Fiscal holes and black holes threaten MDGs

A just published report for Oxfam by Development Finance International, The Impact of the Global Financial Crisis on the Budgets of Low-Income Countries, examines the impact of the global financial crisis on the budgets of low-income countries, especially their spending to reach the Millennium Development Goals (MDG). The crisis created a huge budget revenue hole of $65bn, of which aid has filled only one-third. As a result, after some fiscal stimulus to combat the crisis in 2009, most Low income Countries (LIC) (including those with IMF programs) are cutting MDG spending, especially on education and social protection. They have also had to borrow expensive domestic loans, and increase anti-poor sales taxes. Almost all LICs could absorb much more aid without negative economic consequences (whereas they have much less space to borrow or to raise taxes).

The report therefore urges the international community to make strong new aid commitments at the Millennium Summit in September 2010, funded by financial transaction taxes or other innovative financing:

* the IMF to encourage LICs to spend more on MDG goals and on combating climate change and to report regularly on such spending;
* and LIC governments to increase spending on social protection and education; taxation of income; property and foreign investors; and efforts to fight tax avoidance.

The authors of the report, Katerina Kyrili and Matthew Martin from Development Finance International warn: “If these changes are not made, the fiscal hole caused by the crisis risks becoming a ‘black hole’ into which the MDGs, and the lives and education of many of the world’s poorest citizens, will disappear.“

UN Summit should endorse financial transactions tax

The International Trade Union Federation (ITUC) is calling on governments to commit to introducing a financial transactions tax (FTT) at September’s United Nations Development Summit to help tackle global poverty and accelerate action on jobs and climate change. The UN Summit, to review progress on the Millennium Development Goals (MDGs), will take place against a background of growing global unemployment and inequality and major set-backs on economic development in countries across the globe. An FTT could raise between US$200bn and US$900bn depending on the way it is structured and the level at which it is set, according to the ITUC submission which is being sent by its national affiliates to governments in preparation for the Summit. Even a small percentage of the funds raised by an FTT would help put in place a social protection floor, which would give a major boost to tackling poverty. The submission sets out the case for putting an FTT at the centre of an overall package of measures which would also tackle corporate tax evasion and ensure effective regulation of banks and finance.

According to the trade union body, instead of simply focusing on spending cuts, governments need to increase revenues to ensure employment, public services and development aid. Parts of the finance sector are awash with money, just two years after taxpayers had to bail out poorly regulated banks. An FTT would not solve all the world’s problems, but it would certainly be a good starting point by moving capital from speculative profiteering to kick-starting the real economy and helping avoid a double-dip recession which would have horrendous consequences for the poorest countries in particular, trade unionists say.

HIV and AIDS: Trade unions press for rights-based approach to combat pandemic

International trade union movement is calling for governments to push ahead with a rights-based approach to tackling the HIV and AIDS pandemic, following the 18th International AIDS Conference in Vienna at the end of July. “While there are some positive signs concerning HIV and AIDS prevalence in some countries, millions of HIV-positive people have no access to treatment, millions more are at high risk of infection and there are disturbing signs of increasing incidence in several countries. We have to overcome the stigma and discrimination which are still common around the globe, and allocate sufficient resources to stop the spread of the virus and ensure that treatment is available to all those affected. We are especially concerned that the global economic crisis, and cuts to public expenditure on health in particular could undermine the progress which has been made,” said ITUC General Secretary Sharan Burrow.

Stressing the importance of action at the workplace in fighting the pandemic, the trade union delegation at the Vienna Conference highlighted the adoption of a Recommendation on HIV-AIDS and the World of Work by the ILO at its June Conference this year. The ILO Recommendation, the first ever international human rights instrument to focus explicitly on HIV and AIDS and the world of work, was adopted by an overwhelming majority of ILO delegates. It clearly establishes the importance of action at the workplace, including voluntary testing and counselling protection against discrimination, and focuses on the need for engagement with those most vulnerable and at risk.

Trade union participants from the ITUC, Global Union Federations and national representatives from across the world, including Argentina, Cameroon, Canada, Cote d’Ivoire, Ghana, Guyana, Kenya, Nigeria, the Philippines, Tanzania, Uganda, the UK, Ukraine and Zimbabwe joined the ITUC’s Austrian affiliate the OeGB which hosted the trade union delegation to the Vienna Conference, which was attended by more than 20,000 participants in total.

For further information:
* Global Unions AIDS Programme (GUAP), Statement to the Vienna AIDS Conference