The goal of structural reform is to create a favorable policy environment for accountable, transparent government with a well-defined public and private sector working in mutual reinforcing ways to promote prosperity and sustainable development.  

According to the World Bank’s 1997 World Development Report, chief functions of a modernized system of governance include include five key tasks: (WDR, 4)

·    Establishing a foundation of law

·    Maintaining a non-distortionary policy environment

·    Investing in basic social services and infrastructure

·    Protecting the vulnerable

·    Protecting the environment

Structural reform programs usually consist of a package of inter-related policy correctives designed to improve both the external and internal policy environment.   Improvements in the external policy environment are designed to enhance the country’s ability to reap the gains of trade and enable access to foreign capital.  Improvements in the internal policy environment are designed to improve the efficiency and equity of government functioning and to improve regulatory and oversight capacities with respect to the maintenance of a policy environment for private economic activity. 

Standard components of a structural reform program include an assessment of the country’s internal and external sectors.  Macroeconomic functioning is considered to be at the core of the IFI package of proposed changes, but microeconomic, governance, and even non-economic factors that might impact substantially on the success of the proposed policies are also included.  The IFI assessment teams, working in close collaboration with the government, draw up a draft memorandum based on the assessment and on proposed recommendations.  This is discussed with both the government and the other members of the donor community.   A memorandum is then prepared by the government and is submitted in the form of statement of intention of the government.  The policy memorandum will typically reflect an assessment of the current situation, a set of priorities for policy reform, and requests with respect to IFI assistance.  The government’s program will typically be stated in the form a policy matrix with timetable benchmarks.  The priorities for the structural reform agenda will depend upon the country’s situation, but will typically include: improved governance, including strengthened state capacity, transparency, and competition policy; improved balancing of public and private sectors through privatization; bank and financial sector restructuring; land reform, and energy sector reform.   Governance measures often also include reform of the treasury system, the establishment of a single independent auditing agency to control the efficiency of public finances and eliminate redundant inspection rights, control over quasi-fiscal operations of the central bank, prevention of unjustified intervention by public officials in the operation of private enterprises, and public procurement reform.  The goal of privatization is to raise productivity and support growth targets, as well as aid in the achievement of fiscal goals by bolstering revenues and lowering direct or indirect subsidies.  The goal of bank restructuring is to increase the stability of the banking system.   In post communist structural reform programs particular emphasis is placed on measures that lead to a greater reliance on monetarized commercial transactions and a reduction in inefficient and non-transparent barter relations