Adjustment Programs of the International Monetary Fund (IMF) in Africa

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Stabilization and Structural Adjustment Programs in Africa
The World Bank and the International Monetary Fund (IMF) are referred to as the Bretton Woods institutions because they were both established in Bretton Woods in July 1944. The two institutions complement each other and share a similar objective of raising living standards in their member countries (IMF). The World Bank concentrates on poverty reduction and long-term economic development while the IMF focuses on macroeconomic issues. The two institutions and their relative policies have received significant criticism since the later years of the previous century. Most of these policies that are directed towards the African countries have become unhelpful and more importantly, they have compounded the problem at hand. The stabilization and structural adjustment programs of the IMF and the World Bank have fared poorly, particularly when the subjects of discussion are the poorest countries in the world that happen to be in the African continent.
The Extended Fund Facility (EFF) is a great example of how wrong these strategies and are implemented to serve the developed nations. The EFF was orchestrated to aid states with the unfavorable balance of payments. Such countries were either under significant deficits because of trade and production maladjustments or had slow economic growth and thus weak balance of payments. The position of these countries meant that they could not pursue active development policies. The oil shock of the ‘70s brought forth a clearer picture of these structural changes (Wohlmuth). The IMF emphasized the implementation of highly conditional programs “within a medium-term framework at the expense of low conditionality facilities.” In this case, the IMF argued that “adjustment” implied a better economic and financial position through fundamental economic policies where this objective would be achieved (Lecture 5). Countries would receive the financial injection with the hope that the capital imports and the longer-run development perspectives would bring sufficient returns for debt-repayment. On the other hand...