Coping with crisis
Whom do shocks hit the most? Who are the most vulnerable to crises? In shocks such as a macroeconomic crisis, climate change impacts and global food inflation, the low income consumers are assumed to be the one who are mostly affected. However, who takes the pain and by how much depends on the structure of a country’s economy and its profile of vulnerabilities.
Macro and financial crises
What began as a crisis in industrialized nations has been transmitted to the developing world in different ways. For example, Mexico suffered significant declines in labour income while in Bangladesh the most important source of income loss was international remittances. Depending on the country context, the crisis had differential impacts across demographic characteristics: rural and urban; high- and low-skilled workers.
The expected impacts of climate change are challenging the development efforts around the globe. They will, through multiple channels, exacerbate the incidence, severity and persistence of poverty.
Rising food prices: are there right policy choices? – The policies undertaken to cope with food price increases vary considerably across countries. In some cases, they have neither targeted the poor nor been cost-effective. Some countries have implemented measures that caused serious problems, either at home, or for other countries.
I quote this from the Poverty Reduction Strategy Report 2005.
“Despite serious challenges, Guyana continues to make strides in the achievement of its poverty targets. In 2004, the government accomplished more than 80 percent of its planned actions that was proposed in the PRS progress report.
“The poverty reduction programme is not without risk. Increased concessional financing, especially grants assistance will be needed if Guyana is to meet its poverty reduction targets and the millennium development goals. Importantly, the absorptive capacity of the country will have to improve for Guyana to convert any additional financing into effective programmes and outputs that will definitively support poverty reduction.
“Interest in the poverty reduction is high. In order to sustain this high level of interest, government will have to continue to involve the communities in the prioritization and monitoring of projects that are important.
“The private sector has a critical role to play. It would have to take advantage of many opportunities that government continues to create to allow for increased investment. Thus, efforts will have to be made to stem the flow of Guyanese especially skilled professionals and entrepreneurs. It is therefore important that the causes of migration are adequately addressed”.
There is no list of areas where poverty has been reduced. Information coming to the Guyana Consumers Association is that severe poverty remains. And there is no indication when the poor will have a better way of life.