Adjustment Programs

What Are Structural Adjustment Programs?

SAPs are designed with the objective of allowing the economies of developing countries to focus on trade and production in order to become market oriented. This, in turn, allows them to boost their economy and reduce fiscal imbalances. These consist of loans that can be used for the short term or medium term, or economy adjustment for the long term. The IMF and World Bank are Bretton Woods institutions, and they help countries that experience an economic crisis. The Bretton Woods system is a system of monetary management that established rules for financial and commercial relations in the mid-20th century. SAPs have been promoted by the IMF and World Bank since the early 1980s and works on the provision of loans, conditional on the adoption of these policies.

History of Structural Adjustment Programs

Introduced in the late 1970s, SAPs have evolved over the years. The origin of SAPs was mainly the result of three global crises: (1) the debt crisis, (2) the oil crisis, and (3) the international recession occurring in the early 1980s. These crises caused unprecedented pressure on the external accounts of developing countries. Along with these factors, certain countries in sub-Saharan Africa faced problems like drought and other adverse weather conditions, rapid growth in population, corruption, and political instability that resulted in mismanagement of the economy. For these countries, the value of imports increased, while exports fell in value and volume. These conditions of the economy and constraints of foreign exchange brought problems related to balance of payments.

Purpose of Structural Adjustment Programs

SAPs are intended to provide long-term solutions that will hopefully result in structural changes in developing countries. Their purpose

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