The objective of this research is to evaluate performance of the structural adjustment program in Malawi. Facing an economic crisis in the early 1980s, the Government of Malawi started implementing the. structural adjustment polices with the support of the World Bank and the International Monetary Fund.
Main goals of the adjustment policies are rectification of imbalances of external payments and efficient use of resources. The major policies are categorised as encouragement of production of tradable goods, increase in efficiency of markets, and sound management of public resources.
Items of evaluation are defined to be extent of implementation and impact of the structural adjustment program. As the adjustment program is composed of the structural adjustment policies adopted by the Government, and support from donors, the implementation and impact of each of the two is separately analysed.
Regarding the extent of implementation of the adjustment program, most of major policies were successfully implemented. Fiscal deficits were significantly reduced, while an exchange rate of Malawian currency was frequently devalued. Prices for produce of smallholder farmers were also raised, a sharp contrast with the previous disincentives given by a public purchasing agency.
With respect to impact of the structural adjustment program, comparison is made between economic performance during the period of 1980-82, which saw the economic crisis, and that for 1983-87, when most of the important structural adjustment policies were implemented.
The impact of the adjustment program is positive. Current account deficits of the international balance of payments were substantially reduced. Production and exports rose significantly, mainly in the sector of tradable goods. In addition, smallholder farmers increased their production and sales in response to pricing policies of the structural adjustment program.
Finally, donors increased their assistance to Malawi, which sustained the adjustment efforts of the Government.