Structural Adjustment Programs (SAP) and Bangladesh

The structural adjustment program the Washington consensus is designed to eliminate aberrations and economic inefficiencies based on some macro economic factors like balance of payment, interest rate etc. of developing countries. It is aimed to stimulate growth in developing nations who have been sufferings due to their internal shocks and foreign dominance. The idea is simple to develop a market determined factor (which we call the invisible hand of market) which will guide everything in the market. In earlier times government worked as regulator and played the main role for development. It had also controlled the price of commodities, controlled the market by tariff charges and intervened with public operations. But, with the formulation of SAP that idea has totally changed. This theory was formed considering these factors- deregulation, privatization, and liberalization for allowing the market forces to play their rightful role. Bangladesh was one of the very first countries amongst the 35 to receive structural adjustment assistance under strategic adjustment facility (SAF) of the IMF. Bangladesh carried out a number of important policy reforms under SAF in such areas as agriculture, industry and trade, public resource mobilization, public expenditure, public enterprises, privatization, financial sector, external sector, human resource and poverty alleviation, and environment. It is undeniable that, this approach has brought several positive changes in our country but look- what curses it has brought along with the benefits and how they can be solved.

Impacts of SAP in Bangladesh and some recommendations

Aspect/ Sector Trade and Industry (better to call Trade Liberalization and Industrial Development) Policies 1. Liberalize and Impacts 1. It has enabled the Recommendations 1. Should attract the good and financially strong investors. 2. Govt. should rely on internal sources of fund more than foreign donations or loans.

simplify the investment option of investing process. 2. reducing tax and customs duty 3. additional emphasize on EPZ 4. remove restrictions without verification of the project or the sources of fund. So, the % of black money in GDP is increasing immensely. It has made
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on specify imports 5. Appropriate real exchange rate ratio 6. Establish perfectly competitive market

the market more volatile. (Example- Jute Mills, Share market failure) 2. Now, Govt. has to depend on foreign donation and loans more than before and sometime faces shortage of fund for welfare program. 3. The industrial growth has increased but the cottage or small businesses have decreased by same rate. 4. Import is now out of control, the country has no self sufficiency. ISI is not rewarded much now. 5. Currency is depreciating rapidly. 6. It has given birth of many unfair, illegal and unethical organizational cultures. (low quality, high price, misleading customers)
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3. Must promote SME business. 4. Must emphasize on ISI. 5. Control the BOP. 6. Govt. should increase its regulatory role.

1. Take all initiative steps to increase

1. This approach is totally failure. The

1. Ensure that farmers get the main portion of profit.

agricultural production. agricultural growth has Agriculture For instance, public procurement and increase the market 1. Increase efficiency 2. Govt. will interment less on privatized firms 3. Increase production as well as creating employment Privatization increased but the poor farmers have become poorer. 1. Corruption has also increased contrast to any other thing. 2. Lack of good governance, political system has spoiled all the attempts towards development. 3. The Bottom of Pyramid are the most sufferer

1. Must take initiative steps to control corruption either it will bar every single step. 2. Should maintain minimal distribution of income and wealth. Opportunities should be uniform and equal for everyone.

1. Ensure the quality of environment 2. Embankment to access to water 3. excessive focus on Environment shrimp culture by leasing govt. land 4. Use of fertilizer for bumper production

1. Very familiar- some are trapped in water for months while some dont get water to irrigate in the field 2. Increased the salinity of coastal area. 3. Rice cultivation has been replaced 4. Severe land degradation
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1. Appropriate legislation on access of marginal producer 2. Proper land use policy 3. Zone based cultivation should be introduced.

Reference
1. STRUCTURAL ADJUSTMENT OR POVERTY REDUCTION? AN OVERVIEW OF BANGLADESHS I-PRSP- Asian Affairs, Vol. 28, No. 2, 5-23, April - June 2006 2. Structural Adjustment Participatory Review Initiative, Bangladesh Study Theme 2(C): Implications of Financial Sector Reforms- Toufic Ahmad Choudhury and Ananya Raihan. 3. Bangladesh experience with Structural Adjustment Learning from a participatory exercise- Debapriya Bhattacharya and Rashed A M Titumir; Dhaka, March 13-15-2001, Second National Forum of SAPRI Bangladesh 4. http://www.banglapedia.org/httpdocs/HT/S_0567.HTM 5. http://www.ti-bangladesh.org/docs/muzaffer/muzaffer.htm