Substantial issues caused by World Bank structural adjustment program for Burundi Essay

The structural adjustment program project is one project of the World Bank that created substantial problems for the assisted nation, which in this case is Burundi. The structural adjustment program is a sort of lending program by the World Bank for countries whose economies are experiencing crisis. However, this lending program requires certain reforms and policies to be implemented by the receiving country in exchange for loans. In other words, the loans are strictly conditional, and these conditionality attachments are the root cause through which the project creates problems for the assisted nation. According to the CIA, Burundi is one of the world's poorest countries having poor resources with a high rate of poverty, an undeveloped manufacturing sector and foreign aid represents 42% of Burundi's national income. Retrieved from https//www.cia.gov/library/publications/theworldfactbook/geos/by.html. Due to expanding budget deficits, debt servicing accumulated in the 1970s, a coffee boom period, and war, Burundi adopted the structural adjustment program project around the late 1980s to the 90s. The structural adjustment program emphasized the need to pursue the policy program with special attention to macroeconomic and public sector management.

It recommends further policy actions to reinforce the restructuring of the Burundian economy

a) active export promotion policies b) liberalization of the labor and financial markets and c) promotion of private investment, both domestic and foreign. At the sectoral level, priority needs to be given to measures aimed at improving productivity in agriculture, avoiding depletion of natural resources, developing smallscale activities, ensuring adequate maintenance of infrastructure, and improving efficiency in the social sectors. World Bank Report No. 6754BU (1988 January 20). Burundi Structural Adjustment and Development Issues Executive Summary (pp 1). Retrieved from http//wwwwds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1988/01/20/000009265_3960926101013/Rendered/PDF/multi0page.pdf. The negative outcomes of the program include

1. It damaged Burundis coffee industry and weakened the coffee market prices due to unbalanced terms of trade accompanied by it and subsequent government control. Coffee farmers were paid significantly lower, averagely about 40% of the global market price, which was the lowest in the region. Coffee prices declined from US$4.30/kg in 1986 to US$2.50/kg in 1987. World Bank Report No. 6754BU (1988 January 20). Burundi Structural Adjustment and Development Issues Executive Summary (pp 4). Retrieved from http//wwwwds.worldbank.org/external/default/WDSContentServer/WDSP/IB/1988/01/20/000009265_3960926101013/Rendered/PDF/multi0page.pdf.

2. It led to currency devaluation. Due to the economic slowdown resulting from the implementation of the SAP (structural adjustment program), the government depreciated Burundi franc by 30% against the US dollar

3. It led to increased foreign debt. As of September 30, 1986, Burundi had received one loan and 27 credits, totalling US$ 278.6 million, of which one loan and 14 credits, totalling US$ 97.8 million had been totally disbursed. Agriculture accounts for 28.2 percent of total commitments transport, power and water supply together for about 41.1 percent and education, Public Sector management, local construction, mining and the structural adjustment program for the remaining 30.7 percent. World Bank Report No. P4436BU (1987 April 22). Report And Recommendation Of The President Of The International Development Association To The Executive Directors On A Proposed Credit Of Sdr 6.0 Million