Dorset – International charity Oxfam released a statement citing a report that outlines the devastating effects the COVID-19 crisis could have on the world economy. The United Nations University (UNU-Wider) report, conducted at King’s College London and the Australian National University, said the novel coronavirus lockdown could push the MENA economy back 30 years.
The UNU-Wider research paper found that continued lockdowns would hit the MENA region and sub-Saharan Africa the hardest, leading to a 20% drop in average income and pushing 548 million people into poverty. The report uses three World Bank poverty classifications, including the extreme poverty line of $1.20 per day.
Oxfam also reported that, by the end of the pandemic, the UNU-Wider research suggests over half of the world’s 7.8 billion people will be living in poverty.
The pandemic’s devastating economic fallout is now felt across the globe. “For poor people in poor countries who are already struggling to survive, there are almost no safety nets” to stop them falling into destitution, said Oxfam’s international interim executive director Jose Maria Vera.
The international charity has called on developed countries to help bail out more vulnerable states whose economies are further weakening with the coronavirus lockdown.
“G20 finance ministers, the IMF and the World Bank must give developing countries an immediate cash injection to help them bail out poor and vulnerable communities,” Vera said.
Following the release of the research report, Oxfam is set to meet via video conference with representatives from the World Bank and the International Monetary Fund (IMF), as well as finance ministers from the G20 countries to discuss a possible stimulus package for struggling states in sub-Saharan Africa and the MENA region.
The meetings will look at the possibility of giving additional funds to the IMF to support an emergency fund based on special drawing rights (SDRs).
SDRs are a unique form of currency that countries with vulnerable economies can borrow to bolster job creation and support their populations. Oxfam’s proposal would mean that governments could give grants to small and medium enterprises (SMEs) and entrepreneurs to support job creation.
The proposal also includes cancelling $1 trillion SDR in government debt for MENA and sub-Saharan African states.
Morocco and the IMF
The Moroccan government is well aware of the effects the lockdown will have on its economy and has already put in place a range of mechanisms to cushion the economic shock and prevent the population from falling into poverty.
The European Investment Bank Group (EIB) announced yesterday, April 8, plans to support Morocco’s private sector with credit lines to the tune of €440 million.
The credit line, the EIB said in a press release, will bolster SMEs from the effects of the pandemic and aims to “support the implementation of projects that can help Moroccans concretely and quickly fight on a daily basis the COVID-19 both economically and at the health level.”
EIB’s investment in Morocco comes as part of the “Team Europe” network set up by the European commission. “Team Europe” is designed to help non-European countries to battle the economic effects of the pandemic.
Meanwhile, Morocco announced on April 8 that it has taken a $3 billion credit line from the IMF. The credit line is a five year loan and the government will not have to begin repayments for three years.
Morocco’s Central Bank said the credit line will “soften the impact of the (coronavirus) crisis on our economy and maintain our exchange reserves at an adequate level.”
A statement from the IMF explained that Morocco will “use funds purchased under the PLL (Precautionary and Liquidity Line) to cope with the social and economic impact of COVID-19 and to maintain strong external buffers in a context of heightened uncertainties.”
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