How Effective Is Structural Adjustment?
| Author | Gita Bhatt |
| Position | IMF External Relations Department |
| Pages | 340-342 |
Page 340
Ten years after the IMF's Enhanced Structural Adjustment Facility (ESAF) was set up, the question is being asked: how effective has it been? To provide some answers, an IMF staff team recently completed a wide-ranging study of the experience of 36 countries under ESAF-supported programs (see IMF Survey, August 5). In addition, the IMF's Executive Board commissioned a panel of external experts to evaluate the ESAF. The internal study was published in September 1997, and the external evaluation is expected to be completed later this year.
An IMF Economic Forum, on September 9, addressed the question, "Structural Adjustment: What Does the Record Show?" The discussion was chaired by Jack Boorman, Director of the IMF's Policy Development and Review Department (PDR). Participants included two authors of the internal review-Susan Schadler and Hugh Bredenkamp, both of PDR-and Professor Mark Gersovitz of The Johns Hopkins University and David Beckman, President of Bread for the World.
The benefits of structural adjustment-although hotly disputed over the years-have been confirmed by an increasing body of evidence. Jack Boorman explained that the purpose of the internal review was to take stock of where ESAF countries are in the process of reform and what effects the reforms have had so far. He pointed out that the results of the internal study on ESAF-supported programs are encouraging, with improvements in economic performance and reductions in inflation and fiscal imbalances. Social indicators also improved in most countries: infant mortality rates have declined, life expectancy has increased, and most of the countries reviewed in the study have shifted toward a market orientation.
But these economies clearly needed to deliver faster and more sustainable growth if they were to bring living standards up to the level in other developing countries and make significant inroads into poverty. To achieve this, the review spelled out several key areas where policies need to be strengthened.
ESAF countries share several distinct characteristics: they are among the poorest in the world; their economies are chronically weak; and they were buffeted by serious shocks during the late 1970s and early 1980s. According to Susan Schadler, the IMF's strategy to assist these countries is intended to establish a...
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