SUNS  4303 Friday 16 October 1998


DEVELOPMENT: CASH CRISIS STALLS FIGHT AGAINST POVERTY

United Nations, Oct 16 (IPS/Thalif Deen) - The U.N. Development Programme (UNDP) says the spreading economic crisis in Asia and Latin America is a major setback to its ongoing fight against
global poverty.

"If not addressed early, the eventual impact could be devastating," warns the New York-based agency.

In a new 94-page study released Friday, UNDP says the impact of the crisis on human poverty is unfolding more slowly, but much will depend on government policies.

Titled "Overcoming Human Poverty," the report says that in Indonesia alone, an estimated 6.5 million people could lose their jobs this year. And in South Korea, about one million jobs will be
eliminated because of downsizing of the large conglomerates.

The International Labour Organisation (ILO) already has warned that unemployment in Thailand could increase three-fold over last year, resulting in an additional two million Thais without jobs.

Among those hardest hit, says UNDP, will be the millions of migrant workers. Nearly half of the 1.8 million foreign workers in Malaysia - who come primarily from Bangladesh, Cambodia, Indonesia and Myanmar - will have to return home.

"Starting in Asia, it has deepened and spread beyond expectation, and good sense, cutting the growth rate of the world economy in half, plunging more than a third of the world economy either into economic recession or sharp deceleration, and threatening a global recessions," says UNDP Administrator James Gustave Speth.

"Let us be clear: everywhere the poor are paying the heaviest price for this mismanagement of global finance," he adds.

If current trends continue, says Speth, the World Bank has estimated that the number of poor people in Indonesia, Thailand, Malaysia and the Philippines will more than double - from some 40
million to more than 100 million.

"For the 1.3 billion people, who live on less than a dollar a day, there can be no doubt that poverty is a brutal denial of their human rights," he adds.

Djibril Diallo, UNDP's Director of Public Affairs, says the millions of workers who are being thrown out onto the streets will only aggravate the situation. "We are very concerned about it," Diallo told IPS, "We also feel that the current discussions do not pay enough attention to the impact of the crisis on poverty."

He pointed out that the financial bailout packages that are being cobbled together have mostly failed to underline the need for social safety nets to prevent more and more people being driven
into poverty.

"A labourer in Thailand, for example, who does not even play the stock market suddenly becomes the victim of a crisis not of his own creation," Diallo said.

The crisis, which began in Thailand in July 1997, spread to Indonesia, South Korea, the Philippines, Malaysia, and to a lesser extent to Hong Kong and Singapore. In mid-1998, the recession also
began reached out to Latin America and Russia.
The International Monetary Fund (IMF) has responded with bailout packages for some of the crisis-stricken countries, including South Korea (58 billion dollars), Indonesia (40 billion dollars) and
Thailand (17.2 billion dollars). The economic turmoil was caused mostly by large scale currency speculation, investments in real estate and a rash of bad debts.

According to the UNDP report, the countries most affected in Asia are those that were on the verge of eliminating poverty. In the past 20 years, each of these countries, namely Indonesia, Malaysia,
South Korea and Thailand, have been "remarkably successful in reducing income poverty.

In Malaysia, for example, between 1970 and 1990, the proportion of the population affected by income poverty fell from 50 percent to 15 percent.

"These improvements were achieved, not just as a result of high growth in Gross Domestic Product (GDP) but also because of the composition of that growth - with more employment in labour-
intensive export industries that reduced poverty in urban areas, and growth in agriculture reduced poverty in rural areas," the report notes.

But despite setbacks, the UNDP also cites definite progress against poverty since 1995, the year of the Social Summit.

Many countries, it says, now have working definitions of poverty and almost 80 percent have estimated its extent. At the same time, about 60 percent of the developing countries have formulated plans to overcome poverty.

But yet far fewer countries have backed their plans with adequate resources, or have built effective organisations to implement their plans. According to UNDP, only 30 percent of developing nations
have set targets for poverty eradication and few have systems to monitor progress in meeting goals.

The report also criticises the donor community for failing to meet their aid commitments to alleviate poverty. "Since the beginning of the decade, the numbers of poor people have been rising while aid
has been falling."

Never before, says the UNDP, has there been such a divergence in prospects for the rich and the poor. Around two thirds of the world's population live on less than two dollars per person per
day, and 1.3 billion live on less than a dollar a day.

"Yet official development assistance (ODA) is at an all-time low - 0.22 percent of industrial-country GDP, a far cry from the U.N. target of 0.7 percent." the report noted.