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At risk of returning to poverty
Latinamerica Press
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Economic slowdown would cause 200 million people in Latin American and the Caribbean to fail to meet their basic needs.

In the last decade, Latin America and the Caribbean reached an average annual growth of 3.5 percent, according to figures from the Economic Commission for Latin America and the Caribbean (ECLAC), mainly due to higher prices of raw materials. That growth let to a significant reduction in poverty, but the region did not take advantage of these good times to diversify production. With the price fall of main exports, the region has begun to experience a significant economic slowdown.

The international organization Oxfam argues that, while Latin America and the Caribbean, unlike other regions of the world, achieved a reduction of poverty in the last decade, the trend has ended and the gap between rich and poor is becoming wider. If the region does not better distribute income and wealth, alerts Oxfam, 200 million people are at risk of falling back into poverty.

In its report titled “Privileges that deny rights. Extreme inequality and the hijacking of democracy in Latin America and the Caribbean”, published on Sept. 30, Oxfam says that “although this reduction is still not enough, poverty in Latin America and the Caribbean did experience a marked decline over a 10 year period: while 44 percent of the region’s population was poor in 2002, in 2012 the figure was 28 percent, a reduction of almost 61 million people. During this same period, inequality in terms of income per capita was also reduced, but it still remains the highest in the world.”

Latin America remains the most unequal region in the world, where the richest 1 percent owns 41 percent of the wealth, while the remaining 99 percent shares 59 percent. If this trend continues, says Oxfam, by 2022 the richest 1 percent will have 51 percent of the wealth while the other 99 percent would share 49 percent.

Between 2002 and 2015, the fortunes of Latin American and Caribbean multi-millionaires increased at a rate of 21 percent per year, six times the average economic growth in the region.
The World Bank and IMF governors
The report, released days before the annual meeting of governors of the World Bank and International Monetary Fund (IMF), held in Lima from Oct. 9 to 12, put the nail on the head regarding structural adjustment policies promoted by both organizations since the 1990s, policies that have been dutifully applied by most countries in the region.

Lima was chosen to host the meeting for the economic recovery experienced in Peru since the 1990s, when the neoliberal model started to be implemented. This recovery has been called the “Peruvian miracle”. However, experts such as Javier Torres, director of Noticias SER (Rural Education Service), consider that “in Peru there has not been a ‘Peruvian miracle’, much less due to World Bank and IMF policies. What has happened, due to the structural adjustment of the 90s and super cycle of mineral prices, it is a sort of boom that was enjoyed by some sectors but that unfortunately has not reached the entire country. The economic miracle was only for some, especially for large transnationals.”

“The policies of the IMF and World Bank generated an economy that became dynamic but was not inclusive, an economy that continued to maintain a significant section of the population outside this boom that has already ended. It has been a kind of temporary party. I do not think we have anything to thank the World Bank or the IMF for. [The organizations] have almost always told us how to do things and when their objectives are not achieved, they come and tell us: now do things differently,” Torres said in an interview with the website La Mula.

The press coverage of an image of the concrete wall that is over 2 meters high and several miles long, which separates the wealthy neighborhood Las Casuarinas, in Lima, from the extremely poor settlement Vista Hermosa, highlighted what Torres states and what the Peruvian authorities wanted to hide during the World Bank and IMF meeting: the incredible inequality in which millions of people in Peru live.

A La Mula report revealed that in Vista Hermosa there is no water and a family must pay 20 soles (US$ 6.20) per week for 20 liters of water, while on the other side of the wall the owners have huge swimming pools. The streets to get to Vista Hermosa are made of mud, the houses are precarious and do not have electricity, while in Las Casuarinas each residence is valued at about $3 million.

This situation, shared by millions of people in Latin America and the Caribbean, makes hard to believe the World Bank and IMF invocation at the end of their meeting about “the need to focus on inclusive growth, jobs, infrastructure, human development and health systems.”
—Latinamerica Press.

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