leaders are expected to attend.
"The Millennium Development Goals can be achieved, including in the poorest countries, with renewed commitment, effective implementation, and intensified collective action by all (U.N.) member states and other relevant stakeholders," said the draft, which was obtained by Reuters Thursday.
It says the economic and financial crisis represented a serious obstacle for the goals, which were agreed in 2000 and are aimed at halving poverty, slashing hunger, improving gender equality and improving access to health care and education.
"We are deeply concerned about the impact of the financial and economic crisis -- the worst since the Great Depression," the draft says. "It has reversed development gains in many developing countries and threatened to seriously undermine the achievement of the Millennium Development Goals by 2015."
All 192 U.N. member states, as well as international blocs like the European Union, African Union and organizations such as the World Bank, International Monetary Fund and others are expected to participate in the three-day summit.
Diplomats said the final draft was agreed by U.N. member states Thursday after disputes over language referring to countries under foreign occupation were resolved.
OXFAM: DRAFT THIN ON SPECIFICS
The draft expressed "deep concern at the multiple and interrelated crises, including the financial and economic crisis, volatile energy and food prices and ongoing concerns over food security, as well as the increasing challenges posed by climate change and the loss of biodiversity."
A spokesman for the international humanitarian aid organization Oxfam, Louis Belanger, complained that the draft document was thin on recommendations for specific actions or policy changes aimed at achieving the MDGs.
"Oxfam's main problem with this is that it's not action orientated," Belanger said. "There's little of the 'how' these commitments will be achieved."
The draft also called for reform of international financial organizations like the International Monetary Fund and World Bank. It stressed the key role that trade plays as "an engine of growth and development" worldwide.
"We emphasize the need to resist protectionist tendencies and to rectify any trade distorting measures already taken that are inconsistent with (World Trade Organization) rules," it said, adding that developing nations and others have a right "to fully utilize their flexibilities" regarding WTO rules.
It also called for the early completion of the Doha round of global free-trade negotiations, scaled-up action to combat and treat HIV, malaria, tuberculosis and other diseases, and further steps to reduce maternal and child mortality.
http://www.newsdaily.com/stories/tre68855d-us-un-poverty/

POVERTY: Corruption and anti-corruption effects

The issue of corruption resonates in developing countries. In the Philippines, for instance, the slogan of the coalition that is likely to win the 2010 presidential elections is "Without corrupt officials, there are no poor people."
Not surprisingly, the international financial institutions have weighed in. The World Bank has made "good governance" a major thrust of its work, asserting that the "World Bank Group focus on governance and anticorruption (GAC) follows from its mandate to reduce poverty — a capable and accountable state creates opportunities for poor people, provides better services, and improves development outcomes."
Because it erodes trust in government, corruption must certainly be condemned and corrupt officials resolutely prosecuted. Corruption also weakens the moral bonds of civil society on which democratic practices and processes rest. But although research suggests it has some bearing on the spread of poverty, corruption is not the principal cause of poverty and economic stagnation, popular opinion notwithstanding.
World Bank and Transparency International data show that the Philippines and China exhibit the same level of corruption, yet China grew by 10.3 percent per year between 1990 and 2000, while the Philippines grew by only 3.3 percent. Moreover, as a recent study by Shaomin Lee and Judy Wu shows, "China is not alone; there are other countries that have relatively high corruption and high growth rates."
Limits of a Hegemonic Narrative
The "corruption-causes-poverty narrative" has become so hegemonic that it has often marginalized policy issues from political discourse. This narrative appeals to the elite and middle class, which dominate the shaping of public opinion. It's also a safe language of political competition among politicians. Political leaders can deploy accusations of corruption against one another for electoral effect without resorting to the destabilizing discourse of class.
Yet this narrative of corruption has increasingly less appeal for the poorer classes. Despite the corruption that marked his reign, Joseph Estrada is running a respectable third in the presidential contest in the Philippines, with solid support among many urban poor communities. But it is perhaps in Thailand where lower classes have most decisively rejected the corruption discourse, which the elites and Bangkok-based middle class deployed to oust Thaksin Shinawatra from the premiership in 2006.
While in power, Thaksin brazenly used his office to enlarge his corporate empire. But the rural masses and urban lower classes — the base of the so-called "Red Shirts" — have ignored this corruption and are fighting to restore his coalition to power. They remember the Thaksin period from 2001 to 2006 as a golden time. Thailand recovered from the Asian financial crisis after Thaksin kicked out the International Monetary Fund (IMF), and the Thai leader promoted expansionary policies with a redistributive dimension, such as cheap universal health care, a one-million-baht development fund for each town, and a moratorium on farmers' servicing of their debt. These policies made a difference in their lives.
Thaksin's Red Shirts are probably right in their implicit assessment that pro-people policies are more decisive than corruption when it comes to addressing poverty. Indeed, in Thailand and elsewhere, clean-cut technocrats have probably been responsible for greater poverty than the most corrupt politicians. The corruption-causes-poverty discourse is no doubt popular with elites and international financial institutions because it serves as a smokescreen for the structural causes of poverty, and stagnation and wrong policy choices of the more transparent technocrats.
The Philippine Case
The case of the Philippines since 1986 illustrates the greater explanatory power of the "wrong-policy narrative" than the corruption narrative. According to an ahistorical narrative, massive corruption suffocated the promise of the post-Marcos democratic republic. In contrast, the wrong-policy narrative locates the key causes of Philippine underdevelopment and poverty in historical events and developments.
The complex of policies that pushed the Philippines into the economic quagmire over the last 30 years can be summed up by a formidable term: structural adjustment. Also known as neoliberal restructuring, it involves prioritizing debt repayment, conservative macroeconomic management, huge cutbacks in government spending, trade and financial liberalization, privatization and deregulation, and export-oriented production. Structural adjustment came to the Philippines courtesy of the World Bank, the IMF, and the World Trade Organization (WTO), but local technocrats and economists internalized and disseminated the doctrine.
Corazon Aquino was personally honest — indeed the epitome of non-corruption — and her contribution to the reestablishment of democracy was indispensable. But her acceptance of the IMF's demand to prioritize debt repayment over development brought about a decade of stagnation and continuing poverty. Interest payments as a percentage of total government expenditures went from 7 percent in 1980 to 28 percent in 1994. Capital expenditures, on the other hand, plunged from 26 percent to 16 percent. Since government is the biggest investor in the Philippines — indeed in any economy — the radical stripping away of capital expenditures helps explain the stagnant 1 percent average yearly growth in gross domestic product in the 1980s, and the 2.3 percent rate in the first half of the 1990s.
In contrast, the Philippines' Southeast Asian neighbors ignored the IMF's prescriptions. They limited debt servicing while ramping up government capital expenditures in support of growth. Not surprisingly, they grew by 6 to 10 percent from 1985 to 1995, attracting massive Japanese investment, while the Philippines barely grew and gained the reputation of a depressed market that repelled investors.
When Aquino's successor, Fidel Ramos, came to power in 1992, the main agenda of his technocrats was to bring down all tariffs to 0–5 percent and bring the Philippines into the WTO and the ASEAN Free Trade Area (AFTA), moves intended to make trade liberalization irreversible. A pick-up in the growth rate in the early years of Ramos sparked hope, but the green shoots were short-lived. Another neoliberal policy, financial liberalization, crushed this early promise. The elimination of foreign exchange controls and speculative investment restrictions attracted billions of dollars from 1993-1997. But this also meant that when panic hit Asian foreign investors in summer 1997, the same lack of capital controls facilitated the stampede of billions of dollars from the country in a few short weeks. This capital flight pushed the economy into recession and stagnation in the next few years.
The administration of the next president, Joseph Estrada, did not reverse course, and under the presidency of Gloria Macapagal Arroyo, neoliberal policies continued to reign. Over the next few years, the Philippine government instituted new liberalization measures on the trade front, entering into free-trade agreements with Japan and China despite clear evidence that trade liberalization was destroying the two pillars of the economy: industry and agriculture. Radical unilateral trade liberalization severely destabilized the Philippine manufacturing sector. The number of textile and garments firms, for instance, drastically reduced from 200 in 1970 to 10 in recent years. As one of Arroyo's finance secretaries admitted, "There's an uneven implementation of trade liberalization, which was to our disadvantage." While he speculated that consumers might have benefited from the tariff liberalization, he acknowledged that "it has killed so many local industries."
As for agriculture, the liberalization of the country's agricultural trade after the country joined the WTO in 1995 transformed the Philippines from a net food-exporting country into a net food-importing country after the mid-1990s. This year the China ASEAN Trade Agreement (CAFTA), negotiated by the Arroyo administration, goes into effect, and the prospect of cheap Chinese produce flooding the Philippines has made Filipino vegetable farmers fatalistic about their survival.
During the long Arroyo reign, the debt-repayment-oriented macroeconomic management policy that came with structural adjustment stifled the economy. With 20-25 percent of the national budget reserved for debt service payments because of the draconian Automatic Appropriations Law, government finances were in a state of permanent and widening deficit, which the administration tried to solve by contracting more loans. Indeed, the Arroyo administration contracted more loans than the previous three administrations combined.
When the deficit reached gargantuan proportions, the government refused to declare a debt moratorium or at least renegotiate debt repayment terms to make them less punitive. At the same time, the administration did not have the political will to force the rich to take the brunt of bridging the deficit, by increasing taxes on their income and improving revenue collection. Under pressure from the IMF, the government levied this burden on the poor and the middle class by adopting an expanded value added tax (EVAT) of 12 percent on purchases. Commercial establishments passed on this tax to poor and middle-class consumers, forcing them to cut back on consumption. This then boomeranged back on small merchants and entrepreneurs in the form of reduced profits, forcing many out of business.
The straitjacket of conservative macroeconomic management, trade and financial liberalization, as well as a subservient debt policy, kept the economy from expanding significantly. As a result, the percentage of the population living in poverty increased from 30 to 33 percent between 2003 and 2006, according to World Bank figures. By 2006, there were more poor people in the Philippines than at any other time in the country's history.
Policy and Poverty in the Third World
The Philippine story is paradigmatic. Many countries in Latin America, Africa, and Asia saw the same story unfold. Taking advantage of the Third World debt crisis, the IMF and the World Bank imposed structural adjustment in over 70 developing countries in the course of the 1980s. Trade liberalization followed adjustment in the 1990s as the WTO, and later rich countries, dragooned developing countries into free-trade agreements.
Because of this trade liberalization, gains in economic growth and poverty reduction posted by developing countries in the 1960s and 1970s had disappeared by the 1980s and 1990s. In practically all structurally adjusted countries, trade liberalization wiped out huge swathes of industry, and countries enjoying a surplus in agricultural trade became deficit countries. By the beginning of the millennium, the number of people living in extreme poverty had increased globally by 28 million from the decade before. The number of poor increased in Latin America and the Caribbean, Central and Eastern Europe, the Arab states, and sub-Saharan Africa. The reduction in the number of the world's poor mainly occurred in China and countries in East Asia, which spurned structural readjustment policies and trade liberalization multilateral institutions and local neoliberal technocrats imposed other developing economies.
China and the rapidly growing newly industrializing countries of East and Southeast Asia, where most of the global reduction in poverty took place, were marked by high degrees of corruption. The decisive difference between their performance and that of countries subjected to structural adjustment was not corruption but economic policy.
Despite its malign effect on democracy and civil society, corruption is not the main cause of poverty. The "anti poverty, anti-corruption" crusades that so enamor the middle classes and the World Bank will not meet the challenge of poverty. Bad economic policies create and entrench poverty. Unless and until we reverse the policies of structural adjustment, trade liberalization, and conservative macroeconomic management, we will not escape the poverty trap.
Walden Bello is a member of the Philippine House of Representatives, president of the Freedom from Debt Coalition, and a senior analyst of the Bangkok-based Focus on the Global South. He is the author of The Food Wars.
http://www.counterpunch.org/bello04302010.html

POVERTY: Argentina's experience

When Argentinians watch the news today and see the terrible things that are happening in Greece, we cannot but say, “Hey!! This is EXACTLY like Argentina in December 2001 and beginning of 2002…!”. Then too, Argentina underwent its worst systemic banking, public debt and monetary collapse which led to social turmoil, mad violence, rioting, and social war. The turmoil was so bad, that it forced then president Fernando de la Rúa’s government to resign, especially because of his notorious pro-banker cartel economy minister, Domingo Cavallo, generating a political vacuum that led to Argentina having 5 (five!!) presidents in that terrible last week of December 2001.
What triggered social chaos in Argentina was the attempt by president De la Rúa to implement the grossly unjust austerity measures imposed by the IMF that required, as usual, utmost sacrifice from the people – more taxes, less social spending, “balanced budgets”, zero deficit spending, amongst other anti-social measures – which led to a fall of almost 40% in Argentina’s GDP.
Half of all Argentinians fell below the poverty line (most were never to make it back to the traditional Argentina middle class), private banks were allowed to legally retain everybody’s savings, US dollar deposits were arbitrarily changed into Pesos at whatever rate of exchange the government and bankers decided (the dollar was devalued 300% from one peso to the dollar, to 4 pesos the dollar in just weeks) and yet…. Not one bank fell!!! Indeed, since then they’re all back in “business as usual”, however the poor and impoverished are today totally out of business…
Throughout 25 years of successive caretaker governments in Argentina, the IMF-led Global Banking Cartel artificially generated a basically illegal – or at best, illegitimate – Sovereign Debt that grew so huge, that it ended up collapsing the entire financial and economic system. That was no coincidence. It was part of a highly complex model, engineered to control entire countries, through a cycle having sequential stages and identifiable parts that has one basic overriding goal: when the finance economy is fueled to run in an artificial “growth mode”, the bulk of all profits are privatized into the hands of their “friends”, managers and operators. However, when the whole scheme – like all Ponzi schemes - reaches its climax and total collapse is at hand, they revert the process and then socialize all losses. (See video “Global Financial Collapse”, Parts 1 and 2, below.)
That’s what Mr. Cavallo - a Rockefeller protégé - achieved, ensuring that the Argentine people bore all the losses, whilst the international banksters took all the profits. The mainstream media – both global and local – willingly obliged; The New York Times went so far as to suggest that the entire Patagonian region (i.e., the 5 southern provinces of Argentina accounting for 35% of Argentina’s territory and having immeasurable energy, mining, foodstuff, water resource wealth), should secede from the rest of the country as a way of “resolving our foreign debt woes…”
http://beforeitsnews.com/news/44/819/Argentina_to_Greece:_Default_and_Poverty_Ahead,_Our_Sympathies_to_You.html

POVERTY: Criticism of "Feed the Future Initiative"

The Obama Administration just released its feed the future initiative, promising $3.5 billion in agricultural funding for development. Those looking for a host of impressive buzzwords will be starry-eyed with countless calls for transparency, stake-holder consultation and some strange variety of “country ownership”.
Nonethelss, those who were hoping for a new line towards food security in the global south will be sorely disappointed. For all of its talk on country ownership, FTF relies heavily on the old “good governance” rhetoric, singling out recipients who meet the macroeconomic demands of Bretton Woods. For instance, one of the benchmarks for who gets the aid is the Poverty Reduction Strategy (PRS) process, which outlines national poverty reduction policies, but requires full approval from the IMF. So national ownership kind of goes out the window.
FTF contains a small blurb about increasing the agricultural capacity of women farmers, but any sort of substantial plan on this front remains lacking at best. The most we could gleam was a promise to “integrate gender concerns” into the processes. Sadly, the talk here still is on creating larger bureaucracies to ensure compliance with Bretton Woods conditionality rather than promote any sort of direct investment in agriculture or women-producers.
http://themicroloanfoundation.wordpress.com/author/themicroloanfoundation/