The Fiscal System, Adjustment and the Poor

It is now widely accepted that in many countries the poor suffered additional deprivation during the stabilization and adjustment that took place in the 1980s (Cornia et al. 1987, passim; Helleiner 1985, Addison and Demery 1985, World Bank 1989a). Downward pressure on the conditions of living of poor groups arose from three sources: reductions in real incomes from employment, as employment levels fell and real wages declined; rapid rises in the prices of the goods the poor consume, especially food, following devaluation, increased producer prices for food and the reduction or removal of subsidies; and cuts in government provided services — health, education and economic services — to which the poor had access.