Structural adjustment programs & poverty reduction strategy

This article finds that:

• the U.S. uses its dominant role in the global economy and in the IFIs to impose SAPs on developing countries and open up their markets to competition from U.S. companies
• SAPs are based on a narrow economic model that perpetuates poverty, inequality, and environmental degradation
• the growing civil society critique of structural adjustment has forced the IFIs and Washington to engage in national debates regarding SAPs, though these have not led to much change in bank policy

The primary problems with SAPs are:

• SAPs have major social and environmental implications, yet Washington and the IFIs fail to formally assess these impacts
• SAPs may achieve narrow economic objectives, but many economic gains are based on unsustainable natural resource extraction and exploitation of cheap labor, thereby perpetuating poverty
• SAPs have been negotiated in secret with a small circle of government officials, triggering civic protest against these undemocratic and nontransparent programs and leading to high rates of program failure

The article recommends that:

• the U.S. should work to refocus the IMF on short-term lending, and ensure that PRSPs provide for genuine country-driven economic development plans
• Washington’s priority should be the encouragement of sustainable, equitable development that benefits local people rather than transnational corporations
• the U.S. should push for greater transparency and for social and environmental impact assessments of adjustment lending. The U.S. should also insist on delinking structural adjustment conditions from debt relief.