Over 250 million people could face extreme poverty by 2022-end

Extreme inequality and high food and energy prices, combined with the COVID-19 pandemic and the conflict in Ukraine are going to create a disaster for the world's poorest people. This could push over 250 million people across the world into extreme poverty in 2022, a report by Oxfam, an organisation concentrating on the alleviation of global poverty, has said.

The Oxfam report, titled "First Crisis, Then Catastrophe", has estimated that an additional 263 million people could be living in extreme poverty by the end of 2022. The numbers equate to the combined population of the UK, Spain, France, and Germany.

The estimates have been built on the projections of the World Bank and prior research conducted by the Center for Global Development on food price inflation. The World Bank had earlier projected that rising inequality and the coronavirus pandemic would result in the addition of 198 million people to the list of extremely poor in 2022, reversing 20 years of progress in the fight against poverty. Now, Oxfam’s latest estimation has added 65 million more people to the World Bank's projection due to the rising global food prices. That means by the end of the year, 860 million people could be living below the $1.90 per day, a level defined as extreme poverty level by the World Bank.

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As per Oxfam, ordinary people, many of whom faced severe hardships during the coronavirus pandemic, are now dealing with the huge spike in food prices. In February 2022, global food prices reached an all-time high, overtaking the food crisis of 2011. Millions of families are now forced to make impossible choices, like choosing between eating, paying medical bills, or sending their kids to school.

On the other hand, billionaires’ wealth saw the biggest rise ever during COVID-19, which was more than the last 14 years combined. The brief is that huge corporations seem to be exploiting the inflationary environment to amplify their gains. Oil and gas companies have made huge profits, while the food and beverage sector is following the suit.

Underlining that all people are impacted by the crises in some way, Oxfam said that the poor are the ones being hit the hardest. In wealthy countries, consumer spending on rising food costs stands at 17%, while it is 40% in Sub-Saharan Africa. The impact of the disparity is visible even in rich and developed countries like the United States, where the poorest 20% of families spend 27% of their income on food, compared to the richest 20%, who spend only 7%.

Moreover, poor nations are being pushed deeper into poverty as they are forced to reduce public spending to be able to import food and fuel and pay their creditors. The world's poorest countries, according to Oxfam, will owe $43 billion in debt repayments in 2022.

What needs to be done?

Oxfam has called for bold and coordinated action to tackle the crisis threatening to reverse the progress made in the fight against poverty. The brief, which came ahead of a key meeting of the World Bank and the IMF in Washington DC next week, said that the responsibility to prevent a catastrophe of poverty lies upon the richest countries who will come together at the G-20, along with the World Bank and IMF.

As part of the measures, the aid agency has urged the governments to control food and energy prices directly and create a Global Fund for Social Protection to assist low-income countries. It has also called for the cancellation of unpayable debts in 2022 and 2023 to poorer countries that need it.

It further sought the introduction of one-off wealth taxes on high incomes, citing the example of Argentina, which imposed a special 'millionaire's tax' that has brought in about $2.4 billion to pay for coronavirus measures.