Large corporations are the great beneficiaries of the aid systems implemented to reactivate the economy after the COVID-19 pandemic in emerging countries such as Colombia, Costa Rica or Ecuador, according to an NGO organization reported on Wednesday.
According to the report, prepared by the Financial Transparency Coalition (FTC), emerging countries have allocated on average about 40% of their economic recovery aid to large corporations, setting aside a small proportion to finance social coverage measures.
“Despite the accusation of living, governments in emerging countries, with their hands tied through foreign monetary institutions, do great business for their people,” FTC Director Matti Kohonen said in a statement.
The proportion is even more unbalanced in some countries, according to the FTC, citing Nicaragua, where 87% of aid has gone to giant corporations and only 13% to social systems, Zambia or Uganda.
In other countries, the contrast is also striking: 41% of giant corporations benefited in Costa Rica, to 25% for social protection; 50% in Colombia, 9% for social programs; and 39 cents in Ecuador, with 25 cents for social assistance. In Argentina it is more egalitarian: 37% for social systems and 36% for giant corporations.
On the other hand, 8 of the 21 countries allocate more than a part of their aid to social policies, adding Brazil (58%), Chile (51%), Guatemala (51%) and El Salvador (54%). Others, such as India and Malawi, allocated more than 85 in line with the cent.
This support has also benefited women much less, who earn as much share on average as men, in particular because of the limited number of casual workers.
As a result, between 75 and 95 million more people will have fallen into extreme poverty by the end of this year, the report says, noting that spfining, which already fell between 2021 and 2020, will fall again in 2022.
The report warns that pressure from foreign institutions such as the International Monetary Fund (IMF) to introduce austerity measures and cut investment for the critical public in exchange for debt restructuring makes matters worse.
Several countries “are cutting essential spending on health, education and social coverage because they are short of cash due to the slowdown in economic expansion and in the face of strict lending criteria from the IMF and other institutions,” Kohonen said.
Therefore, the FTC urges the IMF, which will hold its annual meetings in mid-October, and the World Bank to announce public support policies (including through the promotion of progressive income taxes or taxing gigantic profits) and to fight illicit monetary flows.