how does world bank and imf structural adjustment programmes create poverty

Research institutes

Carnegie's commentary on Tunisia describes how IMF conditionality reaches beyond the Fund. When President Saied rejected a $1.9 billion IMF loan in April 2023, most of Tunisia's other creditors, including the United States and the EU, had already made an IMF deal a condition of their own support.

Five Years After His Power Grab, Tunisia's President Has Only Achieved Failure · carnegieendowment.org
Border bargains only borrow time: How Europe can stop its Tunisia rot · ecfr.eu

Justice Council Political Analysis

The causes, from heaviest to lightest: (1) loan conditions require cuts to public spending, devaluation and privatisation, and the costs land first on wage earners and users of public services; (2) other creditors make their own lending depend on an IMF deal, so a borrowing country cannot easily refuse the terms; (3) the creditor countries that write the conditions also control voting in both institutions. That the conditions exist and what they contain is established. How much poverty they cause, and whether that is intended, is contested.

Four changes would alter the finding: binding social impact assessments carried out before a programme starts; a protected minimum for social spending written into every set of loan conditions; debt restructuring before austerity is imposed; and a change in IMF voting shares that ends the single-country veto.

Conclusion

The Expert Opinions in the corpus argue that structural adjustment creates poverty through the conditions attached to the loans: cuts to public spending, currency devaluation and privatisation. These shift costs onto wage earners and service users, while creditors and international finance gain. Research on Tunisia shows why such terms are hard to refuse: other lenders make their own support depend on an IMF deal. The corpus contains no direct poverty data, so how large the effect is remains contested.