From Structural Adjustment Programs to Poverty Reduction Strategy Papers: Same Poison, Different Bottle
Structural Adjustment Programs (SAPs) are now widely regarded as policies of the past, programs so heavily criticised by economists, lawmakers, and civil society that they eventually faded away. Yet, this decline was more a matter of rebranding than a fundamental shift in how global institutions approach poverty and economic development. SAPs were replaced not by a new economic philosophy, but by a new instrument. Poverty Reduction Strategy Papers (PRSPs) were introduced to address criticisms of SAPs while continuing to guide developing economies in restructuring their economies. Although PRSPs did soften certain aspects of SAP conditionality, they preserved many of the same core features that had long proven detrimental for economic development, particularly in the Global South.
During the debt crises of the 1970s and 1980s, the International Monetary Fund (IMF) and the World Bank created SAPs to assist over-indebted developing countries, on the condition that they restructured their economies. While conditions varied, most countries were required to adopt neoliberal reforms, such as trade liberalisation through the removal of quantitative restrictions, privatisation of state-owned enterprises, and deregulation of markets. By the end of the 1990s, many countries implementing SAPs experienced stagnation or even collapse in per capita income, 3 reinforcing criticism that these reforms undermined development rather than supporting it.
As SAPs came to be seen as failures, the IMF and the World Bank introduced PRSPs, presenting them as more “country-driven” and centred on poverty reduction. While PRSPs addressed some sovereignty concerns and incorporated participatory elements, they continued to require adherence to core neoliberal principles, particularly trade liberalisation and privatisation. Ethiopia’s PRSP, for example, introduced tax reforms that favoured foreign private investment over the development of domestic industry. While the process improved communication between the government and marginalised communities, it also contributed to growth in the informal economy (a sector representing roughly half of Ethiopia’s GDP) without substantially improving conditions for workers within it.Additionally, empirical assessments suggest that PRSPs have not produced significant improvements in poverty reduction.
This continuity raises a broader concern: policies presented as poverty-reducing continue to rely on the same economic prescriptions that contributed to stagnation under SAPs. This dynamic sits uneasily with the idea of “just trade.” A just international trading system should ensure that gains from trade benefit all participants, including the least advantaged states. Can developed economies truly claim to support “just trade” if the policies they promote reproduce the same harm of the past, merely repackaged under a different name? If developed economies genuinely seek to promote development and reduce poverty, they must move beyond repackaged conditionality and support reforms grounded in fairness and equity. This could include making fuller use of special and differential treatment in the WTO, expanding access to alternative development financing, and integrating non-economic objectives (such as human rights protections) into the design of global economic governance.
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