Position Paper

Committee: Special Summit on Sustainable Development

Topic: The Role of International Organizations in a Post-Structural Adjustment World
Country: Marshall Islands
Delegate: Monalisha Pandey
Background:
Structural Adjustment Policies are economic policies implemented by international organizations
like World Bank and International Monetary Fund (IMF) claiming to uplift developing and
underdeveloped countries by eradicating poverty with loans and grants. Structural adjustment
policies are designed for individual countries so that they can be self-sufficient and independent
in terms of social, economic and political development. But, they have common guiding
principles of neoliberalism which features export-led growth; privatization and liberalization;
and the efficiency of the free market. They do have certain conditions to provide loans to these
countries, which generally require countries to devalue their currencies, lift import and impose
export restrictions, balance the budget of the governments by removing price controls and
subsidies. Due to these prerequisites, developing countries tend to suffer from debt and balance
of payments deficits, large government budget deficits, low levels of saving and investment, low
levels of economic growth and high unemployment with high levels of inflation. There has been
a large amount of borrowing over the period from 1973 to1981 and the subsequent drying up of
funds available (including foreign aid flows). In addition, interest rates increased in the post-
1979 period when the debt crisis first emerged which ultimately jeopardized these countries
further.
Current Policy:
As mentioned above, World Bank and IMF have certain prerequisites while granting loans to
developing and underdeveloped countries which generally includes devaluation (expenditure-
switching), stabilization (expenditure-reduction) and economic liberalization. Devaluation of
currencies of these nations causes severe decrease in the level of domestic production and
employment, with particularly serious consequences for the poor who tend to be less skilled and
more vulnerable and are the first ones to be laid off when jobs disappear. It reduces consumption,
lowering the standard of living, especially among the poor, accompanied by little additional
investment. It uplifts the cost of living at the same time that incomes and employment have
dropped. On the other hand, economic liberalization leads to free market and less regulation by
the government leaving people open to exploitation, including by multinational corporations, and
increasing their vulnerability. It allows companies to shift production away from necessities -
i.e., away from the goods needed by the poor or less well off in order to maximize profits. This
harms domestic producers who without subsidies are not able to compete with foreigners,
especially foreign suppliers who dump cheap goods on the domestic market, and thus
undermining the supposed effects of the devaluation.
Proposed Resolution:
Although post structural adjustment policies exist to develop countries and make them
independent, it fails to do so by its very existence. In order to improve that, we propose
following resolutions:
More focused approach on the problem of poverty reduction by establishing programs
that effect the poverty reduction.
As poverty is the main economic problem to achieve development, organizations should
provide analysis of poverty in a country by identifying a national strategy to reduce
poverty in that country.
Enhancing the effectiveness of aid flows to LDCs with greater emphasis on
accountability, measurement and assessing the impacts.
Taking into consideration the political and other dimensions of the policy making
involved with greater awareness of government, market and civil society.
Establishing a sense of partnership between developed and less developed countries
Rather than being dominant and imposing higher interest.

Conclusion:
One of the many things that the powerful nations through greater organizations like World Bank
prescribe is that the developing nation should open up to allow more imports in and export more
of their commodities. However, this is precisely what contributes to poverty and dependency
because of the policies they impose on developing countries. International community must
emphasize on this issue and come up with better solutions and policies to strengthen
socioeconomic status of developing countries.