Structural Adjustment Programmes: The Experience with ESAF in Africa tion in production and distribution, protection of domestic industries, and the effec­tive elimination of the price mechanism in important sectors of the economy, in­cluding agriculture. It was believed that government planning and regulation worked better than free markets. That development model failed miserably, because it elimi­nated market discipline and incentives, and became increasingly unproductive, in­efficient, and costly. As a result, poverty increased, social and human development indicators worsened steadily, and the physical infrastructure deteriorated sharply. What structural adjustment programmes have tried to do in the 1980s and 1990s is to dismantle this model, and put in place a structure that emphasises the proper functioning of markets, reduces the pervasive role of government in production and distribution, and promotes the role of the private sector in development. The initial conditions under which countries sought IMF assistance varied, of course, from country to country, but there is quite a commonality in the diagnosis of the troubles. Table 1 illustrates this point. It compares ESAF countries and non-ESAF developing countries with respect to a number of economic and social indicators. It tells a story of negative per capita income growth, low savings, double-digit infla­tion, large fiscal deficits, unrealistic exchange rates, a heavy external debt, high infant mortality, short life expectancy, and a high rate of illiteracy. It also tells an interesting story about the major changes that have taken place between the first half of the 1980s and the first half of the 1990s. I will return to this issue when discussing the record of performance. From this summary diagnosis, it is not too hard to imagine what needed to be done to address these ills, although the political economy of change has not been easy to manage. Deep-seated problems cannot be changed overnight, there are winners and losers when the rules of the game change, and political resistance constrains the pace of reforms. In undoing a large part of the heritage of the past, structural adjust­ment programmes have tried to address the macro-economic stabilisation part through fiscal, monetary, and exchange rate policies, which work largely on the demand side of the economy. They have addressed the structural part, which works on the supply side of the economy, by measures to improve the productivity of labour and capital and the functioning of markets. Both parts need to work together to raise savings and investment, which in turn are essential for achieving sustainable growth and external viability. Designing a programme is more of an art than a science, although the macro-economics of it can rely on a fairly robust empirical basis. On the struc­tural side, the process is fuzzier, but experience, common sense, and examples of “best practices” help in figuring out what works and what does not work. The priority in macro-economic stabilisation was invariably to bring inflation under control by reducing fiscal deficits and controlling domestic credit expansion. Part of the structural reforms, but also an indispensable tool of macro-economic stabilisation, 65