Covid-19 to impoverish 120 million middle-income earners – UN chief
By Nkosana Dlamini
At least 120 million world citizens in the middle-income bracket are set to drop into the poor category due to the acute effects of the Covid-19 strain.
This was said by United Nations general secretary António Guterres in a passionate plea to richer G20 member countries to extend an economic lifeline to countries teetering on the verge of debt default mostly caused by their channelling of resources to fighting Covid-19 in their respective territories.
G20 finance officials meet in Venice this July 9-10, amid growing alarm about a looming debt crisis.
Said the UN chief, “Rich countries have poured the equivalent of 28 percent of their GDP into weathering the COVID-19 crisis.
“In middle-income countries, this figure drops to 6.5 percent; in least developed countries, to less than 2 percent.
“Many developing countries now face crippling debt service costs, at a time when their domestic budgets are stretched and their ability to raise taxes is reduced.”
He added, “The pandemic is set to increase the number of extremely poor people by some 120 million around the world; more than three-quarters of these ‘new poor’ are in middle-income countries.
“These countries need a helping hand to avoid financial catastrophe, and to invest in a strong recovery.”
Guterres said the International Monetary Fund has stepped in to allocate $650 billion in Special Drawing Rights – the best way to increase the funds available to cash-strapped economies.
“Richer countries should channel their unused shares of these funds to low and middle-income countries. That is a meaningful measure of solidarity.
“I welcome steps the G20 has already taken, including the Debt Service Suspension Initiative and Common Framework for Debt Treatment. But they are not sufficient.
“Debt relief must be extended to all middle-income countries that need it. And private lenders must also be brought into the equation,” he said.