85% of the World Will Likely Live Under “Deadly” Austerity Measures Next Year

The world is barreling toward an austerity pandemic.

With countries across the globe facing major costs-of-living crises and looming recessions as prices remain high and central banks rush to slow economic demand, an analysis published Wednesday estimates that 85% of the world population will be living under austerity measures by next year as tens of millions face hunger, homelessness, and health crises.

The work of a coalition of civil society organizations, the new report finds that “a long list of austerity measures is being considered or already implemented by governments worldwide,” including budget cuts targeting key social programs, privatization of public services, and wage caps for teachers, healthcare workers, and others.

In all, the report shows that 143 countries — 94 of which are developing nations — are pursuing austerity, often at the urging of the International Monetary Fund (IMF), which has imposed punishing loan terms on low-income countries throughout the coronavirus pandemic.

“Despite the cost-of-living crisis, governments in developing countries, often with their hands tied by international financial institutions, are putting big corporations ahead of the people,” said Matti Kohonen, director of the Financial Transparency Coalition. “Nearly 40% of Covid-19 recovery funds went to big companies, meaning that those most impacted by the pandemic have been left behind.”

The analysis — titled End Austerity: A Global Report on Budget Cuts and Harmful Social Reforms — notes that the IMF and other global financial institutions often recommend targeting social programs only to the extremely poor in an attempt to justify budget cuts, “a typical neoliberal policy” with damaging impacts that have frequently spurred mass uprisings.

The report observes that “targeting to the poorest populations for cost-saving purposes is discussed in 32 high-income and 88 developing countries.” That list includes the United States, where Republicans are vowing to impose spending cuts and other austerity measures — including attacks on beloved programs such as Social Security and Medicare — if they win control of Congress in the November midterms.

Aggressive means-testing “is often justified as an ‘improvement,’ including in many low- and lower-middle-income countries such as Central African Republic, Eswatini, Gambia, Guatemala, Haiti, Honduras, Liberia, Mozambique, Sierra Leone, Somalia, Togo, and Uganda, where the majority of the population lives below the poverty line,” the report continues. “Especially in these contexts, the targeting rationale is very weak; given the large number of vulnerable households, universal policies better serve developmental objectives.”

The analysis finds that roughly 134 governments began to scale back social spending in 2021 even as the Covid-19 pandemic continued to wreak havoc and millions were plunged into poverty or unable to afford basic necessities.

“The number of countries adopting budget cuts expected to rise through 2025,” the report warns. “In terms of regions, Europe and Central Asia had the highest proportion of countries contracting expenditure in 2021 (42 out of 49 countries, or 86%). Most other regions were close behind, ranging between 70% and 80% of countries affected, including the Middle East and North Africa.”

Isabel Ortiz, director of the Global Social Justice Program at the Initiative for Policy Dialogue and a co-author of the new report, said that “decisions on budget cuts affect the lives of millions of people and should not be taken behind closed doors by a few technocrats at a Ministry of Finance, with the support of the IMF.”

“Policies must instead be agreed transparently in a national social dialogue, negotiating with trade unions, employer federations, and civil society organizations,” said Ortiz. “Austerity cuts are not inevitable; in fact our report presents nine financing alternatives that are available, even to the poorest countries,” including tax increases targeting the wealthy, elimination of “illicit financial flows,” and debt restructuring or elimination.

Around 6.7 billion people are expected to feel austerity’s impacts in 2023, with the impacts falling disproportionately on the poor and other vulnerable populations, including those who could be thrown out of work as the U.S. Federal Reserve and other central banks hike interest rates — widely criticized policy decisions with global implications.

“In the worst of times, austerity is the worst possible choice. It should not even be on the agenda,” argued Nabil Abdo, Oxfam International’s senior policy adviser. “Austerity is designed to dismantle public healthcare and education and labor regulations. It enriches the wealthy and big corporations at the expense of the rest of us. Choosing austerity over many other ways to reduce deficits or even boost budget revenues, like taxing wealth and windfall profits, is not only economically disastrous — it’s deadly.”

The report’s publication coincides with the launch of the global End Austerity campaign, an effort that aims to harness widespread opposition to budget cuts and other damaging policy moves to “put an end to the global austerity wave threatening 6 billion people and undermining efforts to achieve equality, social and gender justice, and sustainable development goals worldwide.”

“This austerity recipe has been tried and failed many times, and only inflicted hardship and pain on populations all over the world, supercharging the inequality crisis,” the campaign’s website declares. “The system is broken, people are worse-off while corporations and the wealthy are getting richer every day. We must #EndAusterity and rise up for a #PeoplesRecovery.”