IGCSE Development Studies: Specimen Questions with Answers 65 - 65 of 98

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Question 65


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What are the two problems associated with SAP?


According to IMF and World Bank structural adjustment are important to promote more open and efficient economy which helps in improving the standard of living of the people.

Two Problems Associated with SAP Are

  • Tackling with policies of inflation: Recession and mass employment can be caused by the higher rates of interest and higher amount of taxes. Implementation of the structural adjustment programme is painful in the short run. It is important to control inflation otherwise economic condition could get worse leading to a problem in the future. If tackled efficiently structural adjustment will provide an economic stability.
  • Cut on spending of the poorest section: Structural adjustment also leads to cut on various expenditures in favor of the society like, Welfare services, health services, education services etc. This spending cut can be controlled by reduction in the budget or charging higher amount of tax from the high-income earners of the society. Recently, poverty reduction has been added to structural adjustment policy by IMF.

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