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The Secret Conditions of the IMF and World Bank: Why are Borrowing Countries So Hard to Resist?
Structural Adjustment Programs (SAPs) are loan programs provided by the International Monetary Fund (IMF) and the World Bank (WB) to countries in economic crisis with the aim of reshaping their economies, improving international competitiveness, and restoring balance of payments. These loans (structural adjustment loans; SALs) come with a set of policy requirements, usually including increased privatization, trade liberalization and foreign investment, and balancing government deficits. Behind these conditions, there are profound impacts on the borrowing countries, making them difficult to resist.
The conditions attached to these loans are often criticized for their impact on the social sector, creating a distorted choice for countries with already fragile economies.
India, the largest beneficiary of structural adjustment program loans since 1990, illustrates how these loans can be affected by restrictions on their use. Under IMF rules, these loans cannot be used for health, education or development projects, but are instead focused on banking and sanitation improvements, which may not directly improve people's livelihoods.
The main objectives of structural adjustment loans include three aspects: promoting economic growth, solving balance of payments deficits and reducing poverty. However, there is a huge gap between these goals and the actual results.
For borrowing countries, these further conditions are necessary to curb government deficits and control inflation, but the consequences of implementing these policies are often the loss of social resources and stagnation of growth. South Korea's acceptance of an IMF loan in 1997 is a typical example. Although it was evaluated as a "success", such "success" concealed the accumulation of social instability.
After receiving IMF assistance, South Korea still has many problems in its economic structure and financial markets, which has led to an increase in social problems and instability.
In Latin America, many countries have benefited from the IMF's structural adjustment policies, but this experience has made them realize the necessity of a new development theory, striving to find a balance between export orientation and rejection of external borrowing. This is not only about economic growth, but also affects the country's sovereignty.
Looking back at history, since the 1980s, the implementation of structural adjustment policies has forced many countries that originally relied on domestic production to turn to export-oriented development. This shift is undoubtedly a shock to the local economic system, especially in the face of As countries compete in international markets, they are forced to specialize in the production of a single commodity, increasing their vulnerability to global economic fluctuations.
Market liberalization and the removal of trade barriers caused by structural adjustment programs attracted foreign investment for a time, but reduced the country's control over its own markets, resulting in huge losses for small businesses and the agricultural sector.
The impact of structural adjustment varied across regions, but its fundamental nature was similar: the policy conditionalities imposed by the IMF and the World Bank changed the economic structure of these countries to a significant extent. Although in theory these policies are intended to promote economic autonomy, in practice they are often a reflection of the interests of major powers, deepening the gap between the rich and the poor and social inequality.
Such long-term economic oppression has left many borrowing countries stuck between being content with the status quo and seeking change. As the contradiction between demand and reality becomes increasingly severe, can borrowing countries really find a way out under the close monitoring of the IMF and the World Bank?
