April 1998 not for citation without permission of the authors david dollar and jakob svensson macroeconomics and growth group, the world bank the findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. The leading role of the imf has proven problematic in many ways. Structural adjustments and their impact on health and society. Structural adjustment program sap alert on imf and world bank lending to tanzania executive summary. The association of policies and growth with repeated imf and world bank adjustment loans, n. By disaggregating imf programs, we consider how structural adjustment impacts income inequality. Political reform structural adjustment in guyana was also linked to the concept of governance from the early 1990s. Subsequently, we describe the search strategy employed to survey the literature. Shortcomings and weaknesses of the structuraladjustment. By globalization challenge initiative, a project of the tides center, usa and the integrated social development programme, isodec, ghana for the full 30plus page text of the structural adjustment program sap information alert for. We begin by outlining the history of structural adjustment. This study examines the impact of structural adjustment policy sap on the welfare of zimbabweans, particularly women and children and draws some parallels with economic policy in the us and its effect on social welfare programs and the poor. The effect of structural adjustment programmes on the delivery of veterinary services in africa 3 officially recognized as part of the animal health delivery system.
How structural adjustment programs affect inequality. This proceeds ahead of the structural adjustment loan or. It describes how saps are being implemented and what results they have produced over the past 20 years. Essentially, saps in africa have combined an imf stabilisation loan with conditionalities for a longer term structural adjustment programme overseen by both the wb and the imf. Oberdabernig abstract the focus of this work is to measure the effects of structural adjustment programs saps of the international monetary fund imf on poverty and income distribution. Rscas 201660 policy conditionality, structural adjustment and the.
What explains the success or failure of structural adjustment. In comparison with previous imf conditionalities, the current programme targets and structural benchmarks are in general, not markedly different, however with few exceptions. I follow the convention of using adjustment lending, structural adjustment, structural adjustment lending, and structural adjustment programs as interchangeable terms. At the same time rich countries, such as the us, were subsidizing their own nut and other industries, allowing them to gain in market share around the world. The structural adjustment programs saps are created with the goal of reducing the borrowing countrys fiscal imbalances.
The conceptual framework for the structural adjustment programme designed by. According to opev programme performance evaluation reports, they are all. Structural adjustmenta major cause of poverty global issues. The effects of structural adjustment programs on poverty and. Particularly in the 1980s and 1990s, when many structuraladjustment programmes were drafted, the fund and its macroeconomically trained experts took over the. Lessons from structural adjustment programmes and their effects in africa franz heidhues university hohenheim, stuttgart, germany, and gideon obare egerton university, egerton, kenya abstract after independence around 1960, african countries started with high hopes for rapid growth and development. Structural adjustment is a term used to describe the policies requested by the imf in condition for financial aid when dealing with an economic crisis in. The decision to undertake a structural adjustment program usually comes at a time when a country is facing a severe economic crisis.
In our findings, we present evidence of the net effect of structural adjustment on. The economic recovery programme erp employed a number of policy and operational measures, such as exchange rate devaluation, price deregulation, wage control in the public sector, increased bank rate and privatisation. These reforms tackle economic imbalances in the shortrun, so we expect their effects to. Feb 25, 2018 a new paper from the political economy research institute discusses how the imfs programs undermine the ability of governments in developing countries to pr. In india, the conditions surrounding the economic crisis of 1991 left indian policymakers with little alternative but to pursue liberal economic policies. These reforms tackle economic imbalances in the shortrun, so we expect their effects to operate within one year of implementation. Structural adjustment programmes of international financial institutions have typically set the fiscal parameters within which health policies operate in developing countries.
The imf and the world bank in africa conditionality, impact and alternatives edited by seminar proceedings no 18. Since then, the country has experienced strong improvements in its socioeconomic standing and the heightening of its industrial capacity. Working paper we will tiy to place adjustment policies in their wider context and, in. Background material available in pdf 411 k for best results print this pdf file. Impulse response function charts 1 and 2 in the a ppendix show the derived impulse response functions of the three. Jan 31, 2012 conditionalities are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan. The argument from the proponents of foreign assistance. Structural adjustment programmes of international financial institutions have typically set the fiscal. The structural adjustment program is essentially a conditional loan. How the imfworld bank and structural adjustment program. In 1986, the structural adjustment facility saf was established to provide balance of payments support on concessional terms to lowincome developing countries. The most searing critique of saps is that the conditions of the poor in ghana did not improve. Structural adjustment programs in developing countries.
Debt to gdp ratio world development indicators 2002 the late 80s to lagging in early to mid90s1 figure 3. The only notable change is that, according to the imf structural conditions are no longer legally binding. Structural adjustment definition and criticisms economics. A year later, the enhanced structural adjustment facility esaf. Koreas economic adjustments under the imfsupported. External resources, however, also reduce the cost of doing nothing, that is avoiding reform. The impact of economic structural adjustment programs esaps. Consequently, the bretton woods institutions including the world bank and international monetary fund imf have lauded ghana as the most successful. The effects of structural adjustment programs on poverty and income distribution by doris a. The two bretton woods institutions require borrowing countries to implement certain policies in order to obtain new loans. Conditionalities are implemented to ensure that the money lent will be spent in accordance with the overall goals of the loan.
Caribbean country experiences with imf stabilization. In view of this it is very surprising that the economic literature has devoted no attention whatsoever to the identification of characteristics that may distinguish countries that comply with the policy conditions set out in adjustment programmes from. Structural adjustment programs saps consist of loans provided by the international monetary. In our findings, we present evidence of the net effect of structural adjustment on child and maternal health outcomes. Many developing countries are trying to improve their economic conditions by means of structural adjustment programmes. Yet, we currently lack a systematic understanding of the ways in which these programmes impact upon child and maternal health. Later i distinguish between structural adjustment lending and structural adjustment policies. The two bretton woods institutions require borrowing countries to implement certain policies in order to obtain new loans or to lower interest rates on existing ones. Conditions stipulating fiscal restraint deteriorate income inequality in sub saharan africa.
It is an honor and a pleasure for me to be here and speak to this gathering of distinguished businessmen. The bank from which a borrowing country receives its loan depends upon the type of necessity. Structural adjustment programs saps consist of loans provided by the international monetary fund imf and the world bank wb to countries that experienced economic crises. Economic structural adjustment programmes in the southern. Some are available via the web links provided while others can be found in. Lessons from structural adjustment programmes and their. A structural adjustment is a loan provided to a country by the international monetary fund, the world bank, or both, in exchange for structural economic reforms. The stabilisation package which addresses monetary and fiscal issues typically attempts to address inflation, reduce the governments budget deficit and balance of. These policy adjustments are conditions for imf loans and serve to ensure that the country will be able to repay the imf. In many cases, governments ended up spending less money on these essential services than on servicing international debts.
Some are available via the web links provided while others can be found in common medical and public health journals. Structural adjustment and the debt crisis saps were born as a result. When a country borrows from the imf, its government agrees to adjust its economic policies to overcome the problems that led it to seek financial aid. However, it should be emphasized that adjustment programmes include a vast array of policies in addition to macroeconomic policies and an assessment of the. These loans are connected with conditionalities like significant policy reforms which have to be complied with before getting the loan abugre, 2000. The longer term structural adjustment programme is aimed at the promotion of production and resource mobilisation through the promotion of commodity exports, public sector reform, market liberalisation and institutional reform.
It was against this background that the bank group negotiated its adjustment programme with sierra leone which was approved by its boards in october 1992 and became effective in june 1993. A disaggregated analysis of imf conditionality, 19802014. The saf provides loans to support the mediumterm macroeconomic and structural adjustment programs of these countries3. The programme seeks to limit the role of government in the economy, promote private sector operations and remove.
Collectively, these conditionalities are purposed with ensuring states are. Therefore, the conventional structuraladjustment programmes emphasised liberalisation, deregulation and privatisation. The large number of policybased loans three sals and two sectoral adjustment loans secals which it has received between 1982 and 1988, as well as a host of other project and programme lending, both bilateral and multilateral, designed to support these programmes, make the country an interesting case study on the role, importance and. Structural adjustment programme and its negative effect on education in nigeria. This thesis examines three aspects of indias economic crisis, political, economic and international, in an. Imf and world bank structural adjustment policies econstor.
Introduction over the past couple of decades, there has been a steady increase in the scholarly literature on organized labour and industrial relations systems in developing countries the bulk of which is on trade union militancy, strikes. Pdf lessons from structural adjustment programs and their. This system of conditionality is designed to promote national ownership of strong and effective policies. Structural adjustment policies were put in place, cutting spending and reducing government involvement in the nut industry and elsewhere. Structural adjustment programs consist of loans provided by the international monetary fund and the world bank to countries that experienced economic crises. Under the structural adjustment program sap introduced in 1986, nigeria reformed its foreign exchange system, trade policies, and business and agricultural regulations. Structural adjustment programmes are designed to change the structure of the economy so as to improve the balance of current account and budget deficit over the medium term.
Imfs structural adjustment programs weaken states they. Structural adjustment programs are programs which make it possible for. Use the free adobe acrobat reader to view pdf files. Conditionality helps countries solve balanceofpayments problems without resorting to measures that are harmful to national or international prosperity. Pdf the good and the bad of structural adjustment programme. This article also gives a short analysis of the roles of the world bank, the imf and the local political elites in this process. Conditionalities and crossconditionalities in the 1980s. Thus, one of the obvious outcomes of developing nations. How structural adjustment programmes affect inequality. The policies are designed to tackle the root cause of the problem and provide a framework for long term development and long term growth.
Structural adjustment and political reform in guyana. Ghana launched its structural adjustment program sap in 1983. An analysis of impact and policy considerations with special reference to zambia and zimbabwe. The conditionality clauses attached to the loans have been criticized b. The objectives of the structural adjustment programme included.
Pdf how structural adjustment programs affect inequality. Structural adjustment program sap alert on imf and world. Through conditionalities, structural adjustment programs generally implement free market programs and policy. Saps were developed in the early 1980s as a means of gaining stronger influence over the. Economic structural adjustment programmes in the southern african development community. To ensure the success of the programme and boost governments implementation capacity, institutional arrangements were put in place to ensure the effective formulation, coordination. Newsrescue below is a brief background of the events that led many countries to accept saps. Structural adjustment, economic growth and the aiddebt. Structural adjustments and their impact on health and. The structural adjustment program in developing economies. The effects of structural adjustment programmes econstor. Imfs structural adjustment programs weaken states they aim.
Jan 22, 2020 structural adjustment is a term used to describe the policies requested by the imf in condition for financial aid when dealing with an economic crisis in. A new paper from the political economy research institute discusses how the imfs programs undermine the ability of governments in developing countries to pr. Problems and limitations of adjustment policies odi working. Lessons from structural adjustment programmes and their effects in africa 57. The paper argues that economic structural adjustment programs esaps, introduced by the world bank. The impact of economic structural adjustment programs. The genesis of the structural adjustment programmes. The country in need the borrower approaches the imf and world bank the lenders for a loan. These programs include internal changes notably privatization and deregulation as well as external ones, especially the reduction of trade barriers. The implementation of policy conditions in structural adjustment.
The effects of structural adjustment programs on poverty. Structural adjustment and the growth problem in two. What explains the success or failure of structural. Despite assurances to the contrary and the imposition of imf conditionalities, the same period has seen a dramatic rise in the proportion of national budget devoted to debt servicing and a corresponding rise in the incidence of poverty 17, 19. Conditionality covers the design of imfsupported programsthat is, macroeconomic and structural policiesand the specific tools used to monitor progress toward goals outlined by the country in cooperation with the imf. Structural adjustment programme sap is the international monetary fund imf and world bank agenda for addressing the debt and economic crises of some third world countries. Pakistan has been a signatory to the structural adjustment programme of the imf for almost 10 years. Pdf this study evaluates the result of structural adjustment programme sap on nigerian economy. The standard justification for world bank structural adjustment lending is that reforms have shortrun costs and foreign assistance can help reforms get launched by alleviating these costs.
Introduction of structural adjustment programs in one way or another was the way of making least developed countries to become dependent instead of independence as seen from all these countries few african countries are independent, this is the evidence of those conditionalities imposed by the imf through structural adjustment programs of 1986. In addition, the fund granted some waivers to ghana after the. Structural adjustment programmes adversely affect vulnerable. Structural adjustment programme and its negative effect on. The structural adjustment programme sap is an economic reform package suggested by the. An almost classic criticism of structural adjustment is pointing out the dramatic cuts in the education and health sectors. Effects of structural adjustment on global policy forum. Structural adjustment is the name given to a set of free market economic policy reforms imposed on developing countries by the bretton woods institutions the world bank and international monetary fund imf as a condition for receipt of loans. Caribbean country experiences with imf stabilization programs.
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