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

 IMF / World Bank Demands

 Benefits for the Rich

 Impacts on the

 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.

IMF, World Bank, Structural Adjustment

Structural Adjustment page