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83-615: IMF, IDA and AfDB fully relieve the debt of countries which attain (after complying with specific conditions that are detailed in HIPC page) termination point—the step where a country is eligible to receive total and irrevocable relief of its debt—in HIPC's frame. The difference with HIPC consists of MDRI not covering all creditors, only IMF, IDA and AfDB. Besides, under MDRI, IMF also provided debt relief to non-HIPC countries whose per capita income did not exceed $ 380 and were indebted with IMF until

166-670: A Poverty Reduction Strategy Paper (PRSP). PRSPs describe the macroeconomic, structural, and social programs that a country will follow to promote economic growth and reduce poverty. A broad range of government, NGO, and civil-society groups must participate in the development of the PRSP to ensure the plan has local support. Under the revised HIPC, a country reaches the decision point once it has demonstrated progress in following its PRSP. The country then reaches its completion point once it has implemented and followed its PRSP for at least one year and has demonstrated macroeconomic stability. In 2001,

249-492: A contractive impact in most countries. Economic growth in African countries in the 1980s and 1990s fell below the rates of previous decades. Agriculture suffered as state support was radically withdrawn. After independence of African countries in the 1960s, industrialization had begun in some places, but it was now wiped out. Critics claim that SAPs threaten the sovereignty of national economies because an outside organization

332-433: A country must first meet HIPC's threshold requirements. At HIPC's inception in 1996, the primary threshold requirement was that the country's debt remains at unsustainable levels despite full application of traditional, bilateral debt relief. At the time, HIPC considered debt unsustainable when the ratio of debt-to-exports exceeded 200-250% or when the ratio of debt-to-government revenues exceeded 280%. The IMF estimates that

415-526: A country's balance of payments position as originally envisaged by the IMF instead of its focusing on structural adjustments. One study pointed towards deleterious effects on countries in Latin America's democratic practices, suggesting that reforms may create an economically and politically marginalized population who views democratic government as unresponsive to its needs and thus less legitimate. However,

498-463: A debt-to-export ratio of 150% and a debt-to-government-revenues ratio of 250%. Second, the country must be sufficiently poor to qualify for loans from the World Bank's International Development Association or the IMF's Poverty Reduction and Growth Facility (PRGF, the successor to ESAF), which provide long-term, interest-free loans to the world's poorest nations. Lastly, the country must establish

581-558: A factor that usually goes unexamined when analyzing the effects of structural adjustment. In some rural, traditional communities, the absence of landownership and ownership of resources, land tenure, and labor practices due to custom and tradition provides a unique situation in regard to the structural economic reform of a state. Kinship-based societies, for example, operate under the rule that collective group resources are not to serve individual purposes. Gender roles and obligations, familial relations, lineage, and household organization all play

664-491: A few longer term options available, which go up to 7 years, as well as options that lend to countries in times of crises such as natural disasters or conflicts. The IMF is supported solely by its member states, while the World Bank funds its loans with a mix of member contributions and corporate bonds . Currently there are 185 Members of the IMF (as of February 2007) and 184 members of the World Bank. Members are assigned

747-534: A global scale. This was successful, as can be seen from the current account of the country's balance of payments. Enormous capital flows to the United States had the corollary of dramatically depleting the availability of capital to poor and middling countries. Giovanni Arrighi has observed that this scarcity of capital, which was heralded by the Mexican default of 1982, created a propitious environment for

830-440: A number of other international financial institutions . Some studies suggest that they have been "weakly associated with growth and reform did seem to reduce inflation." Others have argued, however, that "the outcomes associated with frequent structural adjustment lending are poor." Some have argued that, based on only mild improvement of growth in the 1990s from the 1980s, that the IMF should focus more on remedying management of

913-626: A part in the functioning of traditional society. It would then appear difficult to formulate effective economic reform policies by considering only the formal sector of society and the economy, leaving out more traditional societies and ways of life. While both the International Monetary Fund (IMF) and World Bank loan to depressed and developing countries, their loans are intended to address different problems. The IMF mainly lends to countries that have balance of payment problems (they cannot pay their international debts), while

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996-447: A percentage of GDP in the underlying public health infrastructure. The book claims the consequences have been chronically underfunded public health systems, leading to dilapidated health infrastructure, inadequate numbers of health personnel, and demoralizing working conditions that have fueled the "push factors" driving the brain drain of nurses migrating from poor countries to rich ones, all of which has undermined public health systems and

1079-595: A single cash crop , like cocoa in Ghana, tobacco in Zimbabwe and prawns in the Philippines, which made them highly vulnerable to fluctuations in the world market price of these crops. The other main criticism against the compelled integration of developing countries into the global market implied that their industries were not economically or socially stable and therefore not ready to compete internationally. After all,

1162-454: A track record of reforms to help prevent future debt crises. In addition to the modified threshold requirements, the 1999 revisions introduced several other changes. First, the six-year structure was abandoned and replaced by a "floating completion point" that allows countries to progress towards completion in less than six years. Second, the revised HIPC allows for interim debt relief so that countries begin to see partial relief before reaching

1245-405: Is argued that ESAFs may be more beneficial in promoting growth and bolstering balance of payments.It is to be noted that these are the stated goals of SALs and ESAFs and the actual effects on the economy might be different. Another type of loan issued by the World Bank, sector adjustment loans, differs from SAL only in that the former places more emphasis on improving one economic sector rather than

1328-540: Is claimed that with the growing need for structural adjustments in different nations, the lines between SAL and other loan types provided by the International Monetary Fund and the World Bank have become less distinct. For instance, it is purported that both SALs and Enhanced Structural Adjustment Loans (ESAFs) issued by the International Monetary Fund aim to offer favorable assistance for medium-term structural reforms in low-income member countries. It

1411-551: Is conditional on the national governments of these countries meeting a range of economic management and performance targets and undertaking economic and social reforms. The 37 countries that have so far received full or partial debt relief are: 37 countries have completed the program and had their external debt cancelled in full, after Somalia passed the Completion Point in 2020. An additional two countries ( Eritrea and Sudan ) are being considered for entry into

1494-598: Is dictating a nation's economic policy. Critics argue that the creation of good policy is in a sovereign nation's own best interest. Thus, SAPs are unnecessary given the state is acting in its best interest. However, supporters consider that in many developing countries, the government will favor political gain over national economic interests; that is, it will engage in rent-seeking practices to consolidate political power rather than address crucial economic issues. In many countries in sub-Saharan Africa , political instability has gone hand in hand with gross economic decline. One of

1577-413: Is replaced with the goal of private accumulation. Furthermore, state-owned firms may show fiscal losses because they fulfill a wider social role, such as providing low-cost utilities and jobs. Some scholars, such as Naomi Klein , have argued that SAPs and neoliberal policies have negatively affected many developing countries. Privatization has had disparate effects on women and men; one study examines how

1660-413: Is the privatization of state-owned industries and resources. This policy aims to increase efficiency and investment and to decrease state spending. State-owned resources are to be sold whether they generate a fiscal profit or not. Critics have condemned these privatization requirements, arguing that when resources are transferred to foreign corporations and/or national elites, the goal of public prosperity

1743-505: Is to adjust the country's economic structure, improve international competitiveness, and restore its balance of payments. The IMF and World Bank (two Bretton Woods institutions) require borrowing countries to implement certain policies in order to obtain new loans (or to lower interest rates on existing ones). These policies are typically centered around increased privatization , liberalizing trade and foreign investment, and balancing government deficit. The conditionality clauses attached to

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1826-464: The Asian financial crisis occurred in 1997, South Korea accepted various loan conditions while accepting the largest financial assistance in the history of the International Monetary Fund. The United States and the International Monetary Fund evaluated South Korea as one of the successful cases of the IMF's structural adjustment. They believe that South Korea has been closer to the developed countries after

1909-491: The Bretton-Woods-System in 1971 and the end of capital controls caused multinational corporations (MNCs) to gain access to large sums of capital that they wanted to invest in new markets, such as in developing countries. However, foreign capital could not be freely invested yet because most of these countries protected their nascent industries against it. This changed radically with the implementation of SAPs in

1992-653: The Millennium Development Goals . As a result of PRSPs, a more flexible and creative approach to policy creation has been implemented at the IMF and World Bank. While the main focus of SAPs has continued to be the balancing of external debts and trade deficits, the reasons for those debts have undergone a transition. Today, SAPs and their lending institutions have increased their sphere of influence by providing relief to countries experiencing economic problems due to natural disasters or economic mismanagement. Since their inception, SAPs have been adopted by

2075-507: The debt crisis of the 1980s provided the IMF with the necessary leverage to impose very similar comprehensive neoliberal reforms in over 70 developing countries, thereby entirely restructuring these economies. The goal was to shift them away from state intervention and inward-oriented development and to transform them into export-led, private sector-driven economies open to foreign imports and FDI . Privatization of utilities given into by imposed structural adjustment has had negative effects on

2158-432: The debt crisis of the 1980s . While the structuralist period led to rapid expansion of domestically manufactured goods and high rates of economic growth, there were also some major shortcomings such as stagnating exports, elevated fiscal deficit , very high rates of inflation and the crowding out of private investments. The search for alternative policy options thus seemed justified. Critics denounce, though, that even

2241-800: The modern procedure of colonization. By minimizing a government's ability to organize and regulate its internal economy, pathways are created for multinational companies to enter states and extract their resources. Upon independence from colonial rule, many nations that took on foreign debt were unable to repay it, limited as they were to production and exportation of cash crops, and restricted from control of their own more valuable natural resources (oil, minerals) by SAP free-trade and low-regulation requirements. In order to repay interest, these postcolonial countries are forced to acquire further foreign debt, in order to pay off previous interests, resulting in an endless cycle of financial subjugation. Osterhammel's The Dictionary of Human Geography defines colonialism as

2324-464: The reproductive labor women do while assuming the "reproductive economy" will continue to function in the same way it did prior to the economic restructuring. Postcolonial feminist Chandra Mohanty says “the proliferation of structural adjustment policies around the world has reprivatized women’s labor by shifting the responsibility for social welfare from the state to the household and to women located there.” Critics hold SAPs responsible for much of

2407-708: The "enduring relationship of domination and mode of dispossession, usually (or at least initially) between an indigenous (or enslaved) majority and a minority of interlopers (colonizers), who are convinced of their own superiority, pursue their own interests, and exercise power through a mixture of coercion, persuasion, conflict and collaboration". The definition adopted by The Dictionary of Human Geography suggests that Washington Consensus SAPs resemble modern, financial colonization. Investigating Immanuel Kant 's conception of liberal internationalism and his opposition to commercial empires, Beate Jahn said: ... private interests within liberal capitalist states continue to pursue

2490-423: The 1980s and 1990s, when controls on foreign exchange and financial protection barriers were lifted: Economies opened up and foreign direct investment (FDI) flowed in en masse. A great example of this is the fall of the local textile industry within many African nations, replaced in part by Chinese counterfeits and knockoffs. The scholars Cardoso and Faletto judged this as yet another way of capitalist control of

2573-546: The Congo, Democratic Republic of the Congo, Rwanda, São Tomé and Príncipe, Senegal, Sierra Leona, Tanzania, Tajikistan, Togo, Uganda and Zambia. Heavily Indebted Poor Countries The heavily indebted poor countries ( HIPC ) are a group of 39 developing countries with high levels of poverty and debt overhang . Because of these factors, the International Monetary Fund (IMF) and the World Bank have classified them as eligible for special assistance. The HIPC Initiative

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2656-486: The HIPC initiative had failed, and failed miserably. One aspect behind the failure, according to the Nigerien journalist Moussa Tchangari: The criteria used for country selection excluded the mostly highly populated developing countries (for example, Nigeria — 120 million inhabitants — which was on the very first list in 1996) and kept only small countries that are both very poor and heavily indebted... The countries where

2739-498: The HIPC initiative must adopt a Poverty Reduction Strategy Paper (PRSP), under the auspices of the IMF and the World Bank. This document must indicate the use that will be made of the resources made available by this initiative, and contain a certain number of commitments relating to the implementation of classical structural adjustment measures: privatization of public companies, reduction of the salaried workforce, reduction of grants, elimination of government subsidies and deregulation of

2822-505: The IMF granted preliminary approval to an initial debt relief measure of US $ 3.3 billion for 19 of the world's poorest countries, with the World Bank expected to write off the larger debts owed to it by 17 HIPCs in mid-2006." As of December 2006, twenty-one countries have reached the HIPC completion point. Nine additional countries have passed the decision point and are working toward completion. Ten other countries carry unsustainable debts according to HIPC standards, but they have yet to reach

2905-418: The IMF has modified HIPC in several ways, often in response to the shortcomings its critics have highlighted. The IMF first restructured HIPC in 1999. These revisions modified HIPC's threshold requirements. Today, HIPC defines three minimum requirements for participation in the program. First, as before, a country must show its debt is unsustainable; however, the targets for determining sustainability decreased to

2988-424: The IMF introduced another tool to increase HIPC's effectiveness. Under the new practice of "topping up," countries that unexpectedly suffer economic setbacks after the decision point due to external factors, such as rising interest rates or falling commodity prices, are eligible for increased debt forgiveness above the decision-point level. Further progress towards debt relief was announced on December 21, 2005, when

3071-569: The IMF's structural adjustment. However, others doubt whether South Korea is a successful case of IMF structural adjustment. In the process of South Korea and the International Monetary Fund reaching an agreement, the United States played a major role in it. The US government's structural adjustment to South Korea should be based on its own interests. At present, South Korea's economic structure and financial market contain many problems, which leads to an increase in social problems in South Korea and

3154-813: The IMF, the Enhanced Structural Adjustment Facility was succeeded by the Poverty Reduction and Growth Facility , which is in turn succeeded by the Extended Credit Facility . Structural adjustment loans are mainly distributed to developing countries , located primarily in East and South Asia, Latin America, and Africa. including Colombia, Mexico, Turkey, Philippines, Pakistan, Nigeria, Sudan, Zimbabwe and other countries. As of 2018, India has been

3237-660: The International Monetary Fund. Typical stabilisation policies include: Long-term adjustment policies usually include: In the Washington Consensus the conditions are: Structural adjustment policies were developed by two of the Bretton Woods institutions - the IMF and the World Bank. They were advised by the top economists of both. After the run on the dollar of 1979–80, the United States adjusted its monetary policy and instituted other measures so it could begin competing aggressively for capital on

3320-543: The LDCs under SAPs. Moreover, very few of the loans have been paid off. Pressure mounts to forgive these debts, some of which demand substantial portions of government expenditures to service. Structural adjustment policies, as they are known today, originated due to a series of global economic disasters during the late 1970s: the oil crisis , debt crisis , multiple economic depressions, and stagflation . These fiscal disasters led policy makers to decide that deeper intervention

3403-635: The MDRI." As February 2, 2015, no pending debt rested eligible for MDRI, so its bills were liquidated and the remnants were transferred to the Disaster Relief and Contention Trust Fund. Thirty-seven countries have benefited from MDRI: Afghanistan, Benin, Bolivia, Burkina Faso, Burundi, Cambodia, Cameroon, Comores, Ivory Coast, Ethiopia, Gambia, Ghana, Guinea, Guinea-Bissau, Guyana, Haiti, Honduras, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Nicaragua, Niger, Central African Republic, Republic of

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3486-464: The Northern industrialized countries, it also brought advantages to local elites and to larger, more profitable companies who expanded in size and influence. However, smaller, less industrialized businesses and the agricultural sector suffered from reduced protection and the growing importance of transnational actors led to a decline in national control over production. Overall, it can be said that

3569-412: The World Bank offers loans to fund particular development projects. However, the World Bank also provides balance of payments support, usually through adjustment packages jointly negotiated with the IMF. IMF loans focus on temporarily fixing problems that countries face as a whole. Traditionally IMF loans were meant to be repaid in a short duration between 2 + 1 ⁄ 2 and 4 years. Today, there are

3652-401: The World Bank, have spoken of " poverty reduction " as a goal. SAPs were often criticized for implementing generic free-market policy and for their lack of involvement from the borrowing country. To increase the borrowing country's involvement, developing countries are now encouraged to draw up Poverty Reduction Strategy Papers (PRSPs), which essentially take the place of SAPs. Some believe that

3735-400: The aided country that may have been made while ignoring the actual situation of the aided country. It often overemphasizes market liberalization and financial market opening. In the long run, these loan conditions have brought bad results to the aided countries. Largely as a result of the experiences in Latin America , a new theory was formulated to build upon the experiences of the 1980s and

3818-450: The beneficiaries of these agreements-sometimes intentionally so, often unintentionally-turn out to be the rich countries. The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), it has been argued, turned the WTO into a "royalty collection agency" for the rich countries. The Structural Adjustment Programs (SAPs) connected to IMF loans have proven singularly disastrous for

3901-400: The case in their article "IMF-World Bank Adjustment and Structural Transformation on Sub-Saharan Africa" for the ineffectiveness of structural adjustment in part being attributed to the disconnect between the informal sector of the economy as generated by traditional society and the formal sector generated by a modern, urban society. The rural and urban scales and the different needs of each are

3984-461: The completion point. Third, the PRGF heavily modified ESAF by curtailing the number and detail of IMF conditions and by encouraging greater input from the local community into the program's design. One of PRGF's goals is to ensure that impoverished nations re-channel the government funds freed from debt repayment into poverty-reduction programs. To that end, each country's PRGF program is modeled around

4067-537: The core problems with conventional structural-adjustment programs is the disproportionate cutting of social spending. When public budgets are slashed, the primary victims are disadvantaged communities who typically are not well organized. An almost classic criticism of structural adjustment is pointing out the dramatic cuts in the education and health sectors. In many cases, governments ended up spending less money on these essential services than on servicing international debts. SAPS are viewed by some postcolonialists as

4150-457: The cost of services beyond the citizens' ability to pay. Finally, critics attacked HIPC as a program designed by creditors to protect creditor interests, leaving countries with unsustainable debt burdens even upon reaching the decision point. Inadequate debt relief for such countries means that they will need to spend more on servicing debts, rather than on actively investing in programs that can reduce poverty. In 2008, some analysts showed that

4233-406: The counterrevolution in development thought and practice that the neoliberal Washington Consensus began advocating at about the same time. Taking advantage of the financial straits of many low- and middle-income countries, the agencies of the consensus foisted on them measures of "structural adjustment" that did nothing to improve their position in the global hierarchy of wealth but greatly facilitated

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4316-469: The decision point. So far, the IMF and World Bank have approved $ 35 billion of HIPC debt relief. Five countries have received an additional $ 1.6 billion in "topping up" assistance since 2001. Structural reforms Structural adjustment programs ( SAPs ) consist of loans ( structural adjustment loans ; SALs ) provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries that experience economic crises. Their stated purpose

4399-487: The economic institutions of countries that underwent them. After the Second World War , a Structuralist model of development relying on Import Substitutions Industrialization (ISI) had become the ubiquitous paradigm. It entailed the substitution of foreign imports by goods produced by national industries with the help of state intervention . State intervention included providing the infrastructure required by

4482-456: The economic stagnation that has occurred in the borrowing countries. SAPs emphasize maintaining a balanced budget, which forces austerity programs. The casualties of balancing a budget are often social programs. For example, if a government cuts education funding, universality is impaired, and therefore long-term economic growth. Similarly, cuts to health programs have allowed diseases such as AIDS to devastate some areas' economies by destroying

4565-554: The effects of IMF structural adjustment loans, called New Developmental Theory . This sought to build upon Classical Development Theory , by utilizing insights from Post-Keynesian Macroeconomics and Classical Political Economy, emphasizing the role of the necessity of export-oriented integration into the world economy toward industrialization, while also rejecting foreign indebtedness and management of balance of payments to avert recurrent crises. Structural adjustment programs implemented neoliberal policies that had numerous effects on

4648-414: The end of 2004. Thus a uniform treatment in IMF resources management is guaranteed. Total debt relief provided by IMF through MDRI lied around US$ 3.4 billion, in nominal terms. Besides IMF granted Liberia a debt relief of US$ 172 million as June 30, 2010. "26 HIPC countries that had reached the completion point as of June 2009 will receive $ 29 billion (in end-2008 net present value terms) in debt relief under

4731-453: The entire economy. SAL initially financed the loan by selling gold held in trust funds and accepting donations from donor countries. Subsequent loans are based on the repayment of trust funds and interest earned. The SDR is the accounting unit of the loan, and the disbursement and repayment of the loan are in US dollars. The amount of SALs issued to a country is usually proportional to its quota in

4814-405: The existence of the IMF loan itself has not led to any change away from democracy itself. Critics (often from the left) accuse such policies to be "not-so-thinly-disguised wedge[s] for capitalist interests." Take South Korea after 1997 as an example. Since the loan conditions have a huge influence on the economy of the recipient countries, there are many arguments about the loan conditions. When

4897-640: The fight against HIV/AIDS in developing countries. A counter-argument is that it is illogical to assume that reducing funding to a program automatically reduces its quality. There may be factors within these sectors that are susceptible to corruption or over-staffing that causes the initial investment to not be used as efficiently as possible. Recent studies have shown strong connections between SAPs and tuberculosis rates in developing nations. Countries with native populations living traditional lifestyles face unique challenges in regards to structural adjustment. Authors Ikubolajeh Bernard Logan and Kidane Mengisteab make

4980-526: The full cost, and further funding will need to be raised if additional countries such as Sudan and Somalia meet the qualification requirements for entry into the program. Critics soon began to attack HIPC's scope and its structure. First, they criticized HIPC's definition of debt sustainability, arguing that the debt-to-export and debt-to-government-revenues criteria were arbitrary and too restrictive. As evidence, critics highlighted that, by 1999, only four countries had received any debt relief under HIPC. Second,

5063-409: The increase of the local government's participation in creating the policy will lead to greater ownership of the loan programs and thus better fiscal policy. The content of PRSPs has turned out to be similar to the original content of bank-authored SAPs. Critics argue that the similarities show that the banks and the countries that fund them are still overly involved in the policy-making process. Within

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5146-419: The industrialized countries had engaged in the free trade of goods only after they had developed a more mature industrial structure which they had built up behind high protective tariffs and subsidies for domestic industries. Consequently, the very conditions under which industrialized countries had developed, grown and prospered in the past were now discouraged by the IMF through its SAPs. The erosion of

5229-607: The labour market. In other words, the whole arsenal of ultra-liberal measures which have contributed to the impoverishment of African populations, to the degradation of social services, to fall in life expectancy of over seven years, to the return of diseases we had thought eradicated, to increased unemployment for young graduates, to setting back industrialisation, and to the creation of chronic food shortages. HIPC addressed its shortcomings by expanding its definition of unsustainable debts, making greater relief available to more countries, and by making relief available sooner. Since 1996,

5312-496: The largest recipient of structural adjustment program loans since 1990. Such loans cannot be spent on health, development or education programs. The largest of these have been to the banking sector ($ 2 billion for IBRD 77880) and for Swachh Bharat Mission ($ 1.5 billion for IBRD 85590). According to its stated goals, Structural Adjustment Loans (SALs) aim to achieve three main objectives: boosting economic growth, addressing balance of payments deficits, and reducing poverty. It

5395-496: The loans have been criticized because of their effects on the social sector. SAPs are created with the stated goal of reducing the borrowing country's fiscal imbalances in the short and medium term or in order to adjust the economy to long-term growth. By requiring the implementation of free market programmes and policy, SAPs are supposedly intended to balance the government's budget, reduce inflation and stimulate economic growth. The liberalization of trade , privatization , and

5478-428: The majority of the world's poor people live are not included: China, India, Indonesia, Brazil, Argentina, Mexico, the Philippines, Pakistan, Nigeria, and the like. In fact, the initiative concerns only 11 percent of the total population of developing countries... It must be noted "that to benefit from the HIPC initiative, the countries concerned had to be free of arrears to the IMF and the World Bank. Countries applying for

5561-417: The only source for developing countries to obtain such currency. For the inward-oriented economies it was therefore mandatory to switch their entire production from what was domestically eaten, worn or used towards goods that industrialized countries were interested in. However, as dozens of countries underwent this restructuration process simultaneously and often were told to focus on similar primary goods ,

5644-414: The opening up of markets abroad, and they continue to enlist their governments' support, through multilateral and bilateral arrangements—conditional aid, International Monetary Fund (IMF), and World Trade Organization (WTO). While the latter agreements are formally "voluntary," in light of the desperate economic dependence of many developing states, they are to all intents and purposes "imposed." Moreover,

5727-481: The poor countries but provide huge interest payments to the rich. In both cases, the "voluntary" signatures of poor states do not signify consent to the details of the agreement, but need. Obviously, trade—with liberal or nonliberal states—is not a moral obligation, yet conditional aid, like IMF and WTO policies, aims at changing the cultural, economic, and political constitution of a target state clearly without its consent. A common policy required in structural adjustment

5810-483: The privatization of the male-dominated manufacturing and extractive industries in Argentina as a result of structural adjustment programs and subsequent rise in unemployment among men have forced women into the labor market in which they are underpaid and face poor working conditions. Feminist studies critique the economic theory behind structural adjustment because its focus on the "productive economy" renders invisible

5893-454: The productive state sectors were restructured for the sake of integrating these developing economies into the global market . The shift away from state intervention and ISI -led structuralism towards the free market and Export Led Growth opened a new development era and marked the triumph of capitalism . Since SAPs are based on the condition that loans have to be repaid in hard currency , economies were restructured to focus on exports as

5976-412: The program as of March 2020. At its meeting on 28 June 2021, the IMF's executive board approved a financing plan to help mobilize resources needed for the fund to cover its share of debt relief to Sudan. This occurred after Sudan's civilian-led transitional government and its cabinet led by Abdalla Hamdok implemented tough economic reforms to reach the decision point. To receive debt relief under HIPC,

6059-444: The redirection of capital flows toward sustaining the revival of US wealth and power. Mexico was the first country to implement structural adjustment in exchange for loans. During the 1980s the IMF and World Bank created loan packages for the majority of countries in Latin America and Sub-Saharan Africa as they experienced economic crises. To this day, economists can point to few, if any, examples of substantial economic growth among

6142-483: The reduction of barriers to foreign capital would allow for increased investment, production, and trade, boosting the recipient country's economy. Countries that fail to enact these programmes may be subject to severe fiscal discipline. Critics argue that the financial threats to poor countries amount to blackmail, and that poor nations have no choice but to comply. Since the late 1990s, some proponents of structural adjustments (also called structural reform ), such as

6225-675: The reliability and affordability of access to water and electricity in developing countries such as Cameroon , Ghana, Nicaragua , Pakistan and others. In addition, SAL also has the advantages of long loan life, low loan interest rate, loose loan conditions, and easy negotiation. Because of this, SAL has been welcomed by many developing countries and has played a role of positive for the improvement of economic conditions in these countries. There are multiple criticisms that focus on different elements of SAPs. There are many examples of structural adjustments failing. In Africa, instead of making economies grow fast, structural adjustment actually had

6308-454: The respective industry, the protection of these local industries against foreign competition, the overvaluation of the local currency, the nationalization of key industries and a low cost of living for workers in urban areas. Comparing these inward-oriented measures to neoliberal policies demanded by the SAPs, it becomes obvious that the structuralist model was fully reversed in the course of

6391-467: The result of instability in South Korean society. Because the IMF is subject to the distribution of power and interests of major powers, it is difficult to implement actions with fair and objective criteria. The main reason is that the International Monetary Fund reflects the political issues of American financial hegemony and voting power to a certain extent. This has led to the request of the IMF for

6474-427: The situation resembled a large-scale price war : Developing countries had to compete against each other, causing massive worldwide over-production and deteriorating world market prices . While this was beneficial for Western consumers, developing countries lost 52% of their revenues from exports between 1980 and 1992 because of the decline in prices. Furthermore, debtor states were often encouraged to specialize in

6557-481: The six-year program was too long and too inflexible to meet the individual needs of debtor nations. Third, the IMF and the World Bank did not cancel any debt until the completion point, leaving countries under the burden of their debt payments while they struggled to institute structural reforms . Fourth, the ESAF conditions often undermined poverty-reduction efforts. For example, privatization of utilities tended to raise

6640-469: The total cost of providing debt relief to the 40 countries currently eligible for the HIPC program would be around $ 71 billion (in 2007 dollars). Half of the funding is provided by the IMF, World Bank, and other multilateral organizations, while the other half is provided by the creditor countries. The IMF's share of the cost is currently being funded by the proceeds of gold sales by the organization in 1999, but it estimated that this will not be enough to cover

6723-490: The workforce. A 2009 book by Rick Rowden entitled The Deadly Ideas of Neoliberalism: How the IMF has Undermined Public Health and the Fight Against AIDS claims that the IMF's monetarist approach towards prioritizing price stability (low inflation) and fiscal restraint (low budget deficits) was unnecessarily restrictive and has prevented developing countries from being able to scale up long-term public investment as

6806-470: Was initiated by the International Monetary Fund and the World Bank in 1996, following extensive lobbying by NGOs and other bodies. It provides debt relief and low-interest loans to cancel or reduce external debt repayments to sustainable levels. This means the nations can repay debts in a timely fashion in the future. To be considered for the initiative, countries must face an unsustainable debt burden that cannot be managed with traditional means. Assistance

6889-411: Was necessary to improve a country's overall well-being. In 2002, SAPs underwent another transition, the introduction of Poverty Reduction Strategy Papers . PRSPs were introduced as a result of the bank's beliefs that "successful economic policy programs must be founded on strong country ownership". In addition, SAPs with their emphasis on poverty reduction have attempted to further align themselves with

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