Developing Nations Call for IMF Rescue
Fourteen Latin American and Caribbean nations face their worst economic setback in 50 years and have requested urgent help from the International Monetary Fund.
The region’s economies already were slumping because of the global economy’s slowdown, which reduced sales of commodities on which many of those economies depend.
The global economic shutdown has cratered those sales and made scarce the dollars these countries need to pay their already considerable foreign debts.
Making matters worse, the COVID-19 pandemic is just now beginning to expand across the southern continent with many nations lacking the health care infrastructure to cope.
The 14 unnamed countries collectively have asked the IMF for $4.4 billion through a special funding channel that allows more money at once with fewer restrictions on its use.
The IMF has $1 trillion on hand to respond to requests from countries around the world for help with damage from the pandemic’s economic collapse, said Alejandro Werner, chief of the IMF’s western hemisphere operations. The funds should be enough to respond to such requests without requiring borrowers to meet special conditions, he said.
Ecuador, with an economy dependent on petroleum exports, has been especially hard-hit, with a $4.2-billion IMF loan already in place before oil prices sank to 20-year lows.
TREND FORECAST: Numerous emerging markets had submerged into recession prior to the global economic lockdown. Among many of them, there were widespread protests, riots, and demonstrations against government corruption, crime, violence, and corruption.
While they have been temporarily quelled by governments who have used the virus to keep people off the streets, they will again intensify as restrictions are lifted and poverty, violence, crime, and corruption increase.
Also, the more violent the protests grow, the harder the governments will crack down and the lower economies sink, more people will flee their nations looking for refuge in foreign nations.
The political divide in nations that supported open borders and welcomed refugees will be closed. With the developed world’s economies sinking into depression, strict new laws will be passed to keep unwelcome foreigners out.
 India’s Food Supply Chain Breaks Down

Only two weeks into a nationwide lockdown, India already is experiencing food shortages.
Staples such as eggs, yogurt, and cooking oil are in short supply.
The lockdown permits farming and food production, but large numbers of the people who move food from farm to store have stopped coming to work.
The problem is complicated by India’s unstructured food supply chain: millions of small farmers sell to millions of middlemen, who then distribute foods to millions of small shops and food carts.
Eggs reach food stores by bicycle, sacks of potatoes are loaded onto trucks by lines of men, wheat is scythed by hand instead of by combine.
The wheat harvest is now due, but farmers can’t find enough helpers to bring it in. Truckers hauling the wheat to market can’t find food to eat along the way and can be harassed by police for not obeying the lockdown.
Some drivers have been seen to abandon their trucks by the roadside and walk home.
Wholesale markets have no workers to unload trucks and distributors have stopped delivering to stores. Storekeepers complain they can no longer find rickshaws to take them home after they have visited markets to restock their own inventories.
More than half of India’s population is involved in the food supply chain, but many are afraid that if they go to work they will be stopped on the way and questioned by police.
“There are so many human interventions in the Indian supply chain,” said Subho Roy, a specialist at the University of Chicago who studies Indian agriculture. “There is not a large number of people involved in non-essential, close-downable industries.”
African Economies Collapsing as Virus Invades

Africa is experiencing the virus pandemic in reverse.
Developed nations stopped importing the continent’s raw materials and sending finished goods as those countries shuttered their economies to defend against the virus.
That shut down Africa’s chief source of revenue as well as the finished goods that stocked its stores, crippling national economies.
Now the coronavirus has arrived.
The World Bank foresees Africa’s economy shrinking between 2 and 5 percent this year, with food production dropping by 7 percent, food imports by 25 percent. An African Union study concludes that 20 million jobs are in danger because of the pandemic.
Nigeria, a major oil producer, was already grappling with weak economic growth and could see its economy contract by 3.4 percent this year, the finance ministry has warned.
Nigeria and Angola, also an oil producer, together will lose an estimated $65 billion in revenue this year because of the collapse of oil demand and prices, and their budget deficits will double, the African Union study predicts.
The study also predicts that the pandemic will cost $50 billion in lost tourist revenue, which will erase two million related jobs. Major tourist destinations such as Cape Verde, Gambia, Mauritius, and the Seychelle Islands could lose 7 percent of their economic activity this year.
Prices for South Africa’s metal exports have dropped 8 percent since December, leading Moody’s Analytics to downgrade the bond rating of Africa’s second-largest economy to junk status after the country’s debt had been rated investment-grade for the last 25 years.
Ethiopian Airlines, a carrier linking Europe, Asia, and Africa, is operating at 10-percent capacity and lost $550 million during this year’s first quarter. Ethiopia’s flower exports to Europe are down 80 percent, leaving 150,000 with uncertain futures.
To keep their national economies from seizing up, central banks in Mauritius, Uganda, and Namibia chopped their interest rates to record lows: 2.85 percent, 8 percent, and 5.25 percent respectively. Egypt’s bank slashed 3 percent from its key rate at a March emergency meeting.
Meanwhile, ten central banks have lowered liquidity and reserve requirements for commercial lenders.
Goldman Sachs recently estimated that an infusion of $75 billion is needed to buoy Africa’s failing economies. Africans themselves, however, see a far greater need.
Abiy Ahmed, Ethiopia’s prime minister, has asked G20 nations for $150 billion in aid to African corporations and to convert or abolish debt owed by low-income countries.
Tidjane Thiam, a Cote d’Ivoire native and former CEO of Credit Suisse, reportedly has joined other prominent African business leaders in calling for a two-year moratorium on $115 billion in nations’ debts owned by private interests.
Analysts estimate that even Africa’s less poor nations are spending 20 percent or more of their national revenues to pay principal and interest on debt, leaving little for basic services, including health care during the pandemic.

Comments are closed.

Skip to content