Structual Adjustment Programs

Topics: Economics, Structural adjustment, World Bank Pages: 3 (1128 words) Published: April 19, 2013
Structural adjustment programmes (SAPs) are policies which developing countries must follow in order to qualify for the loans given by the Bretton Wood Institutes [New World Bank (WB )and International Monetary Fund (IMF)] to help them make dept repayment on the older debt owed to commercial banks, governments and the world bank. SAPs have common principles and features such as export-led growth , privatisation and liberalisation and the efficiency of the free market. However they are individually designed for countries. SAPs require countries to devaluate their currencies against the dollar, lift import and export restrictions, balance their budgets and remove price controls and state subsidies and not over spend. SAPs are suppose to make developing countries economy more market orientated. Therefore they concerntrate more on trade and production to boost their economy through conditionalities such as free markets programs and policy. These programmes include internal changes such as privatization and deregulation as well as external ones such as Trade barriers. Statistics reveal that adjustments loans were often offered mulitple times to the same countries. Zambia had received 18 adjustment loans however had negative growth, budget deficits , high inflation, high black market premuim, negative interest rate and a large currency account. It was evident that there was some kind of biased selection operation because some countries were offered multiple loans even though they could not repay old loans.The friends-of-donor vairables that were adopted from foreign literature of political influences were used for selection (Easterly 2005:8-9).

They are three connections between government's economic policies and agricultural performance, first there are macro-prices, second there are challenges whereby Zambia hitherto dominant mineral sector is declining on the long term. Thirdly there are consequences of food subsidies ( Kydd 1988: 228-9). Due to political...
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