The Quest for Adjustment: Tanzania and the IMF, 1980-1986

Abstract

The second crisis of the world market economy in this century affected all countries according to their respective position within the international hierarchy (Rosier, Dockes, 1983: 222ff). The weakest economies, classified as Least Developed Countries (LDCs), were hardest hit because their socio-economic profiles showed severe flaws during the preceding boom (Arnaud, 1984:91-100). They exported agrarian raw materials and, lacking an industrial basis, imported manufactured goods. Consequently, the low level of development limited the internal generation of surplus which made foreign assistance imperative and a major feature of the political economy (Hoogvelt, 1982). The share of African economies among the LDC countries is remarkably high (Sanchez Arnau, 1982:15ff). Those countries, however, which maintained close links with the former colonial metropolis suffered less than Tanzania which tried to establish an autonomous way toward social development. Indebtedness was a characteristic feature of post-colonial reconstruction during the 1960s and 1970s. Foreign capital inflow was the most adequate means to build and to diversify the economy. Internal surplus generation remained severely restricted because of the colonial legacy. Hence, indebtedness was widely accepted among scholars and policy-makers as an unavoidable prerequisite for development. It was the dramatic shift from indebtedness to insolvency in the early 1980s that created alarm and jeopardized the international monetary system. The former commodity exchange lacked the necessary financial resources and a significant segment of the world economic system was about to be suddenly disaggregated.