One feature of adjustment loans that has been often overlooked in their evaluation is their frequent repetition to the same country, with such extremes as the 30 IMF and World Bank adjustment loans to Argentina over 1980-99 or the 26 adjustment loans to Cote d'Ivoire and Ghana. The rate of repetition remains high and non-decreasing as cumulative adjustment loans increases. Repetition changes the nature of the selection problem, with the possible implication that new loans had to be given because earlier loans were not effective. Seventeen out of the eighteen countries that were IDA in 1980 and were in the top half of adjustment loans received became eligible for HIPC debt relief, compared to less than 50 percent of the IDA countries in the bottom half of adjustment lending—again suggesting that previous loans were not effective at generating the growth necessary to service the debt. There were relative successes and failures, but none of the top 20 recipients of adjustment lending over 1980-99 were able to achieve reasonable growth and contain all policy distortions. Policies improved unevenly as adjustment loans accumulated, and even those policies that improved show a nonlinear satiation point after a certain number of adjustment loans is reached. An overall indicator of severe macroeconomic policy distortion does not improve as the number of adjustment loans increases in the overall sample, with about half the adjustment loan recipients showing severe distortions regardless of the number of cumulative adjustment loans. An instrumental variables regression for estimating the causal effect of repeated adjustment lending on policies shows a significant but small improvement for some macro policies, but none for others. None of the techniques in the paper is able to identify a growth effect, positive or negative, of repeated adjustment lending. The findings of this paper are in line with the foreign aid literature that shows that aid does not discriminate between good and bad policies. There's a big difference between structural adjustment lending and structural adjustment policies.
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