Debt Cancelation For Social Protection

An International Non-Governmental Organisation (INGO), working on poverty and inequality issues globally, has rung an alarming bell for universal social protection and debt cancelation. This comes at a time COVID-19 has reversed some development outcomes, especially in developing countries such as Nepal. With global poverty and hunger rising amid the multiple and intertwining crises of war, public health emergencies, and climate change, Amnesty International recently issued an urgent call for governments worldwide. The call is rather uncommon but urgent and very relevant. The call is for implementing universal social protection to ensure that healthcare, childcare, pensions, disability payments, labour market interventions and other benefits are available to those in need. 

The call is grounded on evidence. It is backed by many popular uprisings and mass protests across the globe in recent years. These protests have been fueled by economic and social concerns such as poverty, inequality and vulnerability. Amnesty International has lamented that governments have turned to "repression and unnecessary and excessive use of force" against struggling demonstrators instead of addressing their core concerns, such as high food prices and declining wages. The root of the woes lies in the current malfunctioning of global governance which produces and reproduces poverty and inequality, and creates economic insecurity for many. The global order has been challenged in many parts for the world, including in the capitalistic world. This resounds the proposition that poverty anywhere is a threat to prosperity everywhere. 

Challenges

It has been argued that redistribution has the potential to overcome some of these challenges. Amnesty International has noted that a key factor behind the economic insecurity driving many protests is the fact that the vast majority of people simply do not enjoy their right to social security. This right is realised through the implementation of both contributory and non-contributory social protection measures, in a way that would protect them from crises and precarity and support them to recover. Reducing poverty is all about lifting people above the poverty line and preventing them to fall below the poverty line. Amnesty International estimated that more than half of the world's population is not covered by any social protection measure other than healthcare. The coverage is much lower in developing world. Nepal’s estimated coverage is 32 per cent although benefits are clearly inadequate.

In the absence of or inadequate social protection, a resilient livelihood is almost impossible during various crises. Amnesty International has noted that "It is shocking that over 4 billion people, or about 55 per cent of the world's population, have no recourse to even the most basic social protection, despite the right to social security being enshrined since 1948 in the Universal Declaration of Human Rights." Nepal’s constitution has also guaranteed social security right. This right is all about saving people from falling below the poverty line both during crises and in normal times.

During the crises and immediately after them, governments must provide social protection to rebuild people’s livelihoods. Such investment should be allocated based on the life-cycle approach that demands for social protection support at every stage of the human life. In all stages, people come across various risks and vulnerabilities. Amnesty International briefly demanded that all governments invest in social protection measures that guarantee the right to social security. Such measures should ensure that everyone has access to adequate levels of healthcare; parental care and benefits; family and child benefits; basic income security for persons in active age who are unable to earn sufficient income, in cases of sickness, unemployment, and disability; and basic income security for older persons. 

Nepal has many of these measures for various categories of people. Child grant, minimum employment, school meal, pension, elderly allowance are some the examples. It has been argued that protecting people against losses due to shocks, from disasters or economic reversals, can be transformational, both for society and the state that provides the support. A resilient society is what we should be aspiring for a prosperous Nepal and happy Nepali.

Crises force countries move from targeting to universal social protection. Amnesty International’s report encourages nations to move away from means-tested policy approaches in favour of "universal social protection" that covers everyone in times of need regardless of income. The rich should also be covered by social protection schemes to smoothen their livelihoods in the presence of shocks, disasters and other economic reversal events. Precisely, they enable children to stay in schools, improves healthcare, reduces poverty and income inequality, and ultimately benefits societies economically stated the report. Indeed, human flourishing is possible under such situation.

Global redistribution

To help developing countries establish universal protection systems, Amnesty International has called for creating a global social protection fund and debt cancelation by developed countries and multinational banks. As developing countries must spend huge chunk of their revenue on loan repayment, it is difficult for them to fund universal social protection. Debt cancelation is another form of global redistribution.  Nepal’s foreign debt is about Rs. 1 trillion (22 per cent of GDP). Repayment of it takes away resources that would otherwise be spent on social protection. Global mechanism, such as the global fund, will facilitate comprehensive social protection coverage from current and future shocks.  It is good to note that Amnesty International’s report has called on international creditors to "reschedule or cancel debts" to allow countries to prioritise investments in healthcare, food programmes, and other priorities over costly debt repayment. The INGO also urges governments to do all they can to crack down on tax avoidance by the wealthy and enact progressive tax reforms. Nepal should take these recommendations seriously and act promptly.

(Dr. Bhusal is an expert in poverty, employment and social protection)