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Impact evaluation of structural adjustment program: a case of Pakistan

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  • Khan, Rana Ejaz Ali
  • Nawaz, Muhammad Atif
  • Hussain, Altaf

Abstract

We analyzed the effect of Structural Adjustment Program (SAP) on macroeconomic variables of Pakistan using annual time series data for the years 1981-2001. The impact of four policy instruments of SAP, i.e. reduction in budget deficit, increase in indirect taxes,adjusting the exchange rate and sliding down of subsidies, on employment, income distribution, per-capita income and inflation has been analyzed. It is found that the first policy instrument, i.e. decrease in budget deficit has affected employment, income distribution and inflation adversely. The second policy instrument of imposition of indirect tax negatively affected the employment, income distribution, per capita income and positively affected the inflation. The third policy instrument of SAP was adjustment of exchange rate. It is estimated that adjusting exchange rate has resulted into increased unemployment and inflation. The fourth policy instrument of shrink in subsidies augmented the unemployment, unequal distribution of income and inflation and dwindled the percapita income. It appears that SAP has adversely affected the major socioeconomic variables of the economy. Currently the government is considering for loan from IMF, so it is proposed to avoid such type of policy directives from IMF.

Suggested Citation

  • Khan, Rana Ejaz Ali & Nawaz, Muhammad Atif & Hussain, Altaf, 2011. "Impact evaluation of structural adjustment program: a case of Pakistan," MPRA Paper 34835, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:34835
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    References listed on IDEAS

    as
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    5. Ricardo Martin & Alex Segura-Ubiergo, 2005. "Social Spending in IMF-supported Programs," Public Economics 0504011, University Library of Munich, Germany.
    6. Tilat Anwar, 1996. "Structural Adjustment and Poverty: The Case of Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 35(4), pages 911-926.
    7. Ms. Uma Ramakrishnan & Mr. Juan Zalduendo, 2006. "The Role of IMF Support in Crisis Prevention," IMF Working Papers 2006/075, International Monetary Fund.
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    Cited by:

    1. Michael Anthony Adams, 2020. "Fiscal Policy and Stock Market Efficiency in the USA: An ARDL Bounds Testing Approach," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 9(2), pages 73-81.

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    More about this item

    Keywords

    Structural Adjustment Program; Budget deficit; Indirect taxes; Exchange rate; Subsidies; Employment; Income distribution; Per-capita income; Inflation; Pakistan;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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