Structural Adjustment Lending

Summary of Structural Adjustment Lending

World Bank program designed to assist developing nations with balance of payments problems resulting from correctable internal economic patterns. The program provides hard currency loans conditional upon agreement by the beneficiary country to undertake certain specified corrective measures, which may include improvements in budgeting and management of public debt; enhancement of free enterprise institutions; shift in public investment priorities from traditional to more profitable ventures; elimination of protective tariffs that have sheltered inefficient domestic industries; and tax incentives to stimulate increased production and energy efficiency. Structural adjustment loans are normally paired with five- to ten-year programs, so as to minimize economic shock in the recipient countries.

For fiscal 1984, it was contemplated that structural adjustment lending may consume up to 10 percent of all bank lending.

(Main Author: William J. Miller)

Structural Adjustment Lending and International Trade Economy

In relation to international trade economy, Christopher Mark (1993) provided the following definition of Structural Adjustment Lending: A program of lending by the World Bank (Sec. III) designed to help developing countries deal with balance-of-payments problems resulting from internal economic patterns that are susceptible to correction. The program provides hard-currency loans conditional upon agreement by the beneficiary country to undertake specified corrective measures, which may include elimination of protective tariffs that have sheltered inefficient domestic industries, as well as improvements in budgeting and management of public debt and shifts in public investment priorities.