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Tsunami Drags More Than 2 Million Into Poverty

  • Heda Bayron

The Asian Development Bank says some two million people will be pushed into poverty because of the Indian Ocean tsunami - which swept through some of Asia's poorest communities. This comes as Western nations offer debt relief to the worst affected countries.

The Asian Development Bank says damage to the region's economies from the December 26 tsunami will be minimal. The non-profit lending institution says economic growth in Indonesia will only see a slight fall, despite experiencing the worst damage. Its oil-rich Aceh Province only accounts for two percent of the economy.

But the A.D.B. warns that about two million more people in tsunami affected Asian nations will be thrown into poverty.

Some one million of them will be in Indonesia, 645,000 in India and about 250,000 in Sri Lanka. In the tiny island nation of Maldives, more than 50 percent of the population could fall into absolute poverty.

Ifzal Ali, the bank's chief economist, says the tsunami severely hit poor rural areas - where many people who were just surviving above the poverty line will now fall below it.

"Because of loss of livelihoods, destruction of assets, destruction of fishing opportunities, inundation of seawater in to farming areas - the poverty gap will increase," he explained.

The Asian Development Bank last year estimated that close to 700 million Asians lived in extreme poverty - with a growing gap between rich and poor.

In a bid to ease the burden for the countries worst hit by the disaster, the Paris Club group of creditor nations Wednesday offered a freeze on debt repayments without conditions.

Mr. Ali, however, says such a solution may not be beneficial to all countries.

"For a country like Sri Lanka, it probably would make a difference because a large part of the budget is used for debt servicing," he said. "But for a country like Indonesia, which has foreign investment coming in, if you go in for a debt relief package, it gives a very negative signal on the market in terms of possibility of a growth rebound."

Thailand and Malaysia have already turned down the offer, saying they have enough resources to deal with the disaster.

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