World Bank urges aid for conflict-hit economies amid US aid cuts
THE goal of ending extreme poverty around the globe remains elusive partly due to compounding challenges faced by economies in fragile and conflict-affected situations (FCS) including food insecurity and weak government capacity, a report from the World Bank showed.
The report released on Friday by the Washington-based lender calls on a scaling up of international support, debt relief and technical assistance at a time when the United States, the world's largest aid donor of the past decades, steps back.
Extreme poverty is rising fast in economies hit by conflict and instability, according to the World Bank's first comprehensive report on FCS economies since the COVID-19 pandemic.
Over 420 million people in conflict-ridden economies survive on less than $3 a day, more than the rest of the world combined, even as they are home to under 15% of the global population. The number is projected to rise to 435 million, or nearly 60% of the world's extreme poor, by 2030.
'FCS economies have become the epicenter of global poverty and food insecurity, a situation increasingly shaped by the frequency and intensity of conflict,' the World Bank report said.
Economic output in FCS nations could stall or weaken further as conflict and violence have surged and intensified over the past years. The most high-intensity conflicts can shrink per capita GDP by some 20% after five years, according to the report.
Conflict and war economies are home to 1 billion people and their populations average only six years of schooling, with life expectancy seven years shorter than in other developing countries. Since 2020, the per capita GDP in these economies has shrunk by an average of 1.8% per year, while it has expanded by 2.9% in other developing economies, the report said.
'Progress on poverty reduction has stalled since the mid-2010s, reflecting the compounded effects of intensifying conflict, economic fragility, and subdued growth,' it said.
Targeted domestic reforms and coordinated, long-term global engagement are needed to lift those populations out of poverty, according to the World Bank.
Measures need to focus on addressing root causes of conflict such as injustice and exclusion, as well as expanding access to education and healthcare, and improving infrastructure. Investment in tourism and agriculture could help create jobs for a growing working-age population.
'With sound policies and sustained global engagement, FCS economies can chart a better path toward development,' said the World Bank.
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'When we voted for a government promising reform, transparency, and hope, we weren't just asking for salary reviews or tax tweaks. We wanted long-term structural change. 'But instead we what we got was policies that change so frequently both businesses and the rakyat can't plan ahead, rising taxes and falling subsidies with no real measures to boost incomes, vulnerable communities being pushed to breaking point, and a 'tax first, aid later' model that contradicts with the intent to help and disconnects people from policy,' he lamented. He argued that his current 'change first, explain later' attitude towards new policies gambled with the trust of citizens, and 'is the true crisis at hand'. 'There is a collapse in public trust. The more policies we have, the less trust we seem to gain. And when hope is betrayed, disappointment becomes even heavier. 'Please don't let this opportunity for reform become another chapter of national disappointment,' he warned. 'So, what can we do to fix this?' Well, for Heng, the answer seems obvious. 'What we desperately need now is a clear medium-to-long-term fiscal roadmap that will tell us exactly how Malaysia's revenue will be sustained, how our economy will be restructured and what our tangible fiscal goals are. 'Once that's done then, and only then, can we move towards introducing new policies that have been thoroughly studied and discussed with industry stakeholders. 'Every major policy must include clear explanations of who will be affected, how the pain will be cushioned, and what support systems are in place. No more trial-and-error policies with no accountability,' he stressed. And finally, Heng also emphasised that for the people to tighten their belts for fiscal reforms, the government must also lead by example by reforming government linked corporations (GLCs) and trim inefficiency. 'A bloated public sector and excessive spending cannot be the rakyat's burden anymore.' businesses focus lead SST tax
