THE UNIVERSITY OF ZAMBIA
SCHOOL OF HUMANITIES AND SOCIALSCIENCES
DEPARTMENT OF DEVELOPMENT STUDIES
NAME
: BRIAN SINKAMBA
COMPUTER NUMBER
: 2020029138
LECTURER
: MR JOSEPHAT NCHUNGO
COURSE CODE
: DEV 1150
QUESTIONS
1. What are SAPs? What were their effects on the Zambian economy?
1) Structural Adjustment Programs (SAPs) consists of loans provided by the International
Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic
crises. Their purpose is to adjust the country’s economic structure, improve international
competitiveness, and restore its balance of payments.
2) Zambia adopted a systematic structural adjustment program in 1983. This constituted a
fundamental policy shift from previous attempts at economic reform, and was adopted in
part as a requirement to receive external finance from international financial institutions,
especially the IMF and World Bank.
3) Zambian was faced with imbalances in the terms of trade (TOT) that is the relationship of
the purchasing power of one unit of the country’s exports against its imports.
4) As a result the decline in the demand for copper, TOT dropped by 70 percent,
5) Zambia cancelled SAPs in 1987 due to widespread discontent, during the time Zambia
pulled out of the IMF agreement; it remained starved of any international finance.
6) In June 1991 the Zambian government asked for leverage on the subsidies as it would
cause political chaos amidst elections. The IMF refused and instead they suspended all
financial disbursement to Zambia. As a result, inflation soared and rose to 129 percent.
Therefore when the second government came into power they inherited a government that
was in deep debt, severe shortage of foreign exchange and inflation of over 100 percent
an eroded social and physical infrastructure and a decline in formal sector employment.