PUBLIC FINANCING
I. EXECUTIVE SUMMARY INTRODUCTION This report, Part II in a series of two reports investigating the financial impact of Covid-19 on local public transport (LPT) and emergency funding, focuses on countries and cities in the Global South and the constraints faced by their governments. The report seeks to contextualise the crisis faced by LPT systems and workers within these structural challenges and propose solutions using a social justice approach, which stresses that combating economic and social inequality as central to a sustainable recovery from the pandemic. IMPACT OF COVID-19 ON LPT SERVICES IN THE GLOBAL SOUTH LPT ridership has plummeted since the The pandemic has had a major impact on LPT services around the world. In the Global South, the impact has been particularly severe because authorities have had to impose heavy restrictions while often being unable or unwilling to provide adequate compensation. Layoffs and/or cuts in working hours, wages and conditions have been extensive in many countries, particularly for private and/or informal services operated without government subsidies. In many cities and countries, authorities have allowed fares to rise to make up for lost revenue. Increasing fares, however, are likely to exacerbate social exclusion and inequality because they prevent low-income groups from accessing employment and services. MACROECONOMIC CONSTRAINTS ON SUPPORTING LPT SERVICES THROUGH THE PANDEMIC Governments in the Global South face many more obstacles in supporting their LPT systems than governments in the Global North, due to the much more stringent macroeconomic constraints they face. These constraints include the prospects of a slower economic recovery, narrow tax bases,
high dependence on external finance, high levels of external debt (denominated in hard currencies) and a related structural inability of central banks to act as lenders of last resort. The way in which monetary and financial policies in the Global North exacerbate these constraints is explained in detail in this section. This section also looks at and assesses the efficacy of efforts made by international financial institutions (IFIs), particularly the IMF, to address the pandemic, including through concessionary loans and debt relief. While needed, these programmes are problematic: they are not ambitious enough and they assume recipient countries will move towards fiscal tightening to be able to pay off foreign debts well before they have overcome the health, economic and social crisis. The section ends with a brief overview of solutions to the macroeconomic inequalities discussed by global unions and other intergovernmental and civil society actors. EMERGENCY SUPPORT FOR LPT In the Global North, governments have provided relatively extensive emergency funding to cover the Covid-19-related losses and extra costs incurred by LPT systems. In the Global South, however, emergency funding has been much more limited. National governments in some low-income countries, such as Uganda, have provided no or very minimal support. Where funding has been provided, it has often been a one-off, covered only some modes and/or operators, made up only a portion of losses and/or come in the form of loans and waivers, rather than direct grants. In the Philippines, campaigning by unions and civil society organisations has resulted in significant support for displaced jeepney drivers, although it is unclear if this funding will be expanded in 2021. In Rwanda, the government built on experience with formalisation to provide a subsidy for paratransit in February 2021. In Chile, a highincome country, support for Bus Rapid Transit 2
