[Peace] Fwd: [recovery_human_face] Austerity, the "new normal."

[Karen Aram]

Reply-To: recoveryhumanface at socpro.list.ilo.org<mailto:recoveryhumanface at socpro.list.ilo.org>, "Isabel Ortiz" <isabel.ortiz at ymail.com<mailto:isabel.ortiz at ymail.com>>

Dear friends,

We have launched a new update on austerity at the IMF: ”Austerity, The New Normal: A Renewed Washington Consensus 2010-24”
http://policydialogue.org/files/publications/papers/Austerity-the-New-Normal-Ortiz-Cummins-6-Oct-2019.pdf

The report, published by IPD, ITUC, PSI, EURODAD and the Breton Woods Project: (i) examines historical and projected government expenditure trends for 189 countries; (ii) reviews the latest IMF country reports for countries to identify the main channels used by governments to adjust expenditures; (iii) discusses the negative social impacts of austerity measures; (iv) presents the renewed Washington Consensus advised to governments that are left with limited budgets—and the alternative UN Consensus on Development for All; and (v) calls for urgent action by governments to identify fiscal space to accelerate development, human rights, a green recovery with jobs and inclusive growth, and progress towards the Sustainable Development Goals (SDGs).


While this week Ministers of Finance and economists meet in Washington to confront global economic challenges at the IMF and World Bank Annual Meetings<https://meetings.imf.org/en/2019/Annual>, the majority of the world population lives with austerity cuts and see their living standards deteriorating. World leaders must reverse this trend.

Summary:


•       Since 2010, governments have been cutting public expenditure. According to IMF fiscal projections, a new shock is to start in 2020-21, affecting 130 countries. Rather than investing in a robust recovery to bring prosperity to citizens, austerity has become the “new normal.”

•       As many as 69 countries will be undergoing excessive contraction, cutting expenditure below pre-crisis levels in terms of GDP, including countries with dire development and human needs such as Angola, Burundi, Congo, Djibouti, Egypt, Eritrea, Ethiopia, Iraq, Jamaica, Jordan, Nigeria or Yemen.

•       Austerity will affect approximately 5.8 billion persons by 2021—about 75 per cent of the global population. For billions of persons, the persistence of a long jobs crisis and austerity mean a deterioration of living conditions, rising inequalities and social discontent.

•       Analysis of IMF country reports in 161 countries in 2018-19 show that IMF policy discussions with government include:

  *   Pension and social security reforms (86 countries),
  *   Cutting or capping the public sector wage bill, including the number and salaries of teachers, health workers and civil servants delivering public services (80 countries)
  *   Labor flexibilization reforms (79 countries)
  *   Reducing or eliminating subsidies (78 countries)
  *   Rationalizing and/or further targeting social assistance or safety nets (77 countries)
  *   Increasing regressive consumption taxes, such as sales and value added taxes (73 countries)
  *   Strengthening public-private partnerships (PPPs) (60 countries)
  *   Privatizing public assets/services (59 countries)
  *   Healthcare reforms (33 countries) – all these reforms have NEGATIVE SOCIAL IMPACTS

•       Further, public expenditure adjustment is being used as a trojan horse to induce Washington Consensus policies to cut back on public policies and the welfare state. Once budgets are contracting, governments must look at policies that minimize the public sector and expand PPPs and private sector delivery, often promoted and/or assisted by multilateral development banks.

•       The paper presents the renewed Washington Consensus advised to governments that are left with limited budgets—and the alternative UN Consensus on Development for All

•       Austerity and budget cuts do not need to be “the new normal.” There are alternatives, even in the poorest countries. Governments can find additional fiscal space to fund public services and development policies through at least eight options<https://www.social-protection.org/gimi/RessourcePDF.action?ressource.ressourceId=51537>, which range from increasing progressive tax revenues, cracking down on illicit financial flows, improving debt management and using fiscal and foreign exchange reserves, to adopting more accommodative macroeconomic frameworks, reprioritizing public expenditures and -for lower income countries- lobbying for greater aid. All these options are endorsed by the United Nations and the international financial institutions.

•       It is time for world leaders to abandon the myopic scope of macroeconomic and fiscal policy decisions that benefit few and, instead, look for new fiscal space and financing opportunities to foster a robust global recovery and the achievement of long-term global prosperity for all.


Press articles:
IPS: Austerity, the “New Normal”<http://www.ipsnews.net/2019/10/austerity-new-normal/>
Project Syndicate: The Insanity of Austerity<https://www.project-syndicate.org/onpoint/the-insanity-of-austerity-by-isabel-ortiz-and-matthew-cummins-2019-10>

Best,
Isabel and Matthew

Isabel Ortiz is Director of the Global Social Justice Program, Initiative for Policy Dialogue (IPD) at Columbia University, and former Director at the ILO and UNICEF.
Matthew Cummins is a senior economist who has worked at UNDP, UNICEF and the World Bank.

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Please share your inputs by e-mailing: recoveryhumanface at socpro.list.ilo.org<mailto:recoveryhumanface at socpro.list.ilo.org>. To see earlier messages http://www.recoveryhumanface.org/<https://urldefense.proofpoint.com/v2/url?u=http-3A__www.recoveryhumanface.org_&d=AwMFAg&c=-dg2m7zWuuDZ0MUcV7Sdqw&r=T63lC49deeX8uMRKw_QRo3PXHbWD4VbV4CgzRL07ISw&m=gViCw5wIW3-nlzqPC_o-YilhUy7NfUNTRKLHeIScAiM&s=inyRP2tarRY2zgkK-rWsMl8jrm9M9v31dVEidBmX-5I&e=>. This e-discussion is intended to facilitate the exchange of knowledge and ideas; the views expressed by contributors do not reflect the policies of ILO. The discussion is moderated by Isabel Ortiz, contact at isabel.ortiz at ymail.com<mailto:isabel.ortiz at ymail.com> . Subscribe<mailto:sympa at socpro.list.ilo.org?subject=SUBSCRIBE%20recoveryhumanface> ¦ Unsubscribe<mailto:sympa at socpro.list.ilo.org?subject=UNSUBSCRIBE%20recoveryhumanface>

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