ABSTRACT
This chapter explores the reasons for the World Bank to introduce structural adjustment lending. The central importance of structural adjustment measures within adjustment programs is not reflected in the combined conditionality associated with International Monetary Fund (IMF) programs and with regular World Bank project lending. The constraint on the IMF is not to engage in so-called “micro-policy performance criteria” and the constraint on the World Bank is not to engage in anything other than project lending “except in special circumstances.” These constraints have resulted in a situation in which conditionality and performance monitoring, in respect of major issues of structural adjustment policy, have been in danger of falling between the two stools of IMF operations and of World Bank operations. The urgency of policy reform and the limited effectiveness of project lending, combined with policy dialogue for supporting and monitoring policy reform have made the World Bank introduce Structural Adjustment Lending into its operations in 1980.
