Structural Adjustment Program (SAP)

Definition

A Structural Adjustment Program (SAP) refers to a set of economic policies imposed by international financial institutions, such as the International Monetary Fund (IMF), on developing countries in exchange for financial assistance. These programs often involve implementing austerity measures, privatizing state-owned enterprises, and liberalizing trade.

Analogy

Think of a SAP as a strict diet plan that someone follows to lose weight. Just like how the person has to make significant changes to their eating habits and lifestyle, countries undergoing a SAP have to make substantial economic reforms to receive financial support.

Related terms

Austerity Measures: These are policies implemented by governments to reduce public spending and increase taxes in order to address budget deficits or debt issues.

Privatization: This term refers to the transfer of ownership or control of state-owned enterprises or assets into private hands.

Liberalization: Liberalization involves reducing government regulations and restrictions on trade and investment, allowing for more market-oriented policies.