ABSTRACT
If the World Bank in the 1970s was confronted by unprecedented opportunity for expansion and diversification, the 1980s were years of crisis and adjustment, produced by the economic deterioration of many developing countries, particularly through protracted recession and deepening indebtedness. The Bank as a purveyor of development policies put itself under considerable pressure to formulate alternatives to conventional approaches devised in contexts of sustained growth. The Bank as a lender found itself caught up in the dilemmas of debt, with many of its borrowers proving so uncreditworthy that, yet again, to stay in business the Bank had to discover new avenues of lending. In particular, the presidency of A.W. (Tom) Clausen (1980-6) saw an emergence of program lending, particularly structural adjustment lending, as a means of addressing fundamental long-term weaknesses in borrowing countries, often conceived in the context of shorterterm austerity measures devised by the International Monetary Fund. With time, tension became apparent between short-term austerity measures, and those designed to stimulate immediate and long-term economic growth.
