The NRM government succeeded abroad, failed at home
When the National Resistance Movement (NRM) government came to power in 1986, it inherited an empty treasury and many problems that needed vast amount of foreign currency. The export sector and tax base had collapsed. The government tried to raise money through bilateral engagement with western governments to no avail. It was advised to reach an agreement with the International Monetary Fund (IMF) first (New African 1987-88). The IMF and World Bank were looking for another African country to experiment stabilization and structural adjustment programs (SAPS) model which had failed in Ghana. Paul Nugent (2004) observed that “…Ghana quietly dropped off the World Bank/IMF list of high performers, to be replaced by other countries like Uganda”.
The signing of a structural adjustment agreement between the IMF and the government in 1987 was of mutual benefit to both parties. It gave the IMF and World Bank the opportunity to introduce a rapid and comprehensive (shock therapy) form of structural adjustment which included inflation control to single digits, balanced budget, economic liberalization and privatization of public enterprises, export diversification and labor flexibility. Donor funds would be released contingent on adherence to the terms of the agreement.