SAPs have sometimes succeeded in improving government balance sheets, by shrinking budget deficits, eliminating hyperinflation, and maintaining debt-payment schedules. However, the types of structural adjustment measures that the Bank and Fund require too often fail to promote a sustainable economy. Instead they have frequently led to increased income inequality and poverty, social disruption, and environmental degradation. SAP policies hit people living in poverty the hardest. Increased unemployment and decreased government services are the most direct hits on the poor.
Unemployment grows for several reasons.
Many people lose their jobs when government-owned enterprises are privatized. Restrictions on credit put many small and medium-sized enterprises out of business and bankrupt small farmers. Lowering tariffs on imported products and permitting increased foreign investment sometimes drives local producers and businesses out of the market. The liberalization of trade does make imported items less expensive, but most people in low-income countries consume little besides basic necessities. With jobs disappearing and wages dropping, reductions in government spending called for by SAPs happen at the worst possible time.