The emperor's tailor: an assessment of Vanuatu's Comprehensive Reform Program

Abstract

This article assesses the Asian Development Bank-sponsored CRP from two angles, situating it beside World Bank and IMF structural adjustment programs and also evaluating the impact on the economy. The adjustment of economic structure in Vanuatu was necessary. Public spending was under control but financial management problems were emerging by 1998. Governance left a lot to be desired, the political system was unstable and corruption was growing. The government had little option other than to seek outside support. But it is argued here that it was a mistake to enact a governance-heavy package of reforms rather than attack the macroeconomic problems. GDP per capita declined, exports and incoming investment slumped and the trade balance remained in deficit. The worst failing of the CRP is perhaps not that it worsened economic performance, rather it was the missed opportunities. Vanuatu has taken on the garb of economic restructuring but little of the substance. Show more