Good Morning !
Structural Adjustment
Policy
( SAP)
What Is a Structural
Adjustment?
A structural adjustment is a set of economic
reforms that a country must adhere to in
order to secure a loan from the International
Monetary Fund and/or the World Bank.
Structural adjustments are often a set of
economic policies, including reducing
government spending, opening to free trade,
and so on.
It’s originated due to few global Issues during the late
1970s:
❑ The Oil Crisis,
❑ Debt Crisis,
❑ Multiple economic depressions, and
❑ Rise of Inflation
In Late 80’s SAPs was developed by 2 Bretton Woods
institution,
1. World Bank
2. IMF
SAP’s Consist of consist of loans (structural adjustment
loans; SALs) provided to countries that experience
economic crises.
IMF-supported stabilization
and World Bank supported
adjustment programs have
generally had three principal
objectives:
1.
• To attain macro-economic balance by
bringing expenditure in line with national
income
2.
• To allocate resources more
efficiently, which involves switching
resources across economic sectors
3.
• To mobilize more resources over the
longer term and thus raise economic
growth rates and living standards
Why it’s for 3rd World
Country!!
3rd World countries
faces
➢Government's budget
deficit
➢Inflation
➢Lower economic
growth
SAPs are supposedly intended
to
Balance the
government's
budget,
Reduce
inflation and
Stimulate
economic
growth
Liberalization of
trade,
Privatization,
and
Reduction of
barriers to
foreign capital
For increased investment,
production, and trade