Imf and Pakistan

Structural adjustment, as measured by the number of adjustment loans from the

IMF and World Bank, reduces the growth elasticity of poverty reduction. I find no

evidence for a direct effect of structural adjustment on growth. The poor benefit less from

output expansion in countries with many adjustment loans than in countries with few

adjustment loans. By the same token, the poor suffer less from an output contraction in

countries with many adjustment loans than in countries with few adjustment loans. Why

would this be? One hypothesis that adjustment lending is counter-cyclical in ways that

smooth consumption for the poor. There is evidence that some policy variables under

adjustment lending are counter-cyclical, but there is no evidence that the cyclical

component of those policy variables affects poverty. I speculate that the poor may be illplaced

to take advantage of new opportunities created by structural adjustment reforms, just

as they may suffer less from the loss of old opportunities in sectors that were artificially

protected prior to reforms.For its part, the World Bank headquarters has built into its lobby wall the slogan "our

dream is a world free of poverty." The recent East Asian currency crisis and its aftershocks

in other countries generated intense concern about how the poor were faring under

structural adjustment programs supported by the Bank and the Fund. The poverty issue is

so red-hot that IMF and World Bank staff began to feel that every action inside these

organizations, from reviewing public expenditure to vacuuming the office carpet, should be

justified by its effect on poverty reduction.This paper examines