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Global financial crisis threatens aid work

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International aid agency Oxfam has estimated the global financial crisis will create a $2 million hole in its budget before the end of this year, and is appealing for urgent help from its supporters.

Oxfam Australia Policy Director James Ensor said the agency was doing everything it could to stop the shortfall from hitting the poor communities it worked with.

"The financial crisis has the potential to slow down our response to the HIV epidemic in Mozambique, and leave us unable to properly help families struggling to grow food under drought conditions in the country's south," he said.

"We're also concerned the financial squeeze will affect our livelihoods programs in the Solomon Islands. This work provides families with some extra money that often goes towards buying food, and paying fees to send their children to school," Mr Ensor said.

"We've already had to pull out of funding a program to reduce domestic violence in the west Indian state of Gujarat. That's a decision we made very reluctantly, and we're worried it's the first of many difficult choices we're going to have to make."

"Recent figures from the International Labour Organisation found that the global financial crisis could push an extra 100 million people into poverty, leaving them to live on less than $2 a day," Mr Ensor said.

The collapse in the Australian dollar has hit aid agencies like Oxfam particularly hard because in many countries where we work, like Mozambique and Cambodia, the economy is based around the US dollar.

"This means that as the value of the Australian dollar falls, the cost of our program work goes up and the money we have budgeted for the work is worth less," Mr Ensor said.

"Everybody is feeling the effects of the financial crisis but crises like this hit people living in poverty the hardest. Already rising food prices over the past 12 months have forced many more poor people in developing countries to spend up to 80 per cent of their income just to put food on the table," Mr Ensor said.

"We do understand that the crisis is hurting most people so we are asking only that those who give to us at Christmas just give a little bit more. This small addition will make an immense difference to our ability to continue to provide vital services around the world."

To donate to Oxfam Australia visit our website or Freecall 1800 088 110.

For more information or to interview James Ensor please contact Kate Thwaites on 0407 515 559 or katethwaites@oxfam.org.au