What are Structural Adjustment Programmes (SAPs)?
"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
International Monetary Fund (IMF)) as a condition for receipt of loans.
SAPs were developed in the early 1980s as a means of gaining
stronger influence over the economies of debt-strapped governments
in the South. To ensure a continued inflow of funds, countries
already devastated by debt obligations have little choice but to
adhere to conditions mandated by the IMF and World Bank.
Most donor countries, including Canada, condition their bilateral
assistance upon a country's adoption of structural adjustment
What are SAPs Designed to Do?
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.
What Measures are Imposed Under SAPs?
Although SAPs differ somewhat from country to country, they
Canadians can begin to identify with the citizens of developing
nations when we experience similar SAP-like cutbacks to health,
education and other basic social services.
- 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
- abolishing food and agricultural subsidies to reduce government
- deep cuts to social programmes usually in the areas of health,
education and housng 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.
Why the Need for SAPS?
The World Bank and the IMF argue that SAPs are necessary to bring
a developing country from crisis to economic recovery and growth.
Economic growth driven by private sector foreign investment is seen
as the key to development. These agencies argue that the resulting
national wealth will eventually "trickle down" or spread throughout
the economy and eventually to the poor.
The achievement of social well-being is not an integral
component of SAPs but a hoped-for result of applying free market
principles to the economy. The process of adjustment, as described
by many World Bank and IMF officials to developing countries, is
one of "sacrifice," of "present pain for future hope."
What's Wrong with SAPs?
Many groups argue that SAPs impose harsh economic measures which
deepen poverty, undermine food security, and self-reliance and lead
to unsustainable resource exploitation, environmental destruction,
and population dislocation and displacement. These groups, which
include non-governmental organizations (NGOs), grassroots
organizations, economists, social scientists and United Nations
agencies have rejected the narrow conception of economic growth as
the means to achieve social and environmental objectives. They
believe SAP policies have increased the gap between rich and poor
in both local and global terms.
Despite claims to the contrary, World Bank-imposed SAPs have
paid little or no attention to their environmental impact. SAPs
call for increased exports to generate foreign exchange to service
debt. The most important exports of developing countries include
timber, oil and natural gas, minerals, cash crops, and fisheries
exports. The acceleration of resource extraction and commodity
production that results as countries increase exports is not
ecologically sustainable. Deforestation, land degradation,
desertification, soil erosion and salinization, biodiversity loss,
increased production of greenhouse gases, and air and water
pollution are but among the long-term environmental impacts that
can be traced to the imposition of SAPs.
Women are bearing a disproportionate share of the burdens imposed
by SAPs. The macro-economic thinking on which SAPs are based, takes
little account of the gender-based division of labour. For example,
SAPs promote export- oriented crops, which tend to be grown by men.
This eaves women with little support, marginal land, and fewer
resources to grow food crops to feed their families. In addition,
cutbacks to public services result in a greater workload for women
as they struggle to pay extra fees to secure health care and
education for the family. Often, these cutbacks simply place such
services out of reach.
Are there Alternatives?
There have been a variety of alternatives that address both the
economic model upon which SAPs are based, and the non-democratic
and excessively harsh method by which SAPs are imposed. The UN
Economic Commission for Africa provided a comprehensive and
credible alternative to SAPs in 1989. The African Alternative
Framework called for "adjustment with transformation" which called
for a reduction in the continent's reliance on external trade and
financing, the promotion of food self-sufficiency and greater
popular participation in economic planning and decision-making.
The Third World Network and Freedom from Debt Coalition have
proposed numerous alternative policies in the areas of
international trade and sustainable development. Some specific
alternatives for reform include:
What is urgently required is to open up the debate to allow
for serious consideration of alternative measures. What stands in
the way is the total control over the development debate currently
exercised by the Bank and the IMF with the blessing and support of
Northern governments, including Canada.
- promoting diversification in the products that Southern countries
export and increase processing capacity. This would coincide with
the recognition of providing some protection to infant industries
and the promotion of greater regional trade;
- recognizing the need for states to play a greater role in
facilitating the diversification away from traditional commodities,
determining and promoting investment priorities;
economic policies and planning which include a gendered analysis
of the various options;
- policies that take into account environmental impacts and include
sustainable natural resource use that benefits local communities;
- an emphasis on non-price structural reforms such as land reform,
institutional reforms to increase democratic practice and
- at the international level, measures to reduce the debt problems
of poorer countries, regulate capital markets and address unfair
In addition, fundamental reform of the Bretton
Woods Institutionsto ensure greater transparency, accountability, and
participation in the development of any programmes that will
directly affect communities is essential (see brief on "Reforming the Bretton Woods Institutions"). The Halifax
G-7 Summit provides an important opportunity to alter the debate and begin the
process of transformation.
Structural Adjustment Programmes:
Back to the Bretton Woods Institutions menu
- over-emphasize the restoration of balance of payments instead of
adopting a more just and equitable approach to resolving the debt
- undermine the state's sovereignty and limit its role for
socio-economic intervention through a fixation on deregulation,
privatization and dismantling of the state in the name of
unfettered "free markets";
- exacerbate the disparities between rich and poor by facilitating
income concentration by the wealthy and the exclusion of the poor
from decisions and control over resources;
- undermine democracies and democratic process. Southern
governments must accept SAP measures imposed by non-democratically
elected bank officals even if they conflict with government policy
and the will of the people_the alternative is default and
- lack transparency, accountability and public participation in
their design and implementation;
- hurt the poor disproportionately through deep cutbacks in social
programmes. User fees, privatization, massive layoffs and cutbacks
of scial services have led to malnutrition, school and hospital
closures, recurrence of previously eradicated disease, and
- undermine national food security through an over-reliance on
investment that is short-term, concentrated in the export sector;
- make many basic necessities inaccesible to local people as
currency devaluations drastically reduce the buying power of local
- violate the UN Convention on the Rights of the Child, the UN
Declaration on the Right to Development, and the Convention on the
Elimination of Discrimination Against Women;
- focus on domestic economic adjustment to the exclusion of the
whole world economy, which includes Northern economies, to the
priority goals of sustainable development, self-sufficiency and
greater popular participation in economic planning and
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