Structural+Adjustment+Policies

= Structural Adjustment Policies = 

Structural Adjustment Policies or SAPs are economic policies that have been promoted and enforced by the International Monetary Fund (IMF) and the World Bank since the early 1980s. They are agreed upon when a country takes out a loan with the World Bank or the IMF. Loans are given to developing countries on the condition that they increase imports and exports; decrease the role of the state, and other conditions, all focusing on creating a free market. Structural adjustment policies are marketed as a way to promote economic growth, generate income, reduce poverty and pay off debt. Their effectiveness of reducing poverty, however is disputed as these agreement cause third world countries to become more dependant on developed nations. The premise behind the idea of the SAPs is that the World Bank and IMF want to control how the money is spent so that the loan will be able to be paid off.


 * Conditions of Loans**


 * Increase Imports and exports
 * Trade Liberalization
 * Privatization – Reducing government involvement in industry
 * Cuts in public spending
 * Focusing on a specific crop or industry (Cash Crops )
 * Devaluing of currency
 * Removal of price controls
 * Having a balanced budget
 * Criticisms** 

Structural Adjustment Policies have been criticized for several aspects of their design. SAPs often focus on cuts in public spending. Things like public education, healthcare and welfare are the first things to be cut when a SAP is implemented. This hurts the lower classes the most as they are the ones that rely on those programs the most. SAPs can also cause economic woes by making countries focus on cash crops. Countries are forced to focus on the export of a few primary products. While this has a potential benefit, the instability of price can cause a products value to drop overnight, making all the equipment and infrastructure spent on the product worthless. When SAPs are implemented prices of commodities can double or triple due to the fact that the currency has been devalued and price controls have been removed. For example in the documentary Life and Debt Jamaicans feel as if they have been taken advantage of by the IMF and SAP programs located in their country.

Countries also have to deal with the interest associated with the loan. The World Bank and IMF are designed to make money and for each loan they give, they make money. The debt that a country can accumulate through loans from the World Bank and IMF are enormous. In Nicaragua, the government spends 25% of is budget paying off it debt, the same amount that is put towards healthcare and education combined. It does this while 80% of its population lives in poverty. It has to put it resources towards paying off its debt all the while taking out even more loans that cause even more debt.


 * The Future**

The World Bank and IMF are now introducing Poverty Reduction Strategy Papers (PRSP), which are a rebranded form of SAPs. The countries adopting these new plans are still however, facing the forced policy changes that cause SAPs to have a negative effect on the country. Unfortunately, despite these risks, third world countries still proceed with getting a SAP or PRSP because they have no other alternatives. 