THE PAKISTAN DEVELOPMENT REVIEW
Macroeconomic Effects of Adjustment Lending in Pakistan
During the 1970s and early 1980s, many developing countries faced macroeconomic problems, notably large fiscal deficits, vulnerable balance of payments positions, increasing inflation rates, lower rates of domestic savings, and as a consequence lower capital formation and economic growth rates. The major financial lending institutions, preeminently the W orId Bank and the International Monetary Fund (IMF), argue that the present macroeconomic problems in less developed countries (LDCs) are due to structural maladjustments-poor economic policies and weak institutions. Therefore, since 1980, these donor agencies have been proposing Structural Adjustment Programmes (SAPs) and Sectoral Adjustment Programmes (SECAPs) associated with Structural Adjustment Lending (SALs) and Sectoral Adjustment Lending (SECALs), respectively. These programmes focus on broader macroeconomic adjustment policies. The disbursement of SALs and SECALs are, how~ver, conditional upon the recipient countries adopting economic policies specified by the staff of the World Bank and the IMF.