The Impact of the Global Economic Crisis on the Budgets of Low-Income Countries
The global economic crisis created a huge budget revenue hole of US$ 65 billion of which aid has filled only one-third. As a result many Low Income Countries (LICs) are cutting Millennium Development Goals (MDGs)-related spending (especially on education and social protection), applying for expensive domestic loans, and increasing anti-poor sales taxes. The report explores what 56 LICs did in 2009 and plan to do in 2010 to fight the crisis, protect the poorest, and revive progress toward the MDGs. The report also urges: 1) the international community to make new aid commitments at the Millennium Summit in September 2010, 2) the International Monetary Fund to encourage LICs to spend more on achieving the MDGs, on combating climate change, and to report regularly on such spending, and 3) LIC governments to increase spending on social protection and education; increase in taxes on income, property, and foreign investors; and fight tax avoidance.