Impact evaluation of structural adjustment program: a case of Pakistan

Khan, Rana Ejaz Ali and Nawaz, Muhammad Atif and Hussain, Altaf (2011): Impact evaluation of structural adjustment program: a case of Pakistan. Published in: European Journal of Economics, Finance and Administrative Sciences No. 29 (2011): pp. 1450-2275.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Structural Adjustment Program, Budget deficit, Indirect taxes, Exchange rate, Subsidies, Employment, Income distribution, Per-capita income, Inflation,Pakistan
• Subjects: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D73 - Bureaucracy ; Administrative Processes in Public Organizations ; Corruption; E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E62 - Fiscal Policy; C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D80 - General

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