Skip to main content

Structural Adjustment Programmes


Structural Adjustment Programmes

SAP's are programmes of free market and supply side reforms that multilateral agencies such as the IMF lay down as conditions for lending funds. This is required as conditionality for the loan.

One major area of contention with the two main 'economic' agencies mentioned above (IMF and World Bank) is their application of Structural Adjustment Programmes. These are part of any 'rescue package' a developing country may ask for. Normally, they require the receiver to accept that:

  • They cut, or even drop all subsidies and price controls, even on basic foodstuffs
  • They cut public expenditure
  • They reduce the quantity of money in circulation
  • They reduce those employed in the public sector
  • They quickly reduce domestic inflation
  • They open up home markets
  • They privatise essential utilities such as gas, water and electricity, as well as other industries
  • The move from a fixed to a floating exchange rate regime thus making the domestic currency convertible