Issues in Adjustment Lending

Abstract

Reaping the full benefit of adjustment packages depends on a government's commitment to reform as well as a variety of complementary factors, many of which have not been duly considered because of the lack of time, resources, and skills. It is becoming increasingly clear that if these packages are to be more effective and credible, the menu of policy options might be expanded in three areas. One is translating adjustment policies into improved economic performance -- the objective of domestic strategy. The second is reconciling policy reforms with changing external strategy. The third is improving the process of adjustment itself. The report concludes that attention needs to be placed on the commitment to price reforms and nonprice areas. Support might increase for the outward orientation of countries -- if discussions are extended to consider external factors and if nondistortionary ways of promoting domestic production are explored. There must also be greater government commitment to building support for the reforms as well as flexiblity in the external financing community.

Keywords: ICT Policy and Strategies, Country Strategy & Performance, Achieving Shared Growth, Environmental Economics & Policies, Economic Theory & Research