The Purpose of World Bank Structural Adjustment Programs

The World Bank’s area of interest, activity and responsibility have evolved overtime. When it was first created its main focus were to facilitate and provide financial mechanism to the reconstruction of Europe after the World War II, along with the IMF (Easterly, n.d.). Since then it has been assisting the developing countries by providing aid for their infrastructure, industrialization, as well as assistance on the reformation of the policy for growth (Easterly, n.d.).

Due to globalization, the area of the World Bank’s activity and interest rest on poverty reduction, providing loans, and promoting environment for investment and sustainable growth (World Bank, n.d.). Despite the fact that, the World Bank has been playing a significant role in the international arena and contributing to many areas, there are still criticism and questions about the impacts of their policy on developing countries. The Structural Adjustment Program that was imposed by the World Bank is one of the example and evidence that the program has been severely affecting the developing countries since its creation (Muhumed, & Gas, 2016).

The World Bank has stringent conditions imposed for the recipient countries, which are the developing countries, when they adopt the Structural Adjustment Program (SAP), that has a lot of influenced to those countries’ domestic policies. They were forced to adopt reforms, if they want to borrow from the World Bank, such as to focus on macro-economic stability which to cut government spending, privatization of public sectors including necessities like water and hospital, and liberalize trade and shift toward export (Oatley, 2012). Through SAP, it places emphasize on the role of the market rather than the government, and when it lets the price to set based on the market itself, it leads to the unstable price rising for the basic goods.

Because the Structural Adjustment Program resulted in deep cut in spending on necessities like social care, education and development, while having the state to prioritize on debt repayment and other economic policies, hurt those developing countries more than helping them as what the World Bank demanded make them lower the living standard of their people and increase their dependency on developed countries. Moreover, to reduce the government spending which is to reduce the budget deficit, could be resulted in corruption and unaccountability as well (Githua, 2011). There are also many criticism about the program as well and one of the criticism was that the policies reforms are threaten to state sovereignty, and decision making when an outside international organization impose authority over states’ economic policy as the creation of a nation’s policy is within a state’s own interest (Githua, 2013).

In conclusion, we can say that the Structural adjustment programs contributed to the growth of national economy on one hand but on the other hand, it also has consequences to the state’s domestic policy and well-being in the long run.