The World Bank “says that for the first time since 1998, global poverty rates will rise. By the end of the year, 8 percent of the world’s population — half a billion people — could be pushed into destitution, largely because of the wave of unemployment brought by virus lockdowns, the United Nations estimates.”
While everyone will suffer, “the developing world will be hardest hit. The World Bank estimates that sub-Saharan Africa will see its first recession in 25 years, with nearly half of all jobs lost across the continent. South Asia will likely experience its worst economic performance in 40 years. Most at risk are people working in the informal sector, which employs two billion people, many of whom are women, who have no access to benefits like unemployment assistance or health care.”
“The financial shock waves could linger even after the virus is gone, experts warn. Countries like Bangladesh, which spent heavily on programs to improve education and provide health care, which help lift families out of destitution, may now be too cash-strapped to fund them.”
Abhijit Banerjee, a professor at the Massachusetts Institute of Technology and a winner of the 2019 Nobel Prize for economics, said, “These stories, of women entering the workplace and bringing their families out of poverty, of programs lifting the trajectories of families, those stories will be easy to destroy. There will be groups of people who climbed up the ladder and will now fall back. There were so many fragile existences, families barely stitching together an existence. They will fall into poverty, and they may not come out of it.”
“The gains now at risk are a stark reminder of global inequality and how much more there is to be done. In 1990, 36 percent of the world’s population, or 1.9 billion people, lived on less than $1.90 a day. By 2016, that number had dropped to 734 million people, or 10 percent of the world’s population, largely because of progress in South Asia and China.”
“Famines that once plagued South Asia are now vanishingly rare, the population less susceptible to disease and starvation. But that progress may be reversed, experts worry, and funding for anti-poverty programs may be cut as governments struggle with stagnant growth rates or economic contractions as the world heads for a recession.”
Responding to this crisis, the Prime Minister of Ethiopia and Nobel Peace Prize Laureate, Ably Ahmed, proposes that global creditors immediately should cancel the bilateral and commercial debt of low-income countries. This will free up resources that “will save lives and livelihoods in the short term, bring back hope and dynamism to low-income economies in the medium term and enable them to continue as the engines of sustainable global prosperity in the long term.”
The Prime Minister claims that in 2019, “64 countries, nearly half of them in sub-Saharan Africa, spent more on servicing external debt than on health.”
His own country, Ethiopia, “spends twice as much on paying off external debt as on health. We spend 47 percent of our merchandise export revenue on debt servicing. The International Monetary Fund described Ethiopia as being at high risk of external debt distress.” In short, “The dilemma Ethiopia faces is stark: Do we continue to pay toward debt or redirect resources to save lives and livelihoods? Lives lost during the pandemic cannot be recovered; imperiled livelihoods cost more and take longer to recover.”
 Abi-Habib, Millions Had risen Out of Poverty. Coronavirus Is Pulling Them Back, N.Y. Times (April 30, 2020).
 Ahmed, Why the Global Debt of Poor Nations Must Be Canceled, N.Y. Times (April 30, 2020).