Press Release No. 08/45

Press Release: Statement at the Conclusion of an IMF Mission to Nicaragua

March 7, 2008

A mission of the International Monetary Fund (IMF), led by Mr. Luis Cubeddu, visited Managua during February 25-March 7 to conduct the first review of Nicaragua's economic performance under the Poverty Reduction and Growth Facility (PRGF) Arrangement. The mission met with the authorities' economic team, senior government officials, members of the National Assembly, the donor community, and representatives of the private sector and civil society. The following statement was issued today in Managua by Mr. Cubeddu:

"Economic performance continues to be generally satisfactory, and the authorities have made considerable progress in implementing their economic program. Quantitative targets through end-2007 were met, reflecting the continuation of prudent fiscal and monetary policies. Moreover, the National Assembly approved a budget for 2008 consistent with the program targets, which provides room for much needed spending on social programs and public investment. Some delays have arisen in the adoption of key reforms in the energy sector, however important steps have been taken to normalize service and improve the financial viability of the sector.

"There was agreement that Nicaragua's key challenges include strengthening growth, reducing poverty, bringing down inflation, and managing external inflows, against the backdrop of an increasingly challenging external environment. The authorities and the mission have made progress toward reaching understandings on a policy framework for the remainder of 2008 to address these challenges, taking into account the need to safeguard the program targets, and to ensure the efficient and transparent use of resources from foreign assistance. Over the next few weeks, discussions will continue with the aim of finalizing these understandings; once this work has been concluded, a request for the completion of the first review under the PRGF arrangement will be presented to the IMF Executive Board."