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Essay APC2602 - Political Economy Of Africa Structural Adjustment Programmes as Policy Reform An assessment of their objectives and impact in the SADC Countries R50,00
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Essay APC2602 - Political Economy Of Africa Structural Adjustment Programmes as Policy Reform An assessment of their objectives and impact in the SADC Countries

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Essay APC2602 - Political Economy Of Africa Structural Adjustment Programmes as Policy Reform An assessment of their objectives and impact in the SADC Countries

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  • February 21, 2022
  • 5
  • 2016/2017
  • Essay
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Structural Adjustment Programmes as Policy Reform: An assessment of their
objectives and impact in the SADC Countries



Summary:

The development crisis in Southern Africa required policy measures to reverse the
declining trends and to place the economies of Southern Africa on a path of
sustainable growth and development. This policy measures was born from a need to:

1. Arrest the deepening of poverty

2. Reduce the socioeconomic inequalities

3. Lighten the external debt burden

4. Reverse the brain drain

5. Create new employment opportunities

6. Improve the efficiency of the physical infrastructure

7. Narrow down fiscal deficits

8. Improve the balance of payments



In the early 1980’s the policy measure was born in the form of Structural Adjustment
Programmes (SAP’s). The program was formulated by and with the support of the
International Monetary Fund (IMF) and the World Bank.



There are two types of policy responses:

1. Stabilization policies which are the domain of the IMF. This policy aim at returning
an economy to an equilibrium path that was followed prior to a shock. This policy
relies on demand management and tends to be short- term in perspective.



2. Structural adjustment policies which are the province of the World Bank. These
policies are designed to address the long-term growth issues through better supply
responses to market liberalization and efficient macroeconomic management.

, SAP comprised of three major components:

•The importance of macroeconomic stability

•The need for prices to reflect relative

•Reduction of the role of the state in economic affairs



The precondition for a country to enter into a structural adjustment program, an
agreement must be reached on a set of stabilization measures with the IMF.



The primary objectives of SAP are:

a. The restoration of long-term growth

b. Improvement of the balance-of-payments position

c. Reduction of domestic financial imbalances

d. Promotion of trade liberalization

e. Increased domestic savings in the private-and public sectors

f. Elimination of price distortions in various sectors of the economy

g. The mobilization of additional external resources



The objectives of SAP now include:

a. Reducing its impact on the poor and other vulnerable groups

b. Avoidance of sharp declines in personal consumption

c. Providing for the delivery of basic social services

d. Consideration of its environmental impact



Primary policy instruments are implemented to achieve these objectives which are:

•Exchange rate adjustment

•Primarily devaluation

•Control of the money supply and credit ceilings

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