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Obstacles to progress

Realities

Concerning the World Bank & IMF Programmes
Structural Adjustment Programmes

“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.

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). These policies were
typically centered around increased privatization, liberalizing trade and foreign investment, and

balancing government deficit. The conditionality clauses attached to the loans have been
criticized because of their effects on the social sector.

SAPs are created with the goal of reducing the borrowing country's fiscal imbalances in the
short and medium term or in order to adjust the economy to long-term growth] By requiring the
implementation of free market programmes and policy, SAPs are intended to balance the

government's budget, reduce inflation and stimulate economic growth. The liberalization of
trade, privatization, and the reduction of barriers to foreign capital would allow for increased

investment, production, and trade, boosting the recipient country's economy. Countries that fail
to enact these programmes may be subject to severe fiscal discipline.

Critics argue that the financial threats to poor countries amount to blackmail, and that poor
nations have no choice but to comply . “

"Structural Adjustment." 255
Wikipedia
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“ One of the effects of structural adjustment is that developing countries must increase their
exports. Usually commodities and raw materials are exported ...but poor countries lose out

when they export commodities (which are cheaper than finished products) are denied or
effectively blocked from industrial capital and real technology transfer, and import finished

products (which are more expensive due to the added labor to make the product from those
commodities and other resources)
This leads to less circulation of money in their own economy and a smaller multiplier effect.

Yet, this is not new. Historically this has been a partial reason for dependent economies and
poor nations. This was also the role enforced upon former countries under imperial or colonial

rule. Those same third world countries find themselves in a similar situation. This can also be
described as unequal trade: “
"Structural Adjustment--a Major Cause of Poverty." 256
https://www.globalissues.org/article/3/structural-adjustment-a-major-cause-of-poverty.

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