Lesson 16 Flashcards
What are the Bretton Woods Institutions?
World Bank and IMF. Set up at meeting of 43 countries with an aim to rebuild the post war economy to promote economic cooperation.
What is the Structural Adjustment Program (SAPs)?
SAPs consist of loans provided by the IMF and WB to countries that have experienced economic crises.
They are a set of economic policies which countries must follow if they are to receive these loans, which help them make debt repayments. SAPs generally require countries to devalue their currencies, lift import and export restrictions and remove state subsidies, privatisation of some services to encourage outside investment.
Are SAPs always successful?
Borrowing countries must agree to make concessions in return for new lending. This may involve privatising poorly run government services, or withdrawing costly state support for inefficient industries.
SAPs are regarded as a neo-colonial strategy used by developed countries to maintain influence over the global periphery.
Due to criticism countries now encouraged to develop poverty reduction strategy papers (PRSPs) to replace SAPs. Idea that increasing participation in creating policy leads to greater ownership of loan programmes and better internal fiscal management.
Alternative – Heavily Indebted Poor Countries (HIPCs) introduced in 1996 to cancel or reduce debt repayments to sustainable levels. Must prove unsustainable debt and meet economic management and performance targets, and undertake economic and social reforms.
What happened in Tanzania? (3)
Privatisation, people couldn’t afford water (water boys)
UK company took over water price and made it unaffordable.
People had to drink from contaminated supplies.
