Review of the Relevant Literature

The origins of the debate over the distributional impacts of IMF stabilisation programs can be traced to Cheryl Payer’s vociferous critique of Fund-supported adjustment policies. Payer (1975) starkly asserted that IMF-supported stabilisation programs inherently promote sharp, regressive income shifts. She pointed to the regressive movement of real wages in response to cutbacks in government-sponsored consumer subsidy programs and to reductions in nominal wage indexing. She also discussed the adverse effects of stabilisation programs on unemployment. Other works that set forth similar criticisms of Fund activities have included Hayter (1971), Weissman (1976), and Girvin and Bernal (1982).