The Financial Transparency Coalition (FTC) denounces that the World Bank and the International Monetary Fund are imposing an ideology that increases inequality by favoring the rich over the poor in helping to restore economies after the COVID-19 pandemic.
Large companies are the main beneficiaries of aid programs set to revitalize the economy after the COVID-19 pandemic in developing countries such as Colombia, Costa Rica or Ecuador, according to a report published by a group of NGOs on Wednesday.
According to the report, prepared by the Financial Transparency Alliance (FTC), developing countries on average allocated nearly 40% of their aid to the economic recovery of large corporations, while keeping a barely equal proportion for financing social protection measures.
“Despite the cost of living, governments in developing countries, often tied to their hands by international financial institutions, put big companies before their people,” Federal Trade Commission Director Matti Kohonen said in a statement.
The proportion is more unbalanced in some countries, according to the Federal Trade Commission, which cites in particular Nicaragua — a country where 87% of aid has benefited large corporations compared to just 13% for social programs — or Zambia or Uganda.
In other cases, the discrepancy is also striking: 41% of Costa Rica’s large corporations benefit, against 25% for social protection; 50% in Colombia, compared to 9% socially and 39% in Ecuador, compared to 25% in social assistance. In Argentina, it is more equal: 37% for social programs and 36% for large companies.
By contrast, only eight of the 21 countries dedicate more than half of their aid to social policies, including Brazil (58%), Chile (51%), Guatemala (51%) or El Salvador (54%). Others even allocated more than 85%, such as India or Malawi.
This assistance also benefits women much less, who receive on average half as much as men, particularly because of the lack of support given to informal workers.
As a result, between 75 and 95 million people will have fallen into extreme poverty by the end of this year, says the report, which confirms that spending, already reduced in 2021 compared to 2020, will decline again in 2022.
The report warns that pressure from international institutions such as the International Monetary Fund to introduce austerity measures and cut funding for basic public services in exchange for debt restructuring is making matters worse.
Many countries are “considering making cuts to basic spending on health, education and social protection as they run out of money due to low economic growth and face the stringent credit standards of the IMF and other institutions,” Cohonen says.
Therefore, the Federal Trade Commission urges the International Monetary Fund, which will hold its annual meeting in mid-October, and the World Bank to strengthen policies aimed at strengthening support for the population (particularly by encouraging the introduction of a progressive income tax or by taxing large profits) and combating moves illicit finances.
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