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AID

Aid cuts would be ‘devastating’

Criticism of the government's foreign aid policy is mounting as Swedish ambassadors, aid organizations and politicians slam Development Aid Minister Gunilla Carlsson's announcements that development assistance to several countries may be slashed.

Aid cuts would be 'devastating'

Sweden’s ambassadors to Bolivia, Colombia and Guatemala have filed complaints with the Foreign Ministry, warning that cutting Sweden’s half-billion-kronor ($77 million) budget for aid to Latin America will have “devastating consequences”.

“The Latin American countries are not at all as poor as the countries I focus on in Africa and we do not have endless money and resources,” Carlsson told Sveriges Radio (SR).

She argued that governments in Latin American countries have access to resources and need to take responsibility for their own development.

Speaking to The Local, Annica Sohlström, director of Forum Syd – an umbrella network of 163 Swedish NGOs – called the decision to cut aid to Latin America “unfortunate”.

“Today, 75 percent of poor people live in middle-income countries, so this argument that aid should go to the poorest countries doesn’t hold up. It is the world’s poorest, no matter where they live, whom we should be helping.”

Sohlström also criticized Carlsson’s recent announcement that aid to the Palestinian territories may be slashed.

“It is unfortunate that the Palestinian people should be punished for the ongoing conflict with Israel,” she said.

Sohlström added that Swedish aid organizations work with supporting democratic processes and suggested that assistance is needed with this work in the Palestinian territories.

Carlsson also received criticism from within the Alliance government. The Centre Party’s aid policy spokeswoman Kerstin Lundgren told SR she was surprised by Carlsson’s recent announcement, saying the government is dedicated to continuing assisting the Palestinians with state-building.

Writing in newspaper Dagens Nyheter (DN) Tuesday, representatives of three Swedish aid organizations criticized Carlsson and the government for a lack of transparency in formulating the Swedish aid platform and argued that too much aid money ends up staying in Sweden.

A total of 13.5 percent of the aid budget is used to finance migration-related costs. That is a fourfold increase over the past seven years.

The directors of the Swedish Mission Council (SMC, Svenska missionsrådet), the Swedish Pentecostal Churches (PMU, Pingst¬missionens Utvecklingssamarbete) and Diakonia claimed that, in the aid budget, every seventh Swedish krona stays in Sweden.

“Sweden should have a generous refugee policy, but to finance the Swedish Migration Council [Migrationsverket] with aid money aimed at poor countries is not reasonable,” they argued.

Sohlström told The Local: “We believe Swedish aid is being hollowed out. A country like Sweden should be able to afford receiving refugees but at the same time that should not happen at the cost of the poor people whom aid money is meant for.”

In April, Carlsson said that the government would change the way it determines Sweden’s aid policy. Speaking to SR, she said the government would formulate the aid policy platform internally first and then publish it online to have a continued debate with other actors.

In their DN article, the three aid organization representatives said this signals a lack of “transparency”.

Regarding aid to Latin America, Carlsson has said that the issue will be determined in the fall budget.

“Sweden cannot do everything everywhere. Are we helping poor and unfree people every day? That is the question I have to ask myself,” she said.

The Local/nr

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FINANCE

‘We’ll be struggling well into next year’: German borrowing to soar amid pandemic

Germany on Friday passed a 2021 budget that once again smashes its "debt brake" rule, promising to shield businesses and workers from the economic hit of the pandemic as cases continue to rise.

'We'll be struggling well into next year': German borrowing to soar amid pandemic
The seating area of a restaurant closed off in Boltenhagen on the Baltic Sea coast. Photo: DPA

Chancellor Angela Merkel's government plans to borrow €300 billion ($364 billion) across 2020 and 2021 combined after the government pledged more than a trillion euros in aid, including through short-time work schemes (Kurzarbeit) and business support.

“The budget is the basis for everyone to be confident that we can provide the necessary economic and social support to get us through this crisis together,” Finance Minister Olaf Scholz told lawmakers.

The budget for 2021, which passed with 361 votes in favour to 258 against, provides for a total of €179.8 billion in new loans and nearly €500 billion in public spending.

It means for both 2020 and 2021, Germany will abandon its cherished “debt brake”, a constitutionally enshrined rule that forbids the government from borrowing more than 0.35 percent of gross domestic product (GDP), before planning to return to no new debt in 2022.

Restrictions to curb the second wave of Covid-19 – including shutting the food-and-drink, leisure and cultural sectors – continue to burden the economy, which previously pushed Berlin to amplify its aid to businesses.

Yet case rates continue to climb. On Friday, Germany reported a record nearly 30,000 new infections and almost 600 deaths in a 24-hour period.

Now, Merkel is facing calls to tighten restrictions again.

READ ALSO: Germany mulls three-week lockdown from December 20th

Aid can't be 'endless'

Despite the “ray of hope” of a vaccine rollout, Scholz said, “we know that… we're going to be struggling well into next year with the health, economic and social challenges that are going to follow from this pandemic.”

Businesses hit by the current closures are entitled to claim aid amounting to up to 75 percent of their revenues for November and December 2019, expected to cost the government some 30 billion euros.

However Economy Minister Peter Altmaier said last week that support for pandemic-hit firms implemented through November and December could not go on “endlessly”.

Nevertheless Altmaier on Friday said he aimed to increase the ceiling for aid from January in the case of a harder lockdown.

Germany's debt-to-GDP ratio will climb to 70 percent this year, Germany's central bank said in a report published Friday.

But public finances will likely improve as coronavirus measures come to an end, it said.

The government expects the economy to shrink by 5.5 percent this year, before rebounding by 4.4 percent next year.
 

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