G20 must tackle the “cost of profit” crisis causing chaos worldwide

G20 countries are receiving $136 million every day in debt repayments from the world’s poorest countries at a time when up to 828 million people are facing hunger.  

The “cost of living” crisis is more accurately a “cost of profit” crisis - of rising billionaire wealth and corporate mega-profits - that is driving up poverty, hunger, indebtedness and deprivation around the world, Oxfam says, as the G20 Summit begins in Bali. 

“If the G20 are serious about tackling this looming global economic catastrophe they need to put their own houses in order. That’s where the real cause of this crisis lies,” said Oxfam’s G20 Lead Joern Kalinski.  

“In reality we are facing a 'cost of profit' crisis. The richest are getting richer, while ordinary families and the poorest countries are being squeezed dry,” said Kalinski. 

Since the start of the pandemic, poor countries have had to shell out $113 billion to their rich G20 country creditors, during a time that four times more people died of Covid in poorer nations than in rich ones. 

In 2021, on average, poor countries were forced to spend 27.5% of their budgets on debt repayment – four times more than on health and 12 times more than on social protection. Even the public climate finance they are getting from rich nations, including many in the G20, are 71% loans.  

Meanwhile the G20’s biggest corporations are making record profits. BP made £7.1 billion, their biggest profits in 14 years, and BNP Paribas € 2.76 billion in just the past three months. Nine out of ten of the biggest fossil fuel companies are headquartered in G20 countries. US corporations are seeing their biggest profit margins since 1950 and have been accused of ‘greedflation’; driving higher inflation through price hikes. 

The G20 is home now to 89% of all the billionaire wealth in the world – at around $10 trillion. This has grown by $1.88 trillion, creating 287 newly-minted pandemic billionaires, since 2020. Energy and food billionaires are currently getting richer by a half-a-billion dollars a day. 

Oxfam urges the G20 to acknowledge the consequences that this shocking inequality is visiting on ordinary citizens the world over in the form of mass hunger, death and worsening poverty.  

In Somalia, Ethiopia and Kenya historic levels of drought mean that one person will likely die of hunger every 36 seconds between now and the end of the year as the worst-hit areas hurtle towards famine. Women and girls, who are often the main food producers, primary caregivers, and stewards of household nutrition, are at higher risk of hunger.  

The Ukraine war is an additional layer to existing problems. While 828 million people face hunger, the world’s main food traders made record profits and food and agribusiness billionaires increased their collective wealth by $382 billion (45%) over the past two years. The United Nations has appealed for $17.1 billion in humanitarian food security assistance for 2022 but so far donors have only given $7 billion. 

Globally progress in fighting poverty has halted, according to the World Bank, with poverty increasing during COVID-19 for the first time in decades. Inequality has grown too; with the poorest seeing their incomes decline twice as much as the richest.  

“Austerity is the exact wrong reaction – a textbook blunder – that is ripping away social safety nets and beating people down into poverty,” Kalinski said.  

Recent Oxfam research on inequality shows that despite the worst health crisis in a century, half of all poor countries have cut their share of health spending. Almost half of all countries cut their budget share going to social protection, 70 percent cut their share going to education and two-thirds failed to raise their minimum wage in line with economic growth. Over the next five years, three-quarters of all countries globally are planning further cuts totaling $7.8 trillion dollars. 

143 of 161 countries Oxfam surveyed froze tax rates on their richest citizens, and 11 countries even lowered them. Corporate tax dodging also continues on an industrial scale with an estimated one trillion dollars of corporate profits shifted to tax havens in 2019. 

The G20 must tackle the root causes of hunger: extreme inequality and poverty, human rights violations, conflict, climate change and food and energy price inflation. Oxfam says the G20 must develop an economic and social rescue plan that protects the rights of the poorest people and tackles extreme inequality. This means: 

• Championing systematic strategies to tackle inequality and monitoring progress by rejecting austerity, boosting inequality-busting public spending, making tax more progressive, and increasing workers’ rights and pay 

• Widescale debt relief and significant debt cancellation for the poorest countries 

• Increasing taxes on windfall profits, wealth and corporations 

• Issuing more Special Drawing Rights, and allocating more to the poorest countries 

• Boosting inequality-busting aid 

• Delivering on climate finance, especially for the most vulnerable countries  

• Committing to enhancing pandemic preparedness and building more resilient systems. 

 To halt the worsening hunger crises the G20 must: 

• Urgently mobilize financial resources into humanitarian emergencies 

• Address the root causes of hunger crises including climate change, conflict, poverty and inequality, human rights violations and food price inflation 

• Ensure that blockades, economic sanctions and military activities in all countries do not hinder the free, safe and reliable transport of food and agricultural supplies, especially in conflict-affected areas 

• Rebalance the power in food supply chains to create a more sustainable and just food system.