Structural adjustment

Structural adjustment is a package of economic reforms tied to loans from institutions such as the International Monetary Fund and World Bank. It commonly conditions financing on fiscal restraint, market liberalization, and changes to state ownership or regulation.

International Monetary Fund: An international organization that promotes monetary cooperation and lends to countries facing balance-of-payments problems. Its lending programs have often made structural reforms conditions for financial support.
Latin American debt crisis: A 1980s crisis in which several Latin American countries struggled to service large foreign debts. The crisis made creditor-backed adjustment programs a central response to sovereign debt distress.
Privatization: The transfer of ownership or control of assets and services from the public sector to private entities. Selling state-owned enterprises was a common reform intended to reduce public costs and expand private activity.
Import substitution industrialization: A development strategy that promotes domestic production of goods previously imported, often through protection and state support. It contrasts with adjustment programs that typically favored trade opening and reduced protection.
Washington Consensus debate: The debate over the effectiveness and social consequences of market-oriented economic reforms promoted in developing countries. It gathers disputes about whether adjustment prescriptions fit different countries and conditions.
World Bank: An international development institution that provides financing and expertise to governments. Its adjustment lending supported policy reforms alongside development financing.
Washington Consensus: A set of market-oriented policy prescriptions associated with economic reform in developing countries. Its prescriptions overlap substantially with the reforms promoted through adjustment lending.
Sub-Saharan Africa: The region of Africa south of the Sahara Desert, comprising dozens of countries and diverse economies. Many countries in the region adopted adjustment programs during debt and fiscal crises.
Developmental state: A state that actively guides economic development through industrial policy and strategic coordination. Its active steering role differs from adjustment programs’ emphasis on market allocation and a narrower state.
Heavily Indebted Poor Countries initiative: A program launched by the IMF and World Bank in 1996 to reduce eligible poor countries’ unsustainable debt. Its debt relief and policy conditions raised questions about how adjustment should relate to poverty reduction.

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