Structural adjustment programs (SAPs) are economic reform policies imposed by the IMF and World Bank on developing countries as conditions for receiving loans. SAPs began in the 1980s and involved 187 programs across 64 countries. They aimed to boost exports, reduce government deficits, and improve investment climates. Typical SAP measures included currency devaluation, cutting social spending, privatizing industries, and deregulating markets. While SAPs achieved some economic growth in countries like Ghana, they also had many negative social impacts by reducing education, healthcare and living standards. Critics argue SAPs undermine national sovereignty and prioritize private profits over public welfare. In response to criticisms of SAPs, the IMF and World Bank introduced Poverty

1. Course Teacher: Associate Professor Khairul Chowdhury,
Department of Sociology, University of Dhaka.
Presented by:
Nazia Afroz
Masters of Social Policy
University of Dhaka
Topic: Structural Adjustment Programme (SAPs)

2. "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.
 Developed in the early 1980s
 Initiated in Turkey
 Gaining stronger influence over the
economies of debt-strapped
governments in the South
 187 SAPs negotiated for 64 developing
countries
Structural Adjustment Programmes (SAPs)

3. VS.
IMF’s SAPs
 IMF mainly lends to
countries that have
balance of payment
problems,
 IMF loans focus on
temporarily fixing
problems that countries
face as a whole,
 IMF loans were meant
to be repaid in a short
duration between 2½
and 4 years.
World Bank’s SAPs
 World bank offers loans
to fund particular
development projects,
 World Bank SAPs focus
on providing loans and
grants to countries that
provide funding on a
project basis,
 The World Bank is
divided into two lending
and development
institutions; the IBRD
and IDA. IBRD focuses
on "middle income and
credit-worthy poor
countries" while the IDA
focuses on the lowest
income and least credit
worthy countries.

5. SAPs are Designed…………
 to improve a country's foreign investment climate
by eliminating trade and investment regulations,
 to boost foreign exchange earnings by promoting
exports, and
 to reduce government deficits through cuts in
spending.

6. Objectives of SAPs
SAPs have 4 fundamental objectives according to which they
are shaped:
1. Liberalisation: promoting the free movement of capital;
opening of national markets to international competition.
2.Privatisation of public services and companies.
3.De-regulations of labour relations and cutting social safety
nets.
4.Improving competitiveness (Toissant and Comanne 1995:14)

7. Measures Imposed Under SAPs
Although SAPs differ somewhat from country to country, they typically include:
 a shift from growing diverse food crops for domestic consumption to specializing in
the production of cash crops or other commodities (like rubber, cotton, coffee,
copper, tin etc.) for export;
 abolishing food and agricultural subsidies to reduce government expenditures;
 deep cuts to social programmes usually in the areas of health, education and
housing and massive layoffs in the civil service;
 currency devaluation measures which increase import costs while reducing the value
of domestically produced goods;
 liberalization of trade and investment and high interest rates to attract foreign
investment;
 privatization of government-held enterprises.

8. Typical stabilization policies comprise:
 balance of payments deficits reduction
through currency devaluation
 budget deficit reduction through higher
taxes and lower government spending
 restructuring foreign debts
 monetary policy to finance government
deficits
 raising food prices to cut the burden of
subsidies
 raising the price of public services
 cutting wages
 decrementing domestic credit.
Long-term adjustment policies usually
include:
 liberalization of markets to
guarantee a price mechanism
 privatization, of all or part of state-
owned enterprises
 creating new financial institutions
 improving governance and fighting
corruption
 enhancing the rights of foreign
investors vis-à-vis national laws
 focusing economic output on direct
export and resource extraction
 increasing the stability of
investment.
Conditions of SAPs

9. Impact of SAPs
• Benefits of Structural Adjustment in Ghana:
 Economic growth increased (becoming slightly positive, 1-2% annual per capita
growth).
 Agricultural production began growing again
 Imports and exports (including in agriculture) grew
 Inflation fell to low levels
 Budget deficits reduced
 Growth in “civil society”, civic organizations
• Countries like Zambia & Ivory Coast received dozens of loans without
actually implementing any reforms
• Lenders (like the World Bank) have incentives to make large loans, but
few incentives to carry out evaluations of their programs
• There is basically no cross-country empirical evidence that increased
foreign aid improves economic performance in less developed countries
(despite claims by Jeff Sachs)

10. Effect of SAPs
• End of the Structuralist model of development
• Competitive insertion into the world market
• Removal of trade and financial barriers

13. 1. Sovereignty
- SAPs threaten the sovereignty of
national economies because an outside
organization is dictating a nation's
economic policy.
2. Privatisation
- When resources are transferred to
foreign corporations and/or national
elites, the goal of public prosperity is
replaced with the goal of private
accumulation.
3. Austerity
- SAPs emphasize maintaining a
balanced budget, which forces austerity
programs. The casualties of balancing a
budget are often social programs.
Criticisms of SAPs

14. What Went Wrong with SAPs?
• SAPs lead to decreasing the quality education.
• SAPs have had a particularly negative effect on women because:
 Privatisation of social services like health and education makes these services
unaffordable,
 Women's unpaid work increased,
 Greater unemployment decreased purchasing power and cutbacks in social services,
 Cuts in education services lead to an increase in illiteracy among women and girls,
• In Zambia, the hardships caused by SAPs led to an increase in divorces
• Reduced spending on health leads to an increase in child mortality
• Collapse of small enterprises
• Trade Unions lost 60% of their members in 1990
• Drop in formal sector employment to less then 14% of active population
• Collapse of small enterprises

15.  WB and IMF needed to launch a new initiative to address the
raising levels of poverty as well as the level of dissatisfaction and
disappointment caused by SAPs.
 In 1999, Poverty Reduction Strategy Papers (PRSPs) became
the “successor” to structural adjustment programmes.
 In responding to these criticisms, the UN has came out with a
set of goals known as the Millennium Development Goals
(MDGs).
 PRSPs are seen as the key tool for operationalizing the World
Bank’s approach to poverty as identified in 2000/01 World
Development Report highlighted above and for meeting the
Millennium Development Goals.
SAPs to PRSPs & MDG