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Conditionality

News

Adjustment lending is “bad news” for poor: Bank study

6 February 2001

An internal Bank report has concluded that the poor are better off without structural adjustment. The report, The Effect of IMF and World Bank Programmes on Poverty, by William Easterly, finds that World Bank and IMF adjustment lending “means that economic expansions benefit the poor less under structural adjustment. This could be dangerous because it gives the poor less of a stake in overall good economic performance. This might increase the support of the poor for populist experiments at redistributing income”, warns Easterly.

The paper does not fully resolve why the poor benefit less from adjustment but speculates that they may be ill-placed to take advantage of new opportunities created by structural adjustment reforms because they have neither the skills or financial resources to benefit from high-technology jobs and cheaper imports.