Working Paper
The Impact of Adjustment-Related Social Funds on Income Distribution and Poverty

This study evaluates the impact of the over seventy Social Funds (SFs) which were introduced since the mid-1980s to offset the surge in poverty spurred by adjustment. SFs benefited from greater visibility and financial support by the donor community than traditional social security programmes, and raised expectations about ameliorating living conditions in many developing countries. Notwithstanding the greater administrative flexibility they enjoyed, and their fairly rapid implementation, SFs played a minor role in reducing the number of unemployed, adjustment- and chronic- poor, and in reversing adverse changes in income distribution. This was mainly due to the limited funding they received as well as to targeting, sequencing, and cost- effectiveness problems. All in all, SFs have proven to be no panacea. Greater impact on poverty would have required greater resources, more permanent relief structures, improved planning and targeting and better timing in relation to the cuts entailed by adjustment. Most of all, public policy ought to have fostered greater congruence between the objectives of macroeconomic stability and social protection.