Structural Adjustment Facility
The Structural Adjustment Facility (SAF) was a program of the International Monetary Fund, set up in 1986 and soon replaced by the Enhanced Structural Adjustment Facility (ESAF) in 1987.[1] As a condition of financial assistance, countries were required to implement neoliberal structural adjustment programs.
Contents
History
The idea for the SAF came about in the spring of 1985 with a suggestion by India's finance minister, V.P. Singh. "This initiative... led directly to the establishment of the Structural Adjustment Facility (SAF) in 1986 and indirectly to the creation of the much larger Enhanced Structural Adjustment Facility (ESAF) in 1987. It embodied two roles for the Fund that had emerged only in the preceding decade: lending on concessional terms and lending for structural adjustment."[2]
- "By [September 1985], the United States had taken the lead in advocating the plan. The U.S. Executive Director, Charles H. Dallara, argued before the Board that the goal of the proposed facility should be to “promote structural adjustment and growth” and — in what he called a “bold step” — that “programs should be developed and negotiated jointly by the Fund, the Bank, and the member” country. He suggested that the member should commit to a two-year macroeconomic and structural economic program; that a joint mission from the two institutions should negotiate a program; that both Boards should consider it around the same time and approve funds under their separate jurisdictions; that there should be semiannual drawings based on targets that would be evaluated judgmentally; and that structural elements should cover a broad range of policies, not just those covered by the Fund’s own expertise."[3]
Much of this was ultimately agreed to, but the idea (strongly pushed by James Baker III) that the IMF and World Bank should act together, jointly negotiating and issuing loans, was rejected. The IMF instead said only that "the Fund should work in close collaboration with the World Bank, whilst avoiding cross-conditionality."[4] Ultimately, by the end of 1985, the U.S. abandoned the idea:
- "By end-year, however, they abandoned the quest in favor of the more limited idea of having the Fund and the Bank, together with the authorities of the borrowing country, jointly develop a “policy framework” that would be consistent with but more specific on structural adjustment than the Fund’s usual Article IV report and the Bank’s country economic memorandum. The framework then would be considered more or less simultaneously by the two Executive Boards, after which each institution would negotiate a specific program based on its own criteria."[5]
Resources and articles
Related Sourcewatch articles
- World Bank
- International Monetary Fund
- Washington Consensus
- India's New Economic Policy of 1991
- Structural Adjustment Loan
- Enhanced Structural Adjustment Facility (ESAF)
- Poverty Reduction and Growth Facility (PRGF)
References
External Resources
- ESAF, IMF Fact Sheet.
- "ESAF: No Solution to Multilateral Debt," Halifax Project.
