Sierra Leone: In eight countries, an average of 63% of pandemic-related state aid went to big businesses, while 26% went to social protection schemes, 10% to small and medium-sized enterprises (SMEs), and only 1% to informal sector workers.
“All told, 63 percent of announced Covid-19 funds in these eight countries, which totalled US$51.4 billion, went to large corporations, rather than SMEs and social protection measures” according to the findings by the Financial Transparency Coalition (FTC) released last week.
The civil society group study were based on spending in Kenya, South Africa, Sierra Leone, Bangladesh, Nepal, Honduras, Guatemala and El Salvador.
The Tracker examined the different types of stimulus spending as a share of the actual, total stimulus spending per country. The Tracker found that, on average, just 22.4 percent of the announced recovery spending was in the form of social protection.
This ratio is even more stark in countries like Nepal, where 99 percent of spending went toward companies, rather than toward social protection measures. Other countries, like Sierra Leone, were barely little better” the study finds. The reverse was the case in Guatemala, where a slight majority of recovery funding went toward social protections, as Figure 2 below illustrates.
As it pertains to loans during the pandemic, the tracker revealed that the main largest single source in most countries was the International Monetary Fund (IMF’s) emergency lending that also was not strictly earmarked, which sometimes allowed governments to expand social protection schemes.
However, the stated that the IMF loan agreements continue to come with the expectation of the resumption of fiscal austerity policies in the future, as seen in terminology like ‘fiscal consolidation’ or ‘fiscal discipline’ – language that has been represented in 84 percent of all loan agreements through October 2020. “Concerns remain centred on both quantity and quality of these loans, as the lending remains inadequate to meet the needs of a just and equitable recovery” the Tracker suggests.
The Tracker discovered that, even when governments announced fiscal expansion policies, they did not always fully carry them out. In terms of announced spending, they found that the announced recovery packages proposed ranged from 1.6 percent to 9.9 percent of GDP, but actual spending was noticeably lower in certain cases.
In the case of South Africa, for instance, this meant reducing the size of the stimulus package from 9.9 percent to 7.0 percent of GDP. Other countries also reported discrepancies between where and how funds were actually spent, or if they were spent at all, as SME loans in Guatemala and Bangladesh indicate.
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