Statement by an IMF Mission to NicaraguaPress Release No. 10/84
March 11, 2010
An International Monetary Fund (IMF) mission visited Managua from February 22 to March 5 to begin discussions in the context of the fourth review under the Extended Credit Facility (ECF), as well as to conduct the Article IV consultation.i Mr. Luis Cubeddu, mission chief for Nicaragua, made the following statement today in Managua:
“As anticipated, the Nicaraguan economy has been affected by the global economic crisis, and real GDP growth is expected to have contracted by about 1.5 percent during 2009. At the same time, inflation fell below 1 percent, due to weak domestic demand and lower world commodity prices. Recent data appears to indicate that the economy has begun recovering, consistent with a resumption of positive real GDP growth during 2010.
“Discussions focused in evaluating the economic program agreed in the context of the ECF. Preliminary data through December 2009 indicates that all quantitative targets at end-2009 were met with some margins, in part reflecting the prudent implementation of fiscal and monetary policies. The mission discussed the economic outlook for 2010, as well as the policies needed to maintain macroeconomic stability, as well as to ensure the sustainability of public finances and sound development of the financial system. The mission also evaluated progress in implementing longer-term reforms. In this regard, the mission highlighted the need to make progress towards: (i) evaluating the options to improve the financial situation of the Social Security Institute; (ii) consolidating the reforms in the electricity sector; (iii) improving public financial management; and (iv) strengthening the policy instruments of the Central Bank.
“The discussions between Fund staff and Nicaraguan authorities will continue in the coming weeks, with the objective of reaching an understanding about a set of policies that could be presented for the consideration of IMF management and its Executive Board.”
i In the context of the recent change in the Fund’s financial architecture for LICs, the Poverty Reduction and Growth Facility (PRGF) was replaced by the Extended Credit Facility (ECF).