News & Media

IMFC backs new trust to channel IMF Special Drawing Rights to vulnerable countries: Oxfam reaction

October 14, 2021

The International Monetary and Financial Committee (IMFC) gave its approval today to set up a new IMF-administered Resilience and Sustainability Trust (RST) that will allow wealthy nations to channel some of their Special Drawing Rights (SDRs) to more vulnerable countries. In response, Nadia Daar, Head of Oxfam International’s Washington DC Office, said:

“While it is positive that the RST will be accessible to a wide range of countries, including vulnerable middle-income countries hit hard by the COVID-19 pandemic, it is vital that the IMF deliver these funds on terms that are as close to grants as possible. It is unacceptable that the RST will likely hinge on countries having a separate IMF loan program in place, bound by conditions like freezing public sector wages and raising taxes on the poorest. Austerity measures like these will only worsen inequality and poverty. We want to see significant SDR channelling, but it must work for countries and communities on the receiving end.

“It is encouraging that the IMFC recognises the importance of helping countries address critical issues impacting their economies, including climate change and inequality. But if the IMF fails to assess and address the impacts of its own policies on inequality, it will hypocritically continue to lead countries down a long and painful path.”

Notes

Oxfam and Development Finance International’s Commitment to Reducing Inequality Index (CRII) shows that 14 out of 16 West African nations intend to cut their national budgets by a combined $26.8 billion over the next five years in an effort to partly plug the US$48.7 billion lost in 2020 alone across the entire region due to the pandemic. Such austerity has been encouraged by the IMF, through its COVID-19 loans.

Between March 1 2020 and March 15 2021, 85 percent of the IMF’s COVID-19 loans to 85 countries encouraged, and in some cases required, countries to pursue austerity measures in the aftermath of the crisis. Download “Adding Fuel to the Fire: How IMF Demands for Austerity will Drive Up Inequality Around the World”.

Oxfam was one of the first organisations to call for a new SDR issuance as part of a broader economic rescue plan when the crisis hit in 2020. Oxfam and 280 civil society organizations and academics called on the IMF and G20 for principles for fair channelling of SDRs.

COVID-19 recovery in West Africa is “austerity on steroids” and sets the region on a destructive path ahead: Oxfam

October 14, 2021

Austerity, spiralling debt and vaccine inequity will bring the inequality crisis to levels never reached before, reveals new index.

West African governments are planning to “slash and burn” their way out of COVID-19 induced economic loss, reveals new analysis from Oxfam and Development Finance International (DFI) today. The organizations are calling for an urgent change of course as West African governments are preparing their annual budgets and participating in the Annual Meetings of the World Bank and IMF, which are crucial discussions to focus the recovery on fighting inequality and poverty.

The Commitment to Reducing Inequality Index (CRII) shows that 14 out of 16 West African nations intend to cut their national budgets by a combined $26.8 billion over the next five years in an effort to partly plug the $48.7 billion lost in 2020 alone across the entire region due to the pandemic. Such austerity has been encouraged by the IMF, through its COVID-19 loans.

This massive raid on public finances could push millions more West Africans into poverty and hunger and potentially trigger the worst inequality crisis in decades. Women will be impacted more severely due to their very high concentration in low paid informal jobs and unpaid care work. Meanwhile, the collective net worth of West Africa’s three wealthiest men surged by $6.4 billion in the first 17 months of the pandemic ―enough to lift 18 million people out of extreme poverty.

“This plan is austerity on steroids,” said Oxfam’s West Africa Regional Director Assalama Dawalak Sidi. “Rather than investing toward a positive new future for the people of West Africa, the region’s governments are instead reaching back to a 1980s playbook ―despite it being a hugely discredited one. The danger is that these governments will cut their way into worsening poverty and skyrocketing inequality.”

“This comes at a time when the region has lost the equivalent of seven million jobs, infection rates are increasing, there is no vaccine in sight for the vast majority of people and the Sahel is facing one of its worst hunger crisis,” said Sidi. “This is not the time for governments to be ripping away the public goods, support and services that millions of people need.”

The index ranks 15-member states of the Economic Community of West African States and Mauritania (ECOWAS+) on their policies on public services, tax, workers’ rights, smallholder agriculture and pandemic response spending, all areas pivotal to reducing inequality and weathering the COVID-19 storm.

The index highlights that West African governments are again the least committed to reducing inequality in Africa. Most support measures in response to COVID-19 were temporary and did little to reduce inequality, while triggering a sharp increase in debt ―debt servicing in 2020-2021 will siphon off about 61.7 percent of government revenue in West Africa. The support programs have been replaced with austerity measures as COVID-19 infection rates are increasing in many countries of the region. Less than 4 percent of West Africans are fully vaccinated.

Sierra Leone ranks low (13th) on the index. Its government was trying to implement anti-inequality policies before COVID and sharply increased education and health spending. But large corporations pocketed 92 percent of government pandemic support funding, while only 1.5 percent was spent on social protection. Sierra Leone’s $860 million upcoming spending cuts (2022-26) are equivalent to two and a half times its annual healthcare budget.

Nigeria was the region’s worst performing country in tackling inequality going into the pandemic. Nigeria’s health budget (as a percentage of its overall budget) is the third lowest in the world (3.6 percent) and 40 percent of its population does not have access to healthcare services. Nigeria loses $2.9 billion a year from tax incentives to corporations but in 2021 increased value-added taxes (VAT), which apply to everyday products like food and clothing and fall disproportionately on poor people, from 5 percent to 7.5 percent.

Mali has the highest level of income equality among ECOWAS countries with a tax rate on the richest people that is 9% higher than the world average. But it ranks last on healthcare spending, devoting less than 5 percent of its annual budget on health. Nearly 38 percent of Mali’s population (8 million people) have no access to healthcare and 6.5 percent of households face catastrophic healthcare costs spending each year. Women’s labor rights are often not respected and they lack legal protection from marital rape and sexual harassment. Mali plans to slash its budget by $3.3 billion over the next five years.

Burkina Faso ranks middle (9th) on the Index. It spends nearly 23% of its budget on education, the highest share in the region and 9th in the world. But the wealthiest 20% of the population has 44% of the income, and in rural areas, 47.5% of the population lives in poverty. According to the IMF, such a level of inequality reduces Gross National Product growth by at least 1% per year. The government plans to cut $1.27 billion through 2026.

If the governments of West Africa were to increase fairly their tax revenue by 1 percent in the next five years, they would raise $56.89 billion. This is more than enough to cancel the planned $26.8 billion budget cuts and build 600 fully-equipped hospitals across West Africa.

Matthew Martin, Director of Development Finance International, said: “West Africa is at a crossroads. Will the region come out of COVID-19 with policies which exacerbate inequality, or implement a recovery plan that works for everyone and not only for the privileged few?”

“The pandemic has taught us it is urgent to invest massively in public education, health and social protection and to use more progressive taxation of income and wealth to pay for this. We also need to increase worker’s rights ― especially for women who disproportionately take on the most precarious jobs.”

Notes

Download Oxfam and DFI’s index “The West Africa Inequality Crisis: Fighting Austerity and the Pandemic” and country profiles.

Oxfam and DFI published in 2019 the first “West African Commitment to Reduce Inequality (CRI) index” showing that West African governments were the least engaged across the continent in reducing inequality.

Download “Adding Fuel to Fire: How IMF Demands for Austerity Will Drive Up Inequality Around the World” for more in-depth analysis on austerity measures encouraged by the IMF through its COVID-19 loans. Between March 1, 2020 and March 15, 2021, all countries in West Africa received IMF emergency support to respond to the pandemic through various types of loans. For more information on austerity measures encouraged in the loans received by West African countries refer to Annex 1 and Annex 2 of the report.

Oxfam Aotearoa reaction to Emissions Reduction Plan

October 13, 2021

The Emissions Reduction Plan is a hodgepodge of responses from Ministers, some of whom appear to not be grappling with the very real urgency of climate breakdown, says Oxfam Aotearoa Campaign Lead Alex Johnston.

“Taking nine months to come up with a discussion document about making yet another strategy is not acceptable. With COP26 less than a month away, the government clearly isn’t taking the climate crisis with the urgency required to keep a safe climate future within reach. Aotearoa needs to do more to achieve its fair share of keeping to 1.5 degrees.

“We think of our friends, colleagues and loved ones in the Pacific and beyond who will have to continue to endure rising poverty and hunger, farmers who are losing crops, family homes being destroyed by rising sea levels, and loss of their whenua and culture.

“We urge the Prime Minister to exert leadership within the Climate Change Response Ministerial Group to get Ministers to come back to the table with policy levers that will reduce emissions further and faster, while leaving no one behind. Every sector has to play its part – this includes our agriculture sector which is responsible for half of our emissions profile, but has no new reductions forecasted before 2025. He Waka Eke Noa is not going to meet the target the Government has set itself. The handbrakes need to be taken off now to allow agriculture to play its part in our collective effort to reduce emissions.

“We call on the Government to support farmers to adopt regenerative farming practices that restore soil, water and air quality, including funding to help them do this; to bring forward the pricing of agricultural emissions in the ETS; and to phase out the use of synthetic nitrogen fertiliser, which has fuelled the growth in the dairy cow numbers over the past three decades.

“It is obvious that there is a missing link between the Draft Plan and level of emissions allowed in the proposed emissions budgets. There is also a huge gap between the plan, emissions and what is needed to step up our international commitments by 2030 to keep to 1.5 degrees. Much bolder action is needed to allow our domestic plan to do more of the heavy lifting in meeting our international target, which itself is too low.

“Taking bold action to reduce climate pollution is still the best opportunity we have to create a just, inclusive and sustainable world where people and planet thrive. The solutions are in our reach, and the public will back Aotearoa playing its part to make that a reality.”

OECD tax deal is a mockery of fairness: Oxfam

October 13, 2021

In response to the OECD’s tax deal announced today, Oxfam’s Tax Policy Lead Susana Ruiz said: “Today’s tax deal was meant to end tax havens for good. Instead it was written by them.”

“This deal is a shameful and dangerous capitulation to the low-tax model of nations like Ireland. It is a mockery of fairness that robs pandemic-ravaged developing countries of badly needed revenue for hospitals and teachers and better jobs. The world is experiencing the largest increase in poverty in decades and a massive explosion in inequality but this deal will do little or nothing to halt either. Instead, it is already being seen by some wealthy nations as an excuse to cut domestic corporate tax rates, risking a new race to the bottom.

“Calling this deal ‘historic’ is hypocritical and does not hold up to even the most minor scrutiny. The tax devil is in the details, including a complex web of exemptions that could let big offenders like Amazon off the hook. At the last minute a colossal 10-year grace period was slapped onto the global corporate tax of 15 percent, and additional loopholes leave it with practically no teeth.

“This deal is an unacceptable injustice. It needs a complete overhaul. The OECD and the G20 must bring fairness and ambition back to the table and deliver a tax plan that won’t leave the rest of the world to pick up their crumbs and scraps.”

Notes to editor

140 countries have been negotiating the two-pillar tax framework under the OECD-G20 umbrella. The first ‘pillar’ aims to make the world’s largest corporations pay more taxes in the country where they earn profits. Based on current proposals, Oxfam estimates that it will affect only 69 multinationals and would only apply on ‘super profits’ above 10 percent. Loopholes could let the likes of Amazon and ‘onshore’ secrecy jurisdictions like the City of London off the hook. Extractives and regulated financial services are excluded from the deal.

New analysis by Oxfam estimates that 52 developing countries would receive around 0.025 percent of their collective GDP in additional annual tax revenue from the ‘Pillar One’ proposal endorsed today.

The second ‘pillar’ seeks a global minimum corporate tax rate. The OECD tax plan dropped “at least” from a proposed minimum global corporate tax rate of “at least 15 percent” and further delayed its full implementation from the previously planned 5 years to 10 years.

The 15 percent rate is well below the UN Financial Accountability, Transparency and Integrity (FACTI) Panel recommendation made earlier this year, which called for a 20- to 30-percent global corporate tax on profits. The Independent Commission for the Reform of International Corporate Taxation (ICRICT) has called for a 25 percent global minimum tax to be applied. 

A 25 percent global minimum corporate tax rate would raise nearly $17 billion more for the world’s 38 poorest countries (for which data is available) than a 15 percent rate. These countries are home to 38.6 percent of the world’s population.

Developing countries are more heavily reliant on corporate tax. In 2018, African countries raised 19 percent of their overall revenue from corporate tax, compared to just 10 percent for OECD nations.

Detention as the Default Report

October 7, 2021

Greece is turning more and more to the practice of administrative detention to manage people who arrive in Greece to claim asylum. This is according to the new report, Detention as the Default, from the Greek Council for Refugees (GCR) and Oxfam. The report found:

An excessive use of administrative detention with nearly 3,000 migrants in detention as of June 2021.
7 out of 10 irregular migrants are put in administrative detention with the majority remaining detained when applying for asylum.
1 in 5 people are detained for a long period of time in police cells which are designed to only hold people for just a few hours.
Pregnant women, children and people with vulnerabilities are being placed in detention without the appropriate access to health care and legal aid.
Nearly half of migrants (46%) in administrative detention remain there for over 6 months.

The desire to make detention the norm is reflected in recent changes to Greece’s policy and practice. This is despite European law saying that administrative detention should only be used as a last resort. In 2019, the Greek authorities expanded the grounds for administrative detention of asylum seekers to include verification of identity. They also removed the need to examine alternatives to detention in certain circumstances and introduced an amendment to increase the duration of detention up to 3 years. This approach is in clear violation of European and Greek law.

Vasilis Papastergiou, Legal expert at the Greek Council for said:

“Administrative detention is just another tool to stop people from seeking safety in Europe. While the Greek authorities refuse to look at other less severe options to detention, like frequent check-ins, the Greek courts often turn down appeals to detention, even in the most shocking of circumstances like the appeal of a heavily pregnant woman. Europe’s hands are also not clean as the EU funds the new ‘closed and controlled’ quasi-detention centres, places where migrants are left to be forgotten.

“In Greece, the detention of migrants is the rule, not the exception. Not only is it against international and European asylum law, but it also carries with it a heavy moral and financial cost.”

Testimonies gathered by the Greek Council for Refugees (GCR) expose the real story of people stuck in administrative detention.

Syrian man who spent 9 months in a cell.

The Greek authorities put Omar*, a Syrian national, into detention when he applied for asylum. Omar said: “we were locked in our cells for 22 hours a day – no mobile phone, no visits, disgusting food. We often had to beg the guards to unlock us to go to the toilet. And sometimes this was not even possible.”

The child trapped by the pandemic.

Mohammed* was a child when he arrived in Greece. He asked to join his family in another European country. His application was successful, but his flight to join his family was cancelled due to the start of the pandemic. While waiting for Covid-19 restrictions to lift, he turned eighteen and had to leave the child protection services and move into an apartment. After an incident, he rang the police fearing for his safety. Instead of helping him, the police put him in detention. He was in detention for months as the family reunification unit where unable to find him due to the Greek authority’s administrative failures. His mental health deteriorated, and he attempted suicide. Despite Mohammed’s poor physical and mental health, the authorities put him back in a cell after his hospitalisation. Following many interventions by GCR, he was finally allowed to be reunited with his family after eight months of being detained.

The detainee denied life-saving medical treatment.

Amir-Ali*, an Iranian asylum-seeker did not receive the vital medication needed to stop his body from rejecting a kidney transplant despite the detention centres doctor stating his condition was life-threatening. This left Amir-Ali fearing for his life while in detention. He is now out of detention after months of interventions from GCR and the Greek Ombudsman.

The survivor of violence still stuck in detention.

In Kos, the Greek authorities automatically put asylum seekers in detention if they come from a country with an asylum recognition rate below 33 per cent. Gloria* arrived to Kos, and as she was from Togo, she was automatically put in detention. Despite being classed as a person with vulnerabilities as she was a survivor of sexual and physical violence, the Greek authorities did not provide her with treatment. In detention, her mental health deteriorated, and Gloria attempted suicide. After being hospitalised, she was put back in detention where she remained until GCR successfully got her out.

Erin McKay, European Migration Campaign Manager at Oxfam said:

“These stories shine a light on the heartless and shocking conditions in detention. We see people die in detention from preventable illnesses and from taking their own lives out of complete desperation. We see children in detention and pregnant women. The people in detention speak of their sense of abandonment and the huge deterioration of their mental health. Detention of migrants and asylum seekers is not and cannot be the default. The Greek authorities must use alternatives to detention and not punish people for wanting to build a life in Europe.”

Notes to editors:   

Read the new report from the Greek Council for Refugees and Oxfam, Detention as the Default: How Greece, with the support of the EU, is generalizing administrative detention of migrants.

Spokespeople are available in Athens and Lesbos (English, Greek) and in Brussels (English).  

Nearly 3,000 (2,392) third-country nationals are in administrative detention as of June 2021 because they do not hold papers to be in Greece.

In 2016, the total number of persons detained was 14,864, of which 4,072 were asylum seekers. By 2019, this number had doubled to 30,007, of which 23,348 were asylum seekers. There was a decrease in 2020 (14993 people, of which 10.130 were asylum seekers). This decrease is due to the impact of the pandemic with less arrivals and restrictions on the amount of people in detention.

The European Court of Human Rights has ruled in two separate cases in 2018 and 2019 that the prolonged detention in police stations breaches the prohibition on torture as per Article 3 of the European Convention on Human Rights, noting that ‘police stations per se … are places designed to accommodate people for a short time only’. Despite this, the Greek authorities continue this unacceptable practice.

Names of persons in testimonies changes to protect anonymity.  

EU blacklist must penalise tax havens, not punish poor countries

October 6, 2021

Today, European economic and finance ministers met to approve an update to the EU’s list of tax havens. This comes in the midst of the unfolding Pandora papers scandal and global tax negotiations.

In response, Chiara Putaturo, Oxfam’s EU Tax expert, said:

“The EU blacklist should penalise tax havens. Instead, it lets them off the hook. Today’s decision to delist Anguilla, the only remaining jurisdiction with a zero per cent tax rate, and the Seychelles, which are at the heart of the latest tax scandal, renders the EU’s blacklist a joke. While the Pandora Papers investigation blew the lid on how the super-rich continue to use tax havens to avoid paying their taxes, ordinary people are asked to foot the Covid-19 recovery bill.

“The EU is shutting its eyes to real tax havens while considering blacklisting poor countries who do not sign up to the imminent global tax agreement. This deal is unfair as it benefits rich countries and ignores the needs of poor countries. Instead of using the blacklist as a tool to force poor countries into accepting an unfair tax deal, the EU should reform the list’s criteria to target real tax havens.

“In the next months, European governments have the opportunity to reform the EU’s blacklist. They must blacklist zero per cent and very low tax jurisdictions, set up indicators to detect where companies have fake economic activity and require transparency of their real owner. The reform must make the blacklist fit for purpose. Otherwise, the list will remain a whitewashing tool which allows the wealthiest and the most profitable companies to continue escaping their fair share of taxes.”

Notes to editor

Today, European governments published a revised list of blacklisted countries. The list removed Anguilla, Dominica and Seychelles from the blacklist.
EU countries and the European Commission are currently revising the criteria of the EU blacklist. This should be finalised in early 2022.
In a new media briefing, Oxfam explains why the current list does not capture real tax havens, why it is unfair and what should be changed.
An agreement on global tax reforms (BEPS2) negotiated by OECD Inclusive Framework countries is likely to be endorsed by G20 leaders at the end of October. This package contains two pillars. Pillar 1 introduces the right to tax big multinationals based on where they make their sales. Pillar 2 establishes a global minimum corporate tax rate of 15%. Countries must endorse both pillars as one package. In the next days, Oxfam will publish a new analysis with evidence of the unfairness of the OECD proposal.
In the Communication on Business Taxation for the 21st century, the European Commission announced plans to introduce future criteria requiring the endorsement of the global tax reforms.
On Sunday, the International Consortium of Investigative Journalists (ICIJ) published the Pandora Papers investigation which showed how wealthy individuals use tax havens to hide their fortune or to escape taxes. Almost none of the countries identified as secret jurisdictions features in the EU blacklist. Seychelles was one of the most mentioned jurisdictions and was delisted from the EU’s blacklist today. Introducing a criterion of the list to make sure that the person who owns or controls the company (beneficial owner) is disclosed can increase transparency and help capture some of these jurisdictions. European governments have been considering introducing this type of measure for many years. They are now waiting for the overall reform of the criteria to introduce this measure.