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.
