Making Adjustment Work for the Poor

Many developing countries are engaged in structural adjustment programmes (SAPs) sponsored by the IMF and World Bank. Evidence about the effects of these programmes on poverty remains tentative but it suggests:SAPs have revealed little ability to reduce poverty by accelerating growth, partly because of extensive slippage in implementation.SAPs have often been associated with growing inequalities or have been unable to prevent them. Most measures have impinged particularly adversely on the urban working poor, but devaluation, import liberalisation and export promotion measures have benefited a number of poor groups.Programmes are somewhat peripheral to the causes of poverty and are therefore unlikely to make a large impact in either direction. They do try to tackle some sources of low incomes and to stimulate job-creation, but results have been disappointing.SAPs have not made a decisive difference to social service provision, which has generally been among the more protected categories of government spending. However, there is little evidence of a shift in the composition of such spending towards primary level services which are more beneficial to the poor. Safety nets - intended to protect retrenched civil servants and other vulnerable groups - have had an improving record but are subject to severe limitations.Political realities usually do not favour the poor and many governments have proved reluctant to give high priority to poverty reduction. Policies based on the existing distribution of power often cannot easily be changed because those who benefit are often influential enough to block reform.Overall, the strongest criticisms that SAPs cause poverty are not born out, and concern about poverty effects is not a sufficient reason for deferring adjustment. But SAPs have done avoidable harm and could be made more pro-poor. [author]