Structural Adjustment:
How the IMF/World Bank
Exploits the Globe

IMF / World Bank Demands

Benefits for the Rich

Impacts on the Poor

Cut Social Spending: Reduce expenditures on health and education. [IMF claims it is now making sure such spending goes up, but often it's to put in place systems to collect fees.]	* More debts repaid.	* Increased school fees force parents to pull children -usually girls-from school. Literacy rates go down. * Poorly-educated generation not equipped for skilled jobs. * Higher fees for medical service mean less treatment, more suffering, needless deaths.
Shrink Government: Reduce budget expense by trimming payroll and programs.	* Fewer government employees means less capacity to monitor businesses' adherence to labor, environmental, and financial rules. * Frees up cash for debt service.	* Massive layoffs in countries where government is the largest employer. * Makes people desperate to work at any wage.
Increase Interest Rates: to combat inflation, increase interest charged for credit and awarded to savings.	* Investors find country a profitable place to park cash, though they may pull it out at any moment.	* Small farmers and businesses can't get capital to stay afloat. * Small farmers sell land, work as tenants or move to worse lands. * Businesses shut down, leaving workers unemployed.
Eliminate Regulations on Foreign Ownership of Resources and Businesses.	* Multinational corporations can purchase or start enterprises easily. * Countries compete for foreign investment by offering tax breaks, Low wages, free trade zones. * Once in the country, corporations can turn to WTO for enforcement of "rights".	* Control of entire sectors of economy can shift to foreign hands. o Governments offer implicit pledges not to enforce labor and environmental laws.
Eliminate Tariffs: Stop collecting taxes on imports; these taxes are often applied to goods which would compete with domestically-produced goods.	* Allows foreign goods easy access to domestic markets.	* Makes it harder for domestic producers to compete against better-equipped and richer foreign suppliers. * Leads to closure of businesses and Layoffs.
Cut Subsidies for Basic Goods: Reduce government expenditures supporting basic necessities, food, etc.	* Frees up more money for debt payments.	* Raises cost of items needed to survive. * Most frequent flashpoint for civil unrest.
Re-orient Economies from Subsistence to Export: Give incentives for farmers to produce cash crops (coffee, cotton, etc.) for foreign markets rather than food for domestic ones; encourage manufacturing to focus on simple assembly (often clothing) for export rather than manufacturing for own country; encourage extraction of valuable mineral resources.	* Produces hard currency to pay off more debts. * Law of supply and demand pushes down price of commodities as more countries produce more, meaning guaranteed supply of low-cost products to export markets. * Local competition eliminated for multinational corporations. * Increased availability of low-cost labor.	* Law of supply and demand pushes down price of commodities as more countries produce more, meaning local producers often lose money. * Best lands devoted to cash crops; poorer land used for food crops, leading to soil erosion. * Food security threatened * Women often relegated to gathering all food for family while men work for cash. * Makes country more dependent on imported food and manufactured goods. * Forests and mineral resources (oil, copper, etc) overexploited, Leading to environmental destruction and displacement.

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IMF, World Bank, Structural Adjustment

Structural Adjustment page