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living adjustment clauses from collective agreements and eliminating
minimum-wage laws. Let us not forget that while real wages are one-
tenth or even one-twentieth of what is paid in the advanced capitalist
countries, structural adjustment programmes (S APs) boost the price
of basic household goods to levels seen in the developed capitalist
world. In some cases, the prices are even higher.
SECOND PHASE: STRUCTURAL ADJUSTMENT, THE REAL
THING
Implementing 'macroeconomic stabilisation' is the condition for
receiving IMF funds and a renegotiation of the external debt with the
Paris and London Clubs. It is always followed by the implementation
of 'necessary' structural reforms.
There is a division of labour between the IMF and the World Bank.
The 'necessary' economic reforms are 'encouraged' with structural
adjustment loans and sectoral adjustment loans from the World
Bank. The structural reform package has ten main components:
- Trade Liberalisation
Protectionist tariff barriers are eliminated in order to make the
domestic economy more 'competitive'. In truth, trade liberalisation
destroys industrial production for the domestic market and 'liberates'
domestic capital from genuinely productive activities.
- Liberalisation of the Banking System
This means privatising state-owned banks and deregulating the
commercial banking sector. The central bank loses control of
monetary policy; interest rates are set on the free market by
commercial banks. It is worth recalling that international
agreements have opened up domestic banking to foreign commercial
banks. The tendency is towards a weakening of domestic banking
institutions, whether state-owned or private.
The IMF also dictates large increases in interest rates, in both
nominal and real terms. This upward movement has a direct effect on
domestic prices. It leads to the collapse of a country's credit system,
for both agriculture and industry. Local businesses are depressed by
high interest rates; significantly tighter access to credit for the lower