Structural Adjustment in Lesotho: An Evaluation

This paper evaluates the 1988–90 structural adjustment program in Lesotho using a computable general equilibrium model. It finds that the program failed to rectify a balance of payments problem, and that without a massive inflow of capital for a water project the country would be facing a major balance of payments crisis. Lesotho’s experience suggests that structural adjustment need not work against the poor, and that the balance of payments objective may be achieved by reducing recurrent government expenditures, other than wages.