## _cr10108 — Updated National Human Development Plan (NHDP) 2009–2011 (Technical Summary) ## Source details **Canonical URL:** [_cr10108 — Updated National Human Development Plan (NHDP) 2009–2011 (Technical Summary)](https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr10108.pdf) ## Other formats - [Markdown version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr10108.pdf.md) - [Structured JSON version](/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr10108.pdf.json) --- ### CHAPTER I — Introduction: persistent poverty and root causes - Key findings: - Despite programs and resources between 1990 and 2008, poverty remains high throughout Nicaragua. - Economic growth has not been effective in reducing poverty because: - public policy not traditionally pro-poor; - tax shelters benefit privileged groups, reducing fiscal resources for social protection; - low technological progress → low labor productivity. - Cultural, historical and structural factors and weak public policy are main obstacles: - increase in illiteracy rates over the past 16 years (context described); - absence of disease-prevention tradition and weak natural resource management; - lack of physical infrastructure, weaknesses in the energy matrix, flaws in health, education and potable water systems, and precarious presence of state institutions. - Natural disasters and international commodity shocks hindered poverty reduction: El Niño/La Niña, hurricanes Mitch and Felix, droughts, tsunamis, earthquakes; drop in coffee prices earlier in the decade; rise in oil prices; international economic crisis. - Select baseline statistics (preserved exactly): - Nicaragua per capita income (2007 World Development Indicators): US$1,022.00. - Approximately half the population lives beneath the poverty line; almost one out of every five Nicaraguans in conditions of extreme poverty. - Between 1993 and 2005: - General poverty decreased by only 2% (from 50.3% to 48.3%) despite a 33% increase in per capita income. - Between 2001 and 2005 per capita income increased by 7%, while poverty grew by 2.5%. - Extreme poverty rates improved from 19.4% in 1993 to 17.2% in 2005, of which 2.1% occurred during 2001-2005. ### NHDP origin, premises and updated objectives (2009–2011) - Origins and premises: - Draft NHDP public in April 2008; final version disseminated in October 2008. - Premises: markets imperfect; state must intervene via regulation; market outcomes may be socially undesirable (inequality) requiring state correction. - NHDP structured under IMF program macroeconomic framework and assumptions on foreign investment and cooperation. - Updated NHDP main objective (2009–2011 Technical Summary): - Mitigate effects of the crisis on the most vulnerable, encourage production and employment, and keep citizens united around essential tasks. - Policies, goals and resource allocations constrained by the international financial crisis. - Main pillars (enumerated exactly as in the source): - (i) The renewed role of the state in direct economic, social, environmental and cultural activities. - (ii) A social policy that favors the poor more directly. - (iii) A social response reflected in a prioritized infrastructure policy. - (iv) The capitalization of the poor through programs focused on food production. - (v) Continuation of the energy policy, prioritizing renewable energy. - (vi) Security guarantees for private investors and a commitment to coordinate with the private sector. - (vii) Ongoing dialogue with the international community for consensus and solidarity in commercial and financial support. - (viii) Strengthening of the democratic process. ### Poverty distribution, inequality and regional patterns - Poverty geography and trends: - Poverty more severe in rural areas and the Caribbean coast. - General poverty increased by 2.5% in rural areas and 3.2% on the Caribbean coast (period reported). - Managua: 8.7% reduction in general poverty between 1993 and 2005, followed by a 1% increase per most recent survey. - Inequality: - Wealthiest 20% accounted for 47.2% of total consumption; poorest 20% consumed 6.2%. - Income distribution more uneven than consumption: - Income shows a 24:1 income ratio between first and last decile. - Consumption shows a 12:1 ratio between first and last decile. - Distribution by deciles (EMNN 2005) — selected entries preserved exactly: - Decile 1 — Income (C$) 12,166.3; Average% of Total Income 1.7; Consumption (C$) 2,553.0; Average% of Total Consumption 2.5 - Decile 5 — Income (C$) 57,090.6; Average% of Total Income 5.5; Consumption (C$) 6,768.4; Average% of Total Consumption 6.7 - Decile 10 — Income (C$) 52,816.4; Average% of Total Income 41.3; Consumption (C$) 31,739.1; Average% of Total Consumption 31.4 - Total — Income (C$) 12,727.1; Average% of Total Income 100; Consumption (C$) 10,094.6; Average% of Total Consumption 100 ### Implications for MDGs, external cooperation and citizen participation - MDG horizon severely affected by world oil prices, international financial crisis and natural disasters. - NHDP adjustments: - State must play a more relevant role. - External cooperation needs to be more structural and less assistance-oriented. - Population must participate directly in national, sectoral and territorial decision-making processes. ### Macroeconomic impact of the international financial crisis (2009–2011) - Aggregate impact estimates (preserved exactly where given): - It is estimated that nominal GDP will drop by approximately US$4.8 billion between 2009 and 2011. - Cumulative growth rates for this period are now estimated at 2.5% instead of the 15.3% projected before the crisis. - This represents an accumulated loss in growth (relative to pre-crisis projections) of approximately 12.8%. - Growth and inflation projections (Directive Matrix and text): - Real GDP growth rate — Baseline 3.2 (2007) → Goals 3.2 (2008), -1.0 (2009), 1.0 (2010), 2.5 (2011). - Real per capita GDP growth rate — Baseline 1.8 (2007) → Goals 1.9 (2008), -2.3 (2009), -0.3 (2010), 1.2 (2011). - Inflation rate — Baseline 11.1 (2007) → Goals 19.8 (2008), 4.0 (2009), 5.0 (2010), 5.9 (2011). - Economy anticipated to contract by about 1.0% in 2009 (instead of 4.5% growth estimated in October 2008 NHDP); forecast growth in 2011: 2.5%. - Per capita GDP expected to begin recovery in 2011 by 1.2 %, after decreases in 2009 and 2010. - Nominal and sectoral losses for 2009–2011 (selected exact entries): - Primary activities: US$897 million - Secondary activities: US$1.073 billion - Tertiary activities: US$2.375 billion - Public and private consumption contraction: US$5.192 billion - Gross public and private investment fall: US$2.509 billion - Losses in exports: US$1.999 billion - Decrease in imports: US$4.884 billion - The cumulative loss of US$4.8 billion for 2009-2011 represents 75.6% of the GDP obtained in 2008 and is 3.23 times exports for 2008. ### Fiscal policy, social spending and contingency measures - Fiscal stance and measures: - 2009 fiscal austerity measures (presidential decree) leading to a C$1.312 billion adjustment: - reduce current expenditures for procurement of goods and services by 20%; - reduce procurement for vehicles, office and computer equipment, and travel abroad by 50%; - freeze public sector job openings for three-months; - postpone until April, without retroactivity, the implementation of budgeted salary adjustments; - recalculate allocations guaranteed by the Constitution and the law based on new income and expenditure forecasts; - consider exceptions only for investments linked to infrastructure and production. - Despite budget adjustments, 2009 fiscal policy is countercyclical with real public spending growing by 10%. - GRUN program includes an increase in the consolidated public sector from 1.5% of GDP in 2008 to 4.9% of GDP in 2009; expansion is temporary and fiscal consolidation expected to begin in 2010. - Budgetary effort to fight poverty — aggregate shifts: - Budget effort to fight poverty as proportion of GDP went from 9.2% during 2002-2006, to 13.2% for 2007-2011. - Increase reflects current expenditures changing from 4.6% to 7.1%, and capital expenditures changing from 4.6% to 6.1%. - Social spending impact from the crisis: - Social spending during 2009-2011 is estimated to decrease by 8.6% of GDP (US$555.2 million) relative to resources projected in the EFP framework and the NHDP. - Total reduction in social spending: US$555.2 million (55.7% of total cumulative losses US$997.1 million). - Social sectors absorbed 92.5% (US$513.7 million) of the total reduction in social spending (US$555.2 million). - Education goals lost US$244.7 million. - Health lost US$165.1 million. - Housing construction/improvement and community services lost US$103.9 million. - Central government revenue and gap (selected exact entries): - TOTAL INCOME (millions of dollars) — Budget Before/Crisis 2009: 1,880.3; Budget with/Crisis 2009: 1,578.8; Impact (difference) 2009-2011 total: -1,383.8. - Tax revenue (millions of dollars) — Budget Before/Crisis 2009: 1,273.2; Budget with/Crisis 2009: 1,041.5; Impact 2009-2011 total: -897.4. - External income (millions of dollars) — Budget Before/Crisis 2009: 495.5; Budget with/Crisis 2009: 446.6; Impact 2009-2011 total: -403.1. - FISCAL GAP (millions of dollars) — Budget Before/Crisis 2009: -30.0; Budget with/Crisis 2009: -118.0; Impact 2009-2011 total: -292.8. - Placement of Treasury Bonds (millions of dollars) — Budget with/Crisis 2009: 30.0; Placement total 2009-2011: 292.8. ### Classification of antipoverty expenditures and budget composition - Three expenditure groups: - i) public spending with direct bearing on the standard of living among poor population groups; - ii) expenditures that restore and strengthen the productive capacities of the poor and increase their income; - iii) public spending geared toward creating the institutional capacity needed to increase coverage of services. - Budgetary shifting (2007–2011 averages and changes): - Share of domestic resources of the total budget effort to fight poverty rose from 33.1% to 51.2%. - Share of external resources used for that purpose dropped from 66.9% to 48.8%. - Table No. 4 highlights allocations from foreign debt relief (HIPC/MDRI) across programs (Total avg. 07-11: 144.2; Education Avg. 07-11: 63.2; Health Avg. 07-11: 32.3 — all figures in millions as presented in the source). ### Priority social sector achievements and program details - Health: - Family and Community Health Model (MOSAFC) implementation; free outpatient and hospital medical care; vaccines and maternal-child risk identification. - Education: - Gratuity of schooling; Global and Comprehensive Model for Inclusion to Basic and Middle Education. - “From Martí to Fidel” national literacy campaign reduced illiteracy among population over 15 from 22.8% in 2007 to 4.06% in 2009; Nicaragua declared territory free of illiteracy. - Struggle against hunger: - Hambre Cero (Zero Hunger) program: policies and food assistance for families affected by disasters, drought and floods. - Food Production Program began operations June 2007, benefiting 12,217 families in 2007; total target: 75,000 families over 2007-2011. - Production and livelihoods: - Promotion of staple food production, certified seeds, agriculture and livestock development; support for MIPYMES; Zero Usury micro-credit; credits to small tourist enterprises and small farmers. - Public sector wages: - Teachers and health staff pay raises up to 16% retroactive to January 2009: wage adjustments worth US$ 32.7 million per year and benefited 74,117 employees in these two sectors. ### Public investment priorities and physical infrastructure goals (2009–2011) - Rationale: prioritize infrastructure critical to growth, service delivery and poverty reduction. - 2009–2011 physical infrastructure goals (summary — selected exact entries): - Roads and highways: - 350 km. expansion of the highway network - 131 km of highway rehabilitation - 377 km of road rehabilitation and improvements - 216 meters of bridge construction - Energy: - construction of six electrical substations - 1,450 km extension of the electricity grid - 46,750 homes connected - construction of twenty small hydroelectricity plants - installation of 214 solar and hybrid systems - Education: - 2,108 classrooms repaired, replaced and/or extended - 328 schools with additional spaces added - Health: - rehabilitation of 16 hospitals; construction of 16 health posts; construction of 8 health centers - Water and sanitation: - drilling and rehabilitation of 143 wells - 69,042 home connection to the drinking water pipeline system - 25,334 connections to the sewage system - installation of 73 km of drinking water piping - Housing: - construction and delivery of 26,389 new houses - home improvement to 7,950 units - Key selected table totals (preserved exactly where presented): - Roads — Widening of paved highways (kilometers): 80, 146, 124, 350 (TOTAL) - Energy — Expansion of grid (kilometers): 526, 435, 489, 1,450 (TOTAL) - Social — Education — Classrooms repaired, replaced and/or expanded (units): 582, 678, 848, 2,108 (TOTAL) - Water and Sanitation — Household drinking water connections (units): 36,056, 26,674, 6,312, 69,042 (TOTAL) - Housing — New houses (units): 3,709, 10,940, 11,740, 26,389 (TOTAL) ### Energy and generation expansion (scenario A) and transmission - Expansion and Generation Plan — selected projects and capacities (as listed): - Wind energy – Amayo (40 MW) began operations in February 2009. - Geothermal — San Jacinto-Tizate: expected first 24 MW in second semester of 2011, another 48 MW in first semester of 2012. - Hydroelectricity — Tumarín (180 MW): specific law passed by National Assembly on 1 July 2009; projected to begin producing electricity during the second semester of 2013. - Larreynaga (17 MW): generation probable during the second semester of 2012. - Boboké (70 MW): to start operation in the second semester of 2014. - Salto Y-Y (25 MW): to initiate operation in the second semester of 2012. - HidroPantasma (12 MW): to begin operation during the second semester of 2012. - MEM negotiating hydroelectric project agreements with companies from Brazil, Russia, Iran and Mexico for projects including: - Brito: 180 MW (province of Rivas) - COPALAR Bajo: 150 MW (Río Grande de Matagalpa river basin) - El Carmen: 100 MW (Río Grande de Matagalpa river basin) - Transmission and rural electrification: - Funding to strengthen/expand national transmission grid to meet SIEPAC requirements; enable regional electricity trade by late 2010. - 2009 national budget investment for rural electrification: C$ 204.502 million targeting 230 communities; 74,661 persons in 12,525 houses; 526 km of distribution lines planned. - Law 661 (28 July 2008) enacted; distribution losses reduced to 23% as of July (year in source). ### Productive strategy, agriculture and MIPYME support - Productive strategy priorities: - Agriculture and natural resources as main areas of opportunity. - Medium-term aims: increase food production, boost agro-industrial processing, rational exploitation of natural resources, investment in production. - Agriculture principles and programs (enumerated exactly as in the source): - Principles i)–viii) including food sovereignty, land tenure regulation, irrigation infrastructure, producer associations, access to financial services, technology revolution for small and medium producers, environmental protection and collaboration with business leaders. - Agriculture strategy programs: - i) Productive Rural Development Sector Program - ii) National Food Program - iii) Rural Agro-Industry Program - iv) National Forestry Program - PROMIPYME objective and ten sub-programs (listed in the source) to increase competitiveness of MIPYMEs and reduce poverty. ### Caribbean Coast Development Strategy (CCDS) — objectives and 2012 targets - CCDS development objective (195): restore rights of inhabitants of the Caribbean coast and the Upper Wangki-Bocay river, with basic but good quality human services, equitable and fair productive opportunities, and autonomous citizen participation, contributing to reduce poverty and improve human development on the Caribbean coast by 2020. - 2012 socioeconomic well-being goals (preserved exactly): - a) A drop in the illiteracy rate from 38% in 2008 to 10% in 2012. - b) A drop in the mortality rate from 21% in 2008 to 10% in 2012. - c) An increase in the number of families with access to drinking water, from 40% in 2008 to 60% in 2012. - d) A reduction in extreme poverty from 37% of the population in 2008 to 30% in 2012. - Goals — equitable and sustainable economic transformation (2012): - a) Increase productivity among the poorest sectors from 16% in 2008 to 32% in 2012. - b) Increase access to electrical services among the poorest families from 25% in 2008 to 50% in 2012. - c) Improvement in communications and transport infrastructure by at least 40% in 2012. - Financial targets and crisis impact on CCDS (2009-2011): - cumulative losses of US$997.1 million in the government’s expenditure budget; - US$980.7 million in regular revenues; - US$403.1 million in grants and loans; - budget gap multiplied from US$109.6 million (forecast before the crisis) to US$402.4 million with the crisis; net gap increase of approximately US$292.8 million. - Sectoral impact on social spending (2009-2011): total reduction US$555.2 million; education lost US$244.7 million; health lost US$165.1 million; housing/community services lost US$103.9 million. ### Directive Matrix — selected targets and indicators (2007 baseline → goals by year) - Fight extreme poverty: - % reduction in extreme poverty 1/: Baseline 17.2 (2007) → Goal 16.2 (2011). - Macroeconomic indicators: - Real GDP growth rate: Baseline 3.2 (2007) → Goals 3.2 (2008), -1.0 (2009), 1.0 (2010), 2.5 (2011). - Real per capita GDP growth rate: Baseline 1.8 (2007) → Goals 1.9 (2008), -2.3 (2009), -0.3 (2010), 1.2 (2011). - Inflation (illiteracy and social indicators elsewhere in matrix): Illiteracy rate among persons 10 years or older — Baseline 20.2 (2007) → Goals 7.5 (2008), 5.0 (2009), 4.0 (2010), 3.0 (2011). - Social targets (selected): - Cumulative number of families that receive the Production Package: Baseline 12,217 (2007) → 2009: 31,576; 2010: 47,486; 2011: 75,000. - Net rate of primary schooling: Baseline 86.5 (2007) → Goal 88.5 (2011). - Maternal mortality rate per 100,000 live births: Baseline 80.0 (2007) → Goal 55.0 (2011). - Infant mortality rate per thousand live births: Baseline 29.0 (2007) → Goal 25.0 (2011). - Production perspective: - Electricity generation capacity additions (cumulative additional MW): Baseline 60 (2007) → Goals 120 (2009), 280 (2010), 344 (2011). - Number of rural households with electricity: Baseline 9,102 (2007) → Goals 11,423 (2008), 10,227 (2009), 9,148 (2010), 18,174 (2011). ### Risks, contingency financing and mitigation measures - Identified risks: - Global financial crisis: reduced demand for exports, higher interest rates, reduced remittances. - World food crisis drivers: oil price increases; biofuel demand; speculative commodity activity. - Donor behavior risk: delays or suspension of foreign cooperation tied to political conditions. - Natural disasters: near-annual threat (El Niño/La Niña, hurricanes, floods, droughts). - Contingency and financing instruments: - Contingency credit line signed with CABEI (April 2009) for US$200 million (US$100 million for FOGADE; US$100 million for BCN reserves). - IMF grant as part of G-20 multilateral support: US$164.3 million (SDR105.1 million). - IADB and World Bank additional financing efforts noted; programed external resources for 2009-2011: TOTAL RESOURCES (US$ Mill.): 560.8; 556.7; 521.5 — aggregate 1,656.7 (25.6% of GDP). - Temporary internal debt instrument: placement of treasury bonds up to 21.2% of the amount of the reduction of tax revenue; placement total 2009-2011: 292.8 (millions of dollars). ### Monitoring, evaluation and institutional strengthening - Follow-up and evaluation systems: - SIGRUN operational to consolidate 52 institutional operating plans and produce monthly fulfillment reports and early warnings. - Physical–Financial System for follow-up by contract implemented for PIP weekly monitoring. - Integration and strengthening of National Statistics System (SEN/INIDE) prioritized: - Update legal framework, modernize processes, develop ongoing information production on employment, income, poverty and standard of living via household survey system. - Planned governance and planning instruments: - National Planning System (SNP) design to be finished by January 2010; SNP to begin operations Q1 2010. - Overall NHDP review planned in 2010; long-term strategy formulation to begin in 2010 for 2011–2021 horizon. - Poverty measurement: - "In 2011 it will be critical to measure poverty levels nationwide, in order to redirect and intensify social policies." ### Environmental sustainability, disasters and forestry - Environmental data and concerns (preserved exactly): - Agroforestry potential of Nicaragua: around 72.8%, with 20.6% in agriculture/livestock; 43.9% in forests; and 28.9% in agroforestry and pastureland. - Participation of the forest sector in GDP: 1.3%. - Rate of deforestation: 70,000 ha per year (1948 to 2000). At this pace, within 50 years there will be no more forests in Nicaragua. - Disaster risk management strategy guidelines (selected): - Create organizational planning and training conditions; integrate risk management into institutional and territorial development plans; improve SINAPRED efficacy; coordinate environmental and risk management; implement adaptation and mitigation measures vis-à-vis climate change. - National Reforestation and Natural Resources Restoration Crusade and targets: - Number of hectares reforested (Directive Matrix): Baseline 14,713 (2007) → Goals 20,287 (2009), 19,860 (2010), 16,000 (2011). ### Implementation agenda and medium-term actions (Chapter IX highlights) - Budget formulation for 2010 by sector to determine institutional amounts, wage policy, subsidies, transfers, and foreign debt to finance the PIP. - Continued donor coordination via three roundtables: National Dialogue and Governance; Macroeconomy; and Updating of the NHDP. - Continued dialogue with farming, professional and union sectors; complete NHDP revision planned during second semester of 2009. *Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr10108.pdf* ### CHAPTER I. INTRODUCTION .............................................................................................. ### CHAPTER I. INTRODUCTION ### Key findings on poverty persistence and causes - Despite various programs, policies and large amounts of resources allocated to poverty reduction between 1990 and 2008, poverty remains high throughout Nicaragua. - Economic growth has not been effective in reducing poverty due to: - Public policy not traditionally pro-poor or aimed at sustained growth with social responsibility. - Benefits to privileged groups in the form of tax shelters outweighing fiscal resources allocated to social protection. - Low levels of technological progress implying low levels of labor productivity. - Cultural, historical, and structural factors, and weak public policy are main obstacles: - Increase in illiteracy rates over the past 16 years. - Absence of a tradition of disease prevention and appropriate natural resource management. - Lack of proper physical infrastructure, weaknesses in the energy matrix, flaws in health, education and potable water systems, and precarious presence of state institutions in the territory. - Outcomes indicate prior poverty reduction strategies lacked quality, intensity and continuity: - Superficial and assistance-oriented approaches, limited fiscal resources and fragmented social programs produced temporary alleviation but failed to address structural causes of poverty. - Natural disasters and international commodity price shocks have hindered poverty reduction: - Effects of El Niño and La Niña, hurricanes (Mitch and Felix), droughts, tsunamis and earthquakes. - Drop in coffee prices earlier in the decade, rise in oil prices, and the international economic crisis. ### Data points and statistics (preserved exactly) - Nicaragua per capita income (2007 World Development Indicators): US$1,022.00. - Approximately half the population lives beneath the poverty line; almost one out of every five Nicaraguans in conditions of extreme poverty. - Between 1993 and 2005: - General poverty decreased by only 2% (from 50.3% to 48.3%), despite an increase of 33% in per capita income for this same period. - Between 2001 and 2005 per capita income increased by 7%, while poverty grew by 2.5%. - Extreme poverty rates improved from 19.4% in 1993 to 17.2% in 2005, of which 2.1% occurred during 2001-2005. - Impact of the international financial crisis on GDP (estimates in text): - It is estimated that nominal GDP will drop by approximately US$4.8 billion between 2009 and 2011. - Cumulative growth rates for this period are now estimated at 2.5% instead of the 15.3% projected before the crisis. - This represents an accumulated loss in growth (relative to the pre-crisis projections) of approximately 12.8%. ### NHDP origin, premises and need for revision - In 2007 the Government of Reconciliation and National Unity (GRUN) launched its economic growth and poverty reduction strategy; the medium-term profile is in the National Human Development Plan (NHDP). - A draft NHDP was made public officially in April 2008; the final version was disseminated in October 2008. - Main premises of the NHDP: - Markets are imperfect and the state must intervene through an appropriate regulatory framework. - The market can produce socially-undesirable outcomes in terms of inequality; correction requires state intervention. - NHDP was structured following the macroeconomic framework established under the IMF program and based on assumptions regarding foreign investment and cooperation that signaled favorable economic growth. - During implementation, difficulties arose due to increases in oil and food prices and the international financial crisis, hindering achievement of the first two years’ goals and changing the economic outlook for the five-year period. - Given the changed conditions, it became necessary to update the NHDP strategy. ### Objectives and priorities of the updated NHDP (2009-2011 Technical Summary) - GRUN decided to implement an updated strategy wider in scope but with a narrower order of priorities for 2008-2012, taking global uncertainty as the point of departure. - Main objective: mitigate the effects of the crisis on the most vulnerable, encourage production and employment, and keep citizens united around essential tasks. - The updated document “Updated National Human Development Plan 2009-2011 – Technical Summary” sets policies, goals and resource allocations constrained by the international financial crisis. ### Main pillars of the updated NHDP - (i) The renewed role of the state in direct economic, social, environmental and cultural activities. - (ii) A social policy that favors the poor more directly. - (iii) A social response reflected in a prioritized infrastructure policy. - (iv) The capitalization of the poor through programs focused on food production. - (v) Continuation of the energy policy, prioritizing renewable energy. - (vi) Security guarantees for private investors and a commitment to coordinate with the private sector. - (vii) Ongoing dialogue with the international community for consensus and solidarity in commercial and financial support. - (viii) Strengthening of the democratic process. ### Implications for MDGs, external cooperation and citizen participation - The horizon for achieving the Millennium Development Goals (MDGs) has been severely affected by world oil prices, the international financial and economic crisis, and natural disasters. - These developments necessitate changes in the approach to poverty reduction policies: - The state must play a more relevant role. - External cooperation needs to be more structural and less assistance-oriented. - The population must participate directly in national, sectoral and territorial decision-making processes. ### Organization of the document - Chapter II: evolution of poverty in Nicaragua over recent years. - Chapter III: citizen participation process in the NHDP. - Chapter IV: programs and policies constituting the NHDP scaffold. - Chapter V: strategic framework. - Chapter VI: NHDP budget framework and strategy, lending realism to investment programs and policies. - Chapter VII: risks to implementation and mitigation actions. - Chapter VIII: follow-up and evaluation systems and actions to strengthen the National Statistics System. - Chapter IX: the agenda to be followed. *Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr10108.pdf* ### 14. The poverty map shows that poverty is more severe in rural areas and the Caribbean coast, ### _cr10108 - 14. The poverty map shows that poverty is more severe in rural areas and the Caribbean coast, ### Poverty distribution and recent trends - Poverty is more severe in rural areas and the Caribbean coast, notwithstanding their economic potential. - General poverty increased by 2.5% in rural areas and 3.2% on the Caribbean coast. - Rural areas in western Nicaragua experienced poverty reduction between 1993 and 2005 due to benefits from staple foods production programs and investments in rebuilding infrastructure damaged by Hurricane Mitch of September 2007. - The Caribbean coast displayed a sustained slippage toward deeper poverty. - During the last five years there has been a generalized increase in poverty throughout the country, including areas with public services, public investment, social policies and economic policy incentives. - Managua experienced an 8.7% reduction in general poverty between 1993 and 2005, followed by a 1% increase according to the most recent survey. ### Inequality in income and consumption - At the national level, the wealthiest 20% of the population accounted for 47.2% of total consumption, while the poorest 20% consumed only 6.2%. - Nicaragua is in the upper quartile among world countries with the widest disparity in consumption. - Income distribution is more uneven than consumption: - Income shows a 24:1 income ratio between the first and last decile. - Consumption shows a 12:1 ratio between first and last decile. - For the first three deciles, average income (in córdobas) is lower than average consumption; starting with the fourth decile, the ratio becomes inverted. ### Distribution by deciles of income and consumption (EMNN 2005) - Decile 1 — Income (C$) 12,166.3; Average% of Total Income 1.7; Consumption (C$) 2,553.0; Average% of Total Consumption 2.5 - Decile 2 — Income (C$) 23,473.0; Average% of Total Income 2.7; Consumption (C$) 3,709.9; Average% of Total Consumption 3.7 - Decile 3 — Income (C$) 34,578.7; Average% of Total Income 3.6; Consumption (C$) 4,708.5; Average% of Total Consumption 4.6 - Decile 4 — Income (C$) 45,741.6; Average% of Total Income 4.5; Consumption (C$) 5,671.1; Average% of Total Consumption 5.6 - Decile 5 — Income (C$) 57,090.6; Average% of Total Income 5.5; Consumption (C$) 6,768.4; Average% of Total Consumption 6.7 - Decile 6 — Income (C$) 68,590.2; Average% of Total Income 6.7; Consumption (C$) 8,027.3; Average% of Total Consumption 8 - Decile 7 — Income (C$) 10,664.9; Average% of Total Income 8.3; Consumption (C$) 9,745.9; Average% of Total Consumption 9.6 - Decile 8 — Income (C$) 13,736.6; Average% of Total Income 10.7; Consumption (C$) 12,145.1; Average% of Total Consumption 12 - Decile 9 — Income (C$) 19,121.8; Average% of Total Income 15; Consumption (C$) 15,882.6; Average% of Total Consumption 15.8 - Decile 10 — Income (C$) 52,816.4; Average% of Total Income 41.3; Consumption (C$) 31,739.1; Average% of Total Consumption 31.4 - Total — Income (C$) 12,727.1; Average% of Total Income 100; Consumption (C$) 10,094.6; Average% of Total Consumption 100 ### Policy implications and NHDP strategic priorities - Poverty reduction is a high priority; success depends on government capacity to: - Address low income by accelerating sustained economic growth. - Address high inequality in consumption and income distribution through social policies that expand opportunities for the most disadvantaged and consider needs of the poorest sectors. - NHDP central goal: improving the living conditions of all Nicaraguans, especially those living in poverty. - NHDP priorities include: - Economic growth (Macroeconomic policy; Public investment policy; Productive and commercial strategy) - Well-being and social equity - Measures leading to good public management - Environmental sustainability and forestry - GRUN policy on natural and man-made disasters - Caribbean coast development strategy ### Macroeconomic stance and contingency measures (context of the international crisis) - GRUN considers 2009 a year of resistance to the effects of the international financial crisis and has prioritized a contingency plan to defend medium- and long-term NHDP objectives. - Main pillars of measures: (i) financial stability; (ii) prioritized public investment; (iii) support to production and private investment; (iv) employment solidarity; and (v) fiscal austerity. - It has been estimated that GDP will decrease by 1% in 2009, accompanied by a low 2.6% inflation rate. - Exchange rate policy: crawling peg with a constant 5% per annum devaluation. - International reserves to guarantee at least twice the monetary base. ### Fiscal policy, public investment and social spending - Fiscal policy is the main government instrument to guide the economy and reduce poverty; GRUN is changing fiscal design and administration to increase impact on infrastructure and social/productive programs. - Prudent fiscal deficit management within a sustainable framework is emphasized. - GRUN has undertaken structural spending changes since 2007 to better align resource allocations with NHDP objectives, including discarding non-priority item lines, regulating public employee wages, renegotiating internal public debt and implementing an anti-crisis program. - Measures to generate additional resources: tax system reform and increased efficiency in tax administration, complemented by negotiations for external resources. - 2009 fiscal austerity measures (presidential decree) leading to a C$1.312 billion adjustment: - reduce current expenditures for procurement of goods and services by 20%; - reduce amount budgeted for procurement of vehicles, office and computer equipment, as well as travel abroad by 50%; - freeze public sector job openings for three-months; - postpone until April, without retroactivity, the implementation of budgeted salary adjustments; - recalculate allocations guaranteed by the Constitution and the law based on new income and expenditure forecasts; - consider as exceptions only those investments linked to infrastructure and furtherance of production. - Public investment policy: three levels of action — primary and immediate, stabilization, and growth — to increase investment impact on economic growth and poverty reduction; emphasis on targeting strategic productive and social sectors and guiding resources to pre-investment as a planning instrument. - Despite budget adjustments, 2009 fiscal policy is countercyclical with real public spending growing by 10%. - GRUN program includes an increase in the consolidated public sector from 1.5% of GDP in 2008 to 4.9% of GDP in 2009; this expansion is temporary and fiscal consolidation is expected to begin in 2010. ### Social spending allocation changes and tax policy direction - Changes to allocation criteria to improve public spending effect on poverty reduction: - augmentation of productive capabilities among the poorest population groups; - implementation of a food security strategy in rural areas; - ensuring the gratuity of health and education services; - introduction of a new National Social Welfare System; - creation of anti-poverty programs. - Tax policy reforms aim to: - gradually change the system’s regressive nature; - adjust tax rates to competitive levels; - increase the efficiency of tax collection; - reduce levels of discretion; - increase the tax base by incorporating sectors outside the system. - Tax plan launched in 2007 includes review of taxpayer standing, mechanisms to reduce tax evasion, rationalize tax exemption policy and preferential treatment, increase administrative efficiency, and fight corruption in tax and public funds management. - Early 2009 process of reaching “tax consensus” focused on four areas intended for discussion and passage in September: - reduction in costs of production and financing of productive activities; - financing fiscal stimuli through generalized measures and rationalization; - achieving neutrality in tax revenue collection; - improving the current tax legislation. ### Budgetary effort to fight poverty - GRUN shifts from “spending on poverty” to a “budgetary effort to fight poverty,” focusing on resource allocation and budgetary quality linked to NHDP objectives: - upholding the new strategic vision of the social program; - implementing public policies that further productive capabilities of the poorest, making them subjects and beneficiaries of development; - prioritizing inclusion of programs whose linkage to the Millennium Development Goals is clearly established; - increasing program efficiency through citizen participation. *Source: EMNN 2005 and NHDP implementation text as provided in the chapter.* ### 43. The new criteria used in the social program and productive strategy, and the consolidation of ### 43. The new criteria used in the social program and productive strategy, and the consolidation of ### Classification of antipoverty expenditures - Three expenditure groups were drawn up: - i) public spending with direct bearing on the standard of living among poor population groups; - ii) expenditures that restore and strengthen the productive capacities of the poor and increase their income; and - iii) public spending geared toward creating the institutional capacity needed to increase coverage of services. ### Budgetary effort and expenditure shifts - GRUN gave high priority to a budgetary effort intended to reduce poverty, creating a new generation of programs exerting direct influence on reduction of poverty and hunger. - Rapid growth of current spending occurred for three reasons: - i) the creation and implementation of the antipoverty programs now in place; - ii) the impact of reverting the privatization of health and education services; and - iii) the process of streamlining public investments begun in 2007 and concluded in 2009 implied transferring significant budget item lines from capital expenditures to current expenditures. - During 2008-2009 this cost US$185 million, resources that in large measure now classify as current expenditures earmarked for the fight against poverty. - The budget effort to fight poverty as a proportion of GDP: - went from 9.2% during 2002-2006, to 13.2% for 2007-2011. - This increase reflects current expenditures changing from 4.6% to 7.1%, and capital expenditures changing from 4.6% to 6.1%. ### Policy actions and achievements in priority social sectors (current expenditure focus) - Public health: - Implementation of the Family and Community Health Model (MOSAFC); - Provision of outpatient and hospital medical care to anyone who needs it; - Support for diagnoses, treatment including state-of-the-art technology, free medication; - Timely identification of risks and complications among pregnant women; - Oversight of growth and healthy development of children less than one year of age, including vaccines. - Education: - Gratuity of schooling guaranteed; - Reforms via education policies and the Global and Comprehensive Model for Inclusion to Basic and Middle Education; - “From Martí to Fidel” national literacy campaign reduced illiteracy among the population over 15 years of age from 22.8% in 2007 to 4.06% in 2009, leading to Nicaragua being declared territory free of illiteracy. - Contributions to closing inequity gaps and addressing coverage, efficiency and efficacy in education. - Struggle against hunger: - Policies and strategies for food security, improved food supply through the Hambre Cero (Zero Hunger) program; - Food assistance to families affected by disasters, drought and floods. - Production and livelihoods: - Promotion of staple food production, certified seeds, agriculture and livestock development; - Support for MIPYMES, capitalizing urban women with credit and technical assistance (including Usura Cero micro-credit); - Credits to small tourist enterprises and small farmers; support for environmental management; - Protection of real salary of low-income workers via subsidies to urban collective transport. - Public sector wages and employment: - Teachers and health staff received pay raises of up to 16%, and additional teachers and health staff were hired, retroactive to January 2009. - These wage adjustments are worth US$ 32.7 million per year and benefited 74,117 employees in these two sectors. ### Budget coverage, financing shares and dependency - Budget coverage (BE/TPS) remained broadly the same across the two periods. - Share of domestic resources of the total budget effort to fight poverty: - rose from 33.1% to 51.2%. - Share of external resources used for that purpose: - dropped from 66.9% to 48.8%. - The report notes this external dependency figure is still excessive and reflects a high degree of dependence on foreign resources for the struggle against poverty. ### Allocations from foreign debt relief (HIPC/MDRI) — highlights from Table No. 4 - Total allocations (millions of dollars) moved across programs; basic social services and education are the largest shares in the table. - Specific program highlights (millions of dollars; ratio to GDP columns summarized in table): - Total (avg. 02-): 101.7; 2007: 121.3; 2008: 143.2; 2009: 147.2; 2010: 151.6; 2011: 157.6; Avg. 07-11: 144.2 - Education (millions): 50.5; 2007: 62.5; 2008: 59.7; 2009: 63.0; 2010: 64.8; 2011: 66.1; Avg. 07-11: 63.2 - Health (millions): 22.7; 2007: 21.7; 2008: 32.6; 2009: 35.0; 2010: 35.0; 2011: 37.0; Avg. 07-11: 32.3 - Production and food security (includes Food Production Package of Zero Hunger Program) and support to small and medium production (includes Zero Usury Micro credit, Property Regularization and Rural Development Programs) shown with smaller allocations in the table. - (The full table presents program-by-program allocations and ratios to GDP for 2007-2011 and averages; refer to table for detailed breakdown.) ### Monetary, credit and foreign exchange rate policy - Monetary program is a fundamental pillar of GRUN economic program, keyed to providing a macroeconomic framework necessary to the struggle against poverty. - BCN has continued to use the rate of exchange as a nominal anchor of price levels; GRUN maintains the crawling peg regime with no substantive alterations foreseen in the medium term. - Policy posture: - An increase in the rate of crawl in the short term would fuel inflation and contribute to recession due to high level of indexation. - Monetary policy will be based on an accumulation of international reserves sufficient to cover the monetary base twice over. - Central Bank instruments and coordination: - Main instruments: open market operations to neutralize surplus liquidity and reduce reserve volatility. - Debt acquisition through central bank paper is a short-term measure under organic law; MHCP places longer-term instruments to cover government budget gap. - Attainment of international reserve goals supported by fiscal policy through build up of government deposits in the BCN. - Credit policy and financial sector measures: - BCN will continue a neutral or contractive credit policy with the public sector; government will maintain deposits at BCN and comply with mandatory transfers for servicing external public debt. - BCN will continue as lender of last resort for the banking system and will be strengthened via sensible regulations to facilitate access to credit for productive sectors and strengthen intermediation mechanisms. - GRUN will encourage private and public investment in new banking institutions, promote incorporation of foreign banks including savings and loans companies. - Law 640 created Banco Produzcamos to favor small and medium producers; it will operate with state resources and development assistance. - Government will strengthen microfinance institutions, including those under the Bank Superintendency regulatory framework. ### Crisis-related liquidity measures and contingency lines - International liquidity squeeze caused slowdown in banking system credit and weakening tax revenues; BCN measures include: - Contingency credit line signed with the Central American Bank for Economic Integration (CABEI) approved in April 2009 for the amount of US$200 million, of which US$ 100 million are intended for the Deposit Guaranty Fund (FOGADE) and US$ 100 million are for the BCN to cover international reserves if necessary. - Promotion of new sources of financing for the private sector and approval of an Extraordinary Financial Assistance Line (LAFEX) for the national financial system as part of GRUN’s anti-crisis plan. - Agreement with the Inter-American Development Bank (IADB) permitting commercial banks in Nicaragua to go directly to IADB to mitigate liquidity needs arising from contraction of external credit lines. ### Balance of payments and foreign trade - Structural weaknesses show in persistent current account deficit: weak export sector and high dependence on raw materials and imported consumer goods. - The crisis exacerbated balance of payments pressures via decreases in exports, credit, foreign direct investment and family remittances; sustained expansion of the trade gap due to increased imports. - Debt relief and negotiations: - In 2008 Nicaragua obtained total debt relief of US$ 59.1 million. - Nominal debt relief granted under HIPC and MDRI stands at US$ 6.8064 billion (equivalent to 84% of the total nominal relief foreseen for Nicaragua under these initiatives). - Notable commercial creditor participants in the External Commercial Debt Repurchase Operation: Beogradska Banka AD of Serbia, with US 18.2 million; Bulgargeomin LTD of Bulgaria, with US$ 14.1 million. - Negotiations with bilateral creditors (Costa Rica, Libya, Iran, Honduras, Taiwan and Peru) may yield additional nominal relief of up to US$ 1 billion. - Foreign public debt and vulnerability indicators: - Foreign public debt reached US$ 3.5115 billion by end-December 2008, equivalent to 55% of GDP (59.5% in 2007) and 156.5% of total exports of goods and services (175.8% in 2007). - NHDP actions to reduce long-term balance of payments vulnerability: - Promote change in structure of exports; - Strengthen infrastructure for international trade; - Develop tourism; - Maintain prudent foreign indebtedness policy and foster conditions for greater foreign direct investment; - Facilitate foreign trade by eliminating superfluous procedures, creating one-stop windows, establishing Central American Customs union, improving customs services and diversifying markets. ### Growth and public investment policy - Overall public investment policy aims to increase efficiency, yield and impact of investments on economic growth and poverty reduction through: - Use of pre-investments to reduce improvisation and adopt sectoral/national approaches rather than institutional projects; - Target investments at strategic productive and social sectors; - Form fixed capital as a capacity generator; - Adopt a more efficient physical and financial follow-up system. - Priority sectors for infrastructure: energy, drinking water, health, social housing, land transport and seaports; priority reaffirmed in the January 2009 GRUN Production, Growth and Employment Protection Plan. - Rationale for timely investment: avoid increases in children out of school and maternal-child mortality linked to lack of clean drinking water; avoid economy slowdown from electricity rationing or chaotic transport. - Institutional reforms for public investment efficiency: - Process begun to overcome institutional weaknesses across policy formulation, resource management, strategic planning, budgeting, evaluation and follow-up. - Establishment of a Central Commission lodged at the Presidency to coordinate weekly with planning and project units at ministries and public enterprises, improving physical and financial follow-up of the Public Investments Program (PIP). *Source: SEP RES.* ### 64. Table 5 reflects the main GRUN public investment efforts (Productive and Social ### _cr10108 - 64. Table 5 reflects the main GRUN public investment efforts (Productive and Social Infrastructure Goals, see p. 23, below) ### Public investment priorities and rationale - Even amidst the international financial and economic crisis, priorities emphasize maintenance and in some cases expansion of public services because of their relevance to: - the formation of gross capital, - multiplier effect on the economy, - contribution to the preservation and growth of the economic and social infrastructure. ### 2009-2011 physical infrastructure goals (summary) - Roads and highways: - 350 km. expansion of the highway network - 131 km of highway rehabilitation - 377 km of road rehabilitation and improvements - 216 meters of bridge construction - Energy: - construction of six electrical substations - extension of one electrical substation - construction of one hydroelectricity plant - 1,450 km extension of the electricity grid - 46,750 homes connected - construction of twenty small hydroelectricity plants - installation of 214 solar and hybrid systems - Education: - 2,108 classrooms repaired, replaced and/or extended - 328 schools with additional spaces added - Health: - rehabilitation of 16 hospitals - rehabilitation of 8 health centers - rehabilitation of health posts - construction of 16 health posts - construction of 8 health centers - rehabilitation of 2 childbearing shelters - construction of 2 childbearing shelters - Water and sanitation: - drilling and rehabilitation of 143 wells - 69,042 home connection to the drinking water pipeline system - 25,334 connections to the sewage system - installation of 73 km of drinking water piping - Housing: - construction and delivery of 26,389 new houses - home improvement to 7,950 units ### Key figures from Table No. 5 (selected exact entries) - Roads and Highways: - Rehabilitated highways (kilometers): 275, 648, 131 (by year) - Widening of paved highways (kilometers): 80, 146, 124, 350 (TOTAL) - Improved and repaired roads (kilometers): 182, 90, 1,053, 377 (TOTAL) - Bridge construction (linear meters): 10, 11, 15, 216 (TOTAL) - Energy: - Construction of electric sub-station: 5, 1, 6 (TOTAL) - Construction of hydroelectric plant: 1, 1 (TOTAL) - Expansion of electric sub-station: 1, 1 (TOTAL) - Installation of transformers to increase capacity: 16, 16 (TOTAL) - Reactivation of sub-stations (units): 10, 10 (TOTAL) - Electric installations in homes (units): 12,525, 13,358, 20,867, 46,750 (TOTAL) - Expansion of grid (kilometers): 526, 435, 489, 1,450 (TOTAL) - Construction of small hydroelectric plant (units): 12, 7, 120 (TOTAL) - Installation of solar and hybrid systems (systems): 20, 48, 214 (TOTAL) - Social — Education: - Classrooms repaired, replaced and/or expanded (units): 582, 678, 848, 2,108 (TOTAL) - Schools with complementary environments built (units): 207, 299, 232, 328 (TOTAL) - Social — Health: - Hospitals refurbished (units): 5, 7, 4, 16 (TOTAL) - Health Centers refurbished (units): 5, 1, 2, 8 (TOTAL) - Health Posts refurbished (units): 1, 1 (TOTAL) - Health Posts built (units): 1, 1, 1, 4, 16 (TOTAL) - Health Centers built (units): 2, 4, 28 (TOTAL) - Maternity Houses Refurbished (units): 2, 2 (TOTAL) - Maternity Houses built (units): 1, 1, 2 (TOTAL) - Water and Sanitation: - Drilling and refurbishing of wells (units): 4, 78, 79, 143 (TOTAL) - Increase of storage (cubic meters): 5,347, 12,301, 666, 18,314 (TOTAL) - Household drinking water connections (units): 36,056, 26,674, 6,312, 69,042 (TOTAL) - Household waste water connections (units): 2,075, 2,075, 21,184, 25,334 (TOTAL) - Installation of pipes for drinking water (kilometers): 73, 73 (TOTAL) - Housing: - New houses (units): 3,709, 10,940, 11,740, 26,389 (TOTAL) - Houses improved (units): 1,450, 3,000, 3,500, 7,950 (TOTAL) ### Growth: Production and trade strategy (overview) - Productive strategy based on: - Nicaragua’s comparative advantages, - donor support, - private investment. - Main areas of opportunity: agriculture and natural resources. - Medium-term aims: step up food production, boost agro-industrial processing, rational exploitation of natural resources, and investment in production. - Cooperation and private investment are to be mobilized within NHDP strategies. ### Venezuelan cooperation and ALBA (2008 figures and effects) - Venezuelan cooperation in 2008: US$ 457 million. - Of which US$ 98.5 million went to investments that generated 100 MW of electricity. - PETROCARIBE agreement cooperation in 2008: US$ 293 million (US$ 99 million non-reimbursable financing and US$ 194 million loans). - Uses of funds included: financing productive activities of rural cooperatives, subsidies to electrical energy and collective/selective transport, social infrastructure, and food security. - Result: helped mitigate impact of rising fuel prices, expand electricity generation, reduce rationing of electrical services, and supported exports (Venezuelan demand for Nicaraguan products in 2008 quintupled relative to 2007). ### Productive strategy — policy package and road map (critical medium-term actions) - Direct policies in support of the private sector (micro-, small and medium producers in the countryside and towns). - Strategic agreements with the private sector (large farmers). - Stimuli for national and foreign investment, with investor commitments to fiscal, labor, environmental and cultural responsibility. - Speed up effective commitments of cooperation with friendly countries (such as ALBA members). - Speed up the public investments program in infrastructure directly associated to production. - Overcome the energy crisis and stabilize the sector to improve yields. - Maintain macroeconomic stability and a timetable for consensus on a tax reform that encourages agricultural production. - Ensure respect and introduce guarantees for private property to strengthen market economy and fair trade. - Remain within trade agreements entered into by previous governments (mainly CAFTA-DR) and bilateral treaties. - Promote technical and higher education aimed at transforming the productive process. ### Agriculture, livestock and forestry strategy (principles) - i) Reach food sovereignty and promote agricultural exports; focus on poor decapitalized small farmers and small landowners as active subjects of development. - ii) Regulate land tenure, update the physical cadastre, proceed with delimitation, demarcation, titling and physical planning. - iii) Encourage shift from groundwater to surface water by building reservoirs, dams and micro-dams and adding irrigation systems; reserve groundwater for human consumption. - iv) Promote association of small and medium producers to accelerate capitalization and technology transfer. - v) Ensure small producers’ access to financial services, expand and deepen credit, continue revolving fund for women beneficiaries of the Food Production Program (Hambre Cero). - vi) Revolutionize agricultural technology for small and medium food producers; emphasize Food Production Program and Agricultural Foodstuff Seeds Program. - vii) Maintain and deepen collaboration with top Nicaraguan business leaders to facilitate operation of large farms, agribusinesses and service providers under economic, social, labor and environmental responsibility. - viii) Protect the environment and foster production, conservation, development and life; promote sustainable management of land, water and forests and design instruments to address climate change and vulnerability to natural disasters. ### Agriculture strategy programs - i) Productive Rural Development Sector Program - ii) National Food Program - iii) Rural Agro-Industry Program - iv) National Forestry Program ### Industrial policy and MIPYME support - MIFIC governs policy toward industrial development and MIPYMEs; executing bodies include INPYME, INTUR, and INATEC. - Goals: create conditions for growth of existing businesses and establishment of new industries by improving the investment climate, strengthening legal framework, expanding technical education, and supporting technological change. - Emphasis on infrastructure investment policy linked to cost reduction, notably energy, transport, communications, and water supply. - PROMIPYME (Micro, Small and Medium Enterprise Development Program) objective: - “contribute to increase and consolidate the competitiveness of the MIPYME, so they are able to operate in the national and international markets with improved advantages, become a source of quality employment and additional resources for their owners and workers, and contribute to substantially reduce poverty levels among the Nicaraguan population.” - PROMIPYME will be operated through ten sub-programs: - Furtherance of cooperation among entrepreneurs; - Training and updating of human resources and business promotion; - Improvement in quality, productivity and marketing; - Technological development and innovation; - Export promotion; - Improvement of access to financial systems; - Improvement of access to infrastructure and basic services; - Development of entrepreneurial capabilities and founding of enterprises; - Improvement in the business climate and furtherance of legalization; - Improvement of institutional capacity to support the development of MIPYMEs. - MIPYME regulatory framework to be modernized to reduce entry barriers and promote clear rules for company growth and compliance. ### Energy and mining policy — energy focus and Expansion and Generation Plan (scenario A) - Core policy: expand supply of renewable resources and change the energy generation matrix; MEM supports renewable energy generation projects by private, state or joint enterprises. - Expansion and Generation Plan projects under scenario A: - Wind energy – Amayo (40 MW), began operations in February 2009. - Geothermal: - San Jacinto-Tizate: under execution, expected to deliver first 24 MW in the second semester of 2011, with another 48 MW to follow in the first semester of 2012. - El Hoyo-Monte Galán and Managua-Chiltepe: exploration phase; expected to begin operations in the first semester of 2014 and 2015, respectively. - Casita-San Cristóbal geothermal area: concession awarding scheduled to begin operation in the 2013-16 period (20 MW, 40 MW and 40 MW, respectively). - Bidding for geothermal areas at Apoyo, Ometepe and Mombacho: to begin operating in the first semester of 2016, the second semester of 2016 and the first semester of 2017, respectively. - Hydroelectricity: - Tumarín (180 MW): specific law passed by the National Assembly on 1 July 2009; projected to begin producing electricity during the second semester of 2013. - Larreynaga (17 MW): to be developed by ENEL with civil works tendered through CABEI; generation probable during the second semester of 2012. - Boboké (70 MW): to start operation in the second semester of 2014. - Salto Y-Y (25 MW): to initiate operation in the second semester of 2012. - HidroPantasma (12 MW): to begin operation during the second semester of 2012. _Excerpt source: _cr10108 - 64. Table 5 reflects the main GRUN public investment efforts (Productive and Social Infrastructure Goals, PDF chapter/section)._ ### 85. MEM is negotiating the signing of agreements with companies from Brazil, Russia, Iran and ### _cr10108 - 85. MEM is negotiating the signing of agreements with companies from Brazil, Russia, Iran and ### Energy generation projects and strategy - MEM is negotiating agreements with companies from Brazil, Russia, Iran and Mexico for hydroelectric projects: - Brito: 180 MW (province of Rivas) - COPALAR Bajo: 150 MW (Río Grande de Matagalpa river basin) - El Carmen: 100 MW (Río Grande de Matagalpa river basin) - GRUN energy strategy aims to double Nicaragua’s energy generation capacity by 2017, based on renewable energy. - Table notes: In the "B" and "C" base scenarios, the Brito and Copalar Bajo Hydroelectric projects are presented as alternative projects to Boboké. - A set of projects identified in the plan (selected entries and capacities as presented): - ALBANISA (Bunker) Thermal: 200 - Amayo Wind: 40 - San Jacinto Geo: 24 - Casitas Geo: 20/40/40 (as listed) - El Hoyo I Geo: 40 - Chiltepe Geo: 40 - APOYO Geo: 40 - OMETEPE Geo: 30 - MOMBACHO Geo: 40 - Hydro Boboke (MIXED (BOT)): 70 - Hydro-Pantasma (run-of-the-river): 12 - Larreynaga (run-of-the-river): 17 - Tumarín (Hydro MIXED (BOT)): 160 - Salto Y-Y (run-of-the-river): 25 - TOTAL HYDRO and TOTAL THERMAL entries appear in the expansion plan (2008-2017) but specific totals are presented in the source table format. ### Transmission grid expansion - Funding obtained to strengthen and expand the national electricity transmission grid to meet SIEPAC requirements, enabling Nicaragua to buy and sell electricity on the regional market by late 2010. - ENATREL works completed and in progress: - Built 142 km of transmission lines from Matiguás (Matagalpa) to Siuna (RAAN) - Built interconnection from Bluefields to El Bluff (RAAS) - Built an 18 km transmission line (138,000 volts) from Masaya to Granada - Rehabilitated the Nandaime substation - Replaced power transformers at substations in Villanueva, Las Banderas, Rivas and Chinandega - Continued strengthening the National Transmission System (SNT) ### Rural electrification - Financing sources: IADB, the World Bank, CABEI, the Netherlands, GTZ, SDC, UNDP, ACDI, and budget allocations. - 2009 national budget investment: C$ 204.502 million for rural electrification projects - Target beneficiaries: 230 communities; 74,661 persons living in 12,525 houses - Planned infrastructure: 526 km of distribution lines to be laid - New electrification project (urban and rural) in formulation to significantly increase electrical service coverage. - Small hydroelectric plants under construction in isolated areas; generation and distribution concessions granted to local companies. ### Energy savings and efficiency - Presidential Decree No. 2-2008 (“Planning of Energy Use”) mandates energy efficiency measures. - Audits conducted: - 20 energy audits in the government sector - 25 of the 30 audits scheduled for industry and commercial sectors completed - Decree objective: reduce energy consumption by at least 20% at executive branch agencies. ### Reduction of distribution losses and sector viability - Law enacted: Distribution and Responsible Use of Electrical Energy (Law 661 of 28 July 2008). - Distribution losses reduced to 23% as of this past July. - Government support beginning 2009 for pilot program to improve electricity metering and services in low-income urban neighborhoods. - Protocol of Understanding signed with distributors (DISSUR and DISNORTE) and agreed by the National Assembly (Decree no. 29-2008, published 27 July 2008 in La Gaceta, no. 122): - Distributors committed to invest a minimum of US$ 33.7 million in the distribution system over the next 4 years. - Parties suspended legal actions (an arbitration by INE and a complaint before MIGA). - A mechanism conciliated matured debts between government and distributors, and allowed the government to take over 16% of shares in equity capital, gaining a seat on the companies’ Board of Directors. ### Regulatory framework for electricity - The regulating entity will continue to authorize monthly electricity rate adjustments, applying a published formula (21 December 2007 in La Gaceta, no. 246) that accounts for variations and avoids accumulated losses. ### Hydrocarbons sector actions - Reciprocal Assistance and Cooperation Agreement with Venezuela includes: - Construction of an oil refinery in the Pacific region - Rehabilitation of storage capacity at Piedras Blancas - Construction of a fuel oil reception and storage terminal with capacity for 200,000 barrels at Corinto (currently functioning) - Supply contract for 27,000 barrels of oil per day - Exploration activities: - 4 concession contracts for exploration on the continental platform of the Nicaraguan Caribbean negotiated - Offshore monitoring in the Pacific to determine hydrocarbons presence and potential use ### Agricultural energy and biofuels - MEM promoting biomass programs and use of biofuels as renewable energy sources to partially substitute hydrocarbons, provided food security is not negatively affected. ### Mining sector measures - Ministry of Energy and Mines measures: i) Review legal framework to propose reforms to the Special Law on Mine Exploration and Exploitation ii) Increase knowledge of mineral wealth via geological studies iii) Improve registry, inscription and legalization of artisan miners iv) Promote transformation of artisan miner collectives into small and medium mining companies v) Promote joint investments with mining companies in electricity generation using renewable resources - Geological research: carry out geological research and mapping of potential mineral sites. - Transformation of artisan mining: identify, organize, train artisan miners and transform collectives into small and medium mining companies, introducing modern association types and technology. ### Tourism sector strategy - GRUN promoting infrastructure transformations and political/social stability to attract internal and FDI and stimulate growth in tourism. - Policies include: - Offering incentives to small tourism projects - Positioning Nicaragua in the world economy and promoting tourism - Defining touristic products, reviewing legal framework, improving customs procedures, prioritizing the Caribbean Coast, promoting tourism MIPYMES, and developing specific projects - Legal adjustments to develop tourism sustainably and securely; initiatives include: - Law of Retired Pensioners (attract foreign retirees) - Coastal Law (regulate coastal areas for sustainable development) - Law on Incentives for the Tourism Industry (facilitate MIPYMES inclusion and access to incentives) - Caribbean Coast priority: integrate Nicaraguan Caribbean Coast into regional brand “the Caribbean”; pursue infrastructure financing for ports, airports (e.g., Bilwi), and roads; develop services through MIPYME. - Improve entry points: modernize customs, free visas and residency options, and encourage airlines and cruise ships to call at Nicaraguan airports and ports. ### Telecommunications and postal services - Goal: prioritize investments to reduce social inequity, geographic isolation, and lack of access to communications; increase quality through public investment. - TELCOR-led targets and actions: i) By late 2009, detailed analysis of the telecommunications sector to define sectoral policy ensuring universal access. ii) During 2009, install Internet presence points, call centers and cell phone coverage in 104 municipal capitals that lacked service when GRUN took office; estimated beneficiaries: 1,165,000 Nicaraguans. Project aims for all 153 municipal capitals to have internet and cell coverage upon conclusion. iii) By end of Q3 2009, install 100 technological centers with computers connected to the Nicaragua Educational Intranet at public schools. iv) During 2009-2012, install approximately 400 technological centers throughout Nicaragua. v) During 2009-2010, install at least one public telephone in 347 neglected communities with populations over 400 persons (coverage target: 90% of these communities); first 60 communities to benefit by late 2009. By end-2011, coverage of communities with more than 400 inhabitants will be total. vi) During 2009-2010, 42 rural communities in RAAN expected to receive a renewable energy electricity generation plant for strictly local use, accompanied by telecommunications systems, computer equipment and electrification of community facilities. - Postal services goals: i) 2009: implementation began of the Comprehensive Postal Sector Reform and Development Plan, prepared in second semester 2008 and scheduled to conclude in 2010. ii) By late 2009, analysis of the Universal Postal System (SPU) to ensure quality postal service and to issue law and enabling regulations for competitive and fair market conditions between private operators and Correos de Nicaragua. iii) In 2010, establish a sectoral policy to define state SPU obligations without limiting private operators’ commercial exploitation of the national postal market. iv) By late 2011, implement a modernized public postal system (Correos de Nicaragua) capable of providing strategic services to support development across economic and social sectors. - Implementation actions planned: i) Formulate a new Telecommunications Sector Policy aligned with the National Human Development Plan. ii) Modernize the regulating entity; TELCOR is drafting a modern telecommunications bill with enabling regulations. iii) Identify and prepare frequency band use conditions to maximize coverage and service quality at lowest infrastructure cost. iv) Facilitate productive and social use of infrastructure and services by installing electronic service portals in all provincial capitals and government delegations, including one-stop investment windows and taxpayer registration offices; implement a municipal e-government conceptual framework. v) Expand ENATREL network so all provincial capitals are connected to the grid to enable data transmission at fair and reasonable prices and increase service supply. *Source: _cr10108 - 85. MEM is negotiating the signing of agreements with companies from Brazil, Russia, Iran and* ### 108. To further develop the postal sector, GRUN is implementing a Comprehensive Postal Sector ### _cr10108 - 108. To further develop the postal sector, GRUN is implementing a Comprehensive Postal Sector ### Postal sector reform and development - GRUN is implementing a Comprehensive Postal Sector Reform and Development Plan in cooperation with the Universal Postal Union (UPU) and the Postal Union of the Americas, Spain and Portugal (UPAEP). - Objectives and planned actions: - i) Set up a Universal Postal Service (SPU). - Several studies are being carried out to determine the quantitative and qualitative features of the supply and demand in the country’s postal services market. - Studies will decide which postal services to include in the Universal Postal service. - ii) Modernize current legislation by means of a new law and its enabling regulations, based on the abovementioned studies. - iii) Modernize services provided by the public postal operator (Correos de Nicaragua). - A specific and direct plan will be drawn up, based on a strategic, medium-term plan, including pertinent actions and projects required for restructuring and updating its operations. - iv) Prepare a study to identify logistical support the public postal operator may provide state institutions to reduce logistical service costs at these agencies and determine the benefits to be obtained. ### Trade policy - Main objective: regulate Nicaragua’s trade relations with the rest of the world, guided by fair and competitive trade and recognition of asymmetries between economies. - Policy positions and commitments: - Nicaragua will continue to propose to industrialized countries the elimination of subsidies and internal assistance for goods and services of commercial interest. - Nicaragua seeks special and differentiated treatment for developing countries, particularly those with small and vulnerable economies. - GRUN considers the WTO Doha Round negotiations a fundamental instrument for the country’s development strategy. - Domestic trade-related guarantees: - The government will guarantee a stable and predictable rate of exchange, the free use of hard currency, the free convertibility of currencies and a tariff policy congruent with its commercial interests, including respect for international commitments. ### Private investment promotion policy - General policy to stimulate private investment is based on: - i) macroeconomic stability; - ii) responsible fiscal policy; - iii) respect for private property; and - iv) appropriate incentives to stimulate direct foreign investment. - Recent actions and framework: - A three-year agreement with the IMF guarantees flows of external resources to finance investments in infrastructure. - Cooperation agreements have been renewed with main donors; progress has been made on commercial agreements. - A legal framework to strengthen the arbitration system and property rights is being devised. - Investments are being made in infrastructure and citizen security to fight illicit activities and create a propitious business climate for national and foreign direct investment. - Private sector coordination: - In 2007 a coordination mechanism (roundtable) was established with the large business sector, headed by the President of Nicaragua, to maintain ongoing dialogue with large producers. - The roundtable has facilitated resolution of sector difficulties and fostered a common agenda favorable to economic development. - Outcomes include time-saving measures by reducing bureaucracy and eliminating unnecessary procedures in business management. - A program is underway to capitalize small rural producers and small and medium urban enterprises. ### Fostering well-being and social equity — overall social strategy - GRUN prioritizes five social policy areas contributing to poverty reduction and economic growth: - i) food strategy; - ii) education strategies and policies; - iii) health strategies and policies; - iv) drinking water and sanitation strategies and policies; and - v) labor policy. - The NHDP is subject to constant updating according to prevailing conditions and population needs. ### Food strategy - Purpose: tackle malnutrition among small farmer families and the urban poor, with income-generating activities to follow. - Programs and targets: - Hambre Cero program launched in 2007, designed to benefit 75,000 rural families over a five-year period. - Implemented through a partially reimbursable transfer mechanism providing means of production, with the adult woman in the household as the main partner. - Strategy includes extension of the Pound-for-Pound program and the microfinance program Usura Cero. ### Education strategy and policies - Education is conceived as the fundamental strategic pillar for sustainable human development; policy based on equity and quality since January 2007. - Main policy lines: - (i) More Education — diminish illiteracy among population under fifteen and extend coverage at all levels (pre-school, primary, secondary, special, teacher training and technical). - (ii) Better Education — transform curriculum and train teachers. - (iii) Other Education — transform values in education and the education system. - (iv) Participatory and Decentralized Education Management — promote participation of parents, educators, students, civil society, municipal governments, media and international NGOs in policy formulation and administration. - (v) All Educations — coordinate subsystems into a comprehensive continuum from cradle to grave. - Literacy and curriculum achievements: - National Literacy Campaign “From Martí to Fidel” implemented June 2007–June 2009 using Cuban method Yo, Sí Puedo. - Illiteracy among population over 15 years of age reduced from 22.8% to 4.06%; Nicaragua declared Territory Free of Illiteracy by UNESCO. - Post-literacy campaign planned using Yo Sí Puedo Seguir; permanent literacy program continues for those still illiterate (estimated in June 2009 at 121,811 persons over 15 years of age). - Curricular transformation undertaken: 2007 National Curriculum Consultation (17,500 persons interviewed nationwide); 2008 preparation of new Basic and Middle Education Curriculum; starting February 2009 new Regular Education Curriculum implementation; starting in 2010 both Regular and Non-Regular subsystems will have entirely new curricula. - Values, decentralization and higher education: - Pro-Values Program implemented starting in 2009 to promote monthly thematic values at education centers. - Ten-Year Education Plan to be developed in all 153 municipalities with full citizen participation. - Higher education strategy consensus with universities along four lines: (i) improve quality and relevance; (ii) strengthen institutional framework and sector coordination; (iii) create culture of social accountability; (iv) strengthen higher education on the Caribbean coast (support academic/scientific development, establish a curriculum, improve quality, promote cultures, intensify autonomy). ### Health strategy and policies - Health viewed as a human right; policy focuses on preventive health and availability of comprehensive services (promotion, prevention, assistance and rehabilitation) that are free of charge and adjusted to multiethnic, cultural, religious and social realities. - Objective: ensure universal and free access to quality health services with priority to first health care level and investments in hospitals and health care centers; coverage increase focuses on marginalized rural and urban areas. - Ministry of Health (MINSA) actions: promote plans and programs with other state institutions and broad-based mobilization and participation; harmonize public and private service delivery under MINSA leadership; strengthen epidemic response and disaster preparedness. - New Family and Community Health Model: decentralized, personalized service inviting family and community participation; emphasis on promotion, prevention, epidemic control and health protection. - Main policy actions, sector objectives, indicators and goals: - i) Avoid people falling ill — nine nationwide campaigns each year: - one Summer Citizen Power Campaign; - one Citizen Power Vaccination Campaign; - five Citizen Power Anti-Epidemic Campaigns; - one Citizen Power Dog Vaccination Campaign; - one Citizen Power Campaign to Prevent Accidents Caused by Fireworks. - Promote physical activity, sports, recreation and healthy dietary habits among boys, girls and adolescents. - Promote traffic accident prevention. - Community programs educating mothers of children less than six years of age on health and nutrition. - Childbirth shelters functioning in rural areas to guarantee safe childbirth and reduce maternal mortality. - ii) Provide quality medical care and free medication: - Outpatient care provided to any citizen anywhere in the country who requires it. - Hospital care provided to anyone among the population who requires it. - Laboratory examinations carried out for patients who visit doctors and/or are hospitalized at any MINSA health unit. - Medications provided free of charge to patients who visit MINSA health units. - iii) Fight against maternal mortality: - Detect potential risks and complications among pregnant women in a timely fashion (family planning, early detection of pregnancy, four prenatal controls). - Guarantee safe childbirth for pregnant women who come to or are referred to a MINSA hospital. - iv) Fight against child mortality: - Monitor growth and development of children less than one year of age and promote adequate growth. - Vaccinate children under one year of age against tuberculosis, diphtheria, whooping cough, tetanus, influenza, hepatitis B, polio, rotavirus (diarrhea), measles, rubella and mumps. - v) Shorten lists of persons awaiting surgery and specialized external care: - Increase number of scheduled and emergency surgeries. - Improve surgery quality using modern, low-risk techniques. - Provide medical care to poor populations with access difficulties via national and international health brigades. - vi) Bring health services to poor or extremely poor populations and those with greatest access difficulties: - Implement Family and Community Health Model providing health care to populations in health unit areas of influence. - Organize family and community health teams composed of health brigade members and community leaders. - Extend hours during which medical care is available. - Expand health care provided to persons insured by INSS at MINSA Social Security Medical Clinics. - vii) Regionalize health care in RAAN and RAAS: - Provide health care to the Caribbean population using norms adjusted to their social, cultural and political features. - Professional medical staff specializing in comprehensive medicine will be available in the RAAS and RAAN; they are graduates of the Latin American School of Medicine in Cuba. - viii) Revive popular and traditional medicine and other non-western medicine: - Provide health care to the Caribbean population using norms adjusted to social, cultural and political features. - Professional medical staff specializing in comprehensive medicine work in the RAAS and RAAN; they are graduates of the Latin American School of Medicine in Cuba. - ix) Comprehensive development of human resources in the health sector: - Ensure availability of doctors, nurses or other health technicians in all provinces and autonomous regions. - Reinforce technical and scientific level of knowledge among health service doctors. - x) Better use of external resources: - Align and harmonize foreign cooperation with national policies and plans. - Strengthen social integration processes in health in Central America and the Caribbean. *Source: _cr10108 - 108. To further develop the postal sector, GRUN is implementing a Comprehensive Postal Sector* ### 133. Social security in Nicaragua is financially structured upon a common fund, at whose base a ### _cr10108 - 133. Social security in Nicaragua is financially structured upon a common fund, at whose base a ### Social security: structure and principles - Social security in Nicaragua is financially structured upon a common fund, fed mainly by contributions made by employees throughout the course of their working lives and those of their employers, as established by law. - Fundamental principles underpinning the Social Security system: - i) Universality, through the protection provided indiscriminately to all persons at all stages of their lives. - ii) Solidarity, by protecting those least favored and based on the participation of all those who pay into the system. - iii) Equity, meaning equal opportunity, access, treatment and guarantee of receiving benefits. - iv) Comprehensiveness, by ensuring that all social security needs forming part of the system are covered. - Government intention and constraints: - The Government of Reconciliation and National Unity (GRUN) treats social security as an important pillar of the NHDP social strategy and is working on a broad-based proposal ensuring that the costs of changing the system are not borne by pensioners. - The viability of a mixed model is under study, but under no circumstances will reform place the benefits of those currently covered at risk. - GRUN is taking actions to guarantee social security services for active and retired workers and seeks alternatives to improve the system’s financial position and re-establish balance between contributions and benefits while respecting rights acquired by workers not yet of retirement age. ### Health services under INSS - GRUN priority: ensure health services are provided without exclusion to all persons covered by INSS; services will continue to be delivered through the private sector while strengthening public health institutions. - Coverage and delivery: - The Government guarantees universal access to health services to those insured by INSS by purchasing services from public and private providers. - This system provides care for approximately 1 million persons (the insured person, spouse and children under 12 years of age). - Most of this population lives in León, Chinandega and Managua. - Contract types used by INSS: - Pre-payment for outpatient or hospital care. - Post-payment of a fixed sum for complementary services. - Payment for high-cost medical services. - Provider network and quality control: - Health care services are made available through contracts with 21 health providers nationwide. - In 2007 and 2008 contracts were rescinded with 14 such providers because they lacked adequate infrastructure and medical equipment to deliver acceptable health care to the insured and pensioners. - Service expansion and preventive care: - Starting in 2007 a gradual negotiation process sought delivery of prepaid services to cover all illnesses and health services available in the country. - By late 2008 the list of illnesses previously considered “off-coverage” had been eliminated; today all those insured have the right to receive attention regardless of their illness. - Prepayment contracts were expanded to include all laboratory exams available in Nicaragua, computerized axial tomography, magnetic resonance and all diagnostic and therapeutic ultrasound equipment. - INSS has introduced preventive services at workplaces to identify women at risk of cervical cancer, breast cancer and early detection of patients with chronic diseases. ### Drinking water and sanitation: challenges and policy principles - Sector weaknesses and environmental problems: - The drinking water sector lacks long-term policies and investments to expand coverage, improve quality, and contribute to population health. - The sector experiences a high coefficient of non-technical and technical losses; technical losses are largely due to an obsolete network affected by tremors and earthquakes and lack of maintenance. - Final disposal of untreated industrial wastewater is problematic; there is a low level of solid waste collection and disposal and excessive use of agrochemicals. - Footnote estimates: It is estimated that 37% of the population living in poverty, and 60% of those in extreme poverty, have no access to toilets or latrines. Sewage system coverage is low (35.1%), and of the volume of wastewater collected by the different networks only 42% are treated. - Fundamental principles guiding policy: inclusion, sustainability, participatory joint responsibility, decentralization, equity and work with the municipalities. - Main policy guidelines: - i) strengthen the administration, regulation and organization of the sector; - ii) mobilize donor resources in an organized and systematic manner, under the program modality; - iii) promote proper management of water resources; - iv) provide adequate maintenance to the systems, equipment and infrastructure; - v) encourage and promote citizen, entrepreneurial and social responsibility towards the sector; - vi) promote the development and monitoring of water quality and stimulate the social, environmental and financial sustainability of the strategy. - Rural area policy actions: - Seek a model to include entire communities more efficiently, improve the setting and generate citizen capacity to participate actively in projects. - Implement a medium and long-term investment program to restore and expand water infrastructure, including installation of alternative systems such as mini-aqueducts. - Establish technical accompaniment and citizen participation programs for decision-making, identification, implementation and maintenance of water and sanitation works. - Urban area policy actions: - Strengthen institutional capacity for efficient administration of water resources and promote solidarity in citizen behavior. - Rehabilitate networks and storm sewers of damaged sewage systems; implement a plan to control industrial pollution and wastewater quality entering rivers, lakes and lagoons; maintain systems and promote social, entrepreneurial and citizen joint responsibility. - Intensive policy to monitor quality of water and effluents, protect water sources and educate new generations. ### Housing policy: deficits, subsidies, financing and reforms - Problems and constraints: - Lack of a comprehensive long-term housing policy, extremely limited public investment, credit restrictions in an incipient housing market, and cost factors constrain solutions to the housing problem. - Footnote census estimates (Population Census (III) and Housing (IV) Census 2005): housing deficit is of 957,000 units; necessary to build 349,000 new houses to cover needs of 48,000 families with no house and replace another 300,000 that are in a state of total disrepair. Partial improvements are needed at another 609,000 houses in poor condition. - GRUN policy framework and mechanisms: - Guidelines include: - i) granting of subsidies; - ii) creation of an insured mortgage fund; - iii) creation of a credit fund; - iv) creation of a construction materials bank; - v) training of a workforce as contribution by program beneficiaries; - vi) program to legalize property rights. - Subsidy design: - Two types of subsidies: direct and with interest rates. - Direct subsidies granted for new houses and house improvements and consider beneficiary family income. - Subsidy with an interest rate attached is an amount granted by government for a ten-year period to ensure a lower interest rate on mortgage loans and monthly payments adjusted to payment capacity. - Subsidy amounts defined by income brackets: - For low-income families (those earning less than US$ 200 a month), the subsidy is of US$ 900 for home improvements and US$ 1,850 for the building of a new home. - For those in the middle-income bracket (US$ 500 a month) the subsidy is of US$ 600 for home improvements and US$ 1,500 for the building of a new home. - Financing schemes promoted: - i) Insured Mortgage Fund — guarantee fund insuring mortgage funds granted by the financial system to families of moderate or medium income. - ii) Social Housing Credit Fund — government direct financing to social sectors or territories of special interest. - iii) Construction materials bank — finances construction materials for low-income families for home construction and improvement. - Additional policy actions: - i) Introduce reform of INVUR and FOSOVI legal framework to the National Assembly, modernizing social interest housing concept, expanding eligibility criteria, regulating tax incentives, and redefining auxiliary entity roles. - ii) Promote reforms of regulations at the Bank Superintendency to expand access to mortgage credit by low-income families. - iii) Strengthen planning, regulation and control capabilities at mayor’s offices, including environmental impact assessment. - iv) Support poor families in legalization of urban and rural housing through subsidies and provision of juridical security to make them eligible for credits and/or subsidies. - v) Establish effective coordination between government entities (INETER, INVUR, and DGI) and the Supreme Court of Justice to expedite cadastral certifications and registry at the Land Registry. - vi) Promote supply of urbanized land in coordination with mayor’s offices and landowners. - vii) Grant direct fixed subsidies for construction and/or improvement of housing disbursed in a single payment to families. ### Labor policy: objectives and institutional measures - Historical context: - Since 1990 labor policy did not include a government policy to protect worker’s rights; system imperfections and lack of adequate legal framework impeded an efficient labor market. Wages are inadequate in real terms and working conditions involve high risk. - Policy foundations: - Aim of “restoration, oversight and promotion of labor rights” with a salary policy centered on minimum wages. - Minimum Wage Law stipulates negotiation every six months by unions, employers and the government based on inflation and productivity indicators. Readjustments seek a social and juridical combination addressing gap between wages and the cost of the basic goods basket. - Minimum wage policy will continue to seek tripartite consensus between employees, employers and the government. - GRUN approach and dimensions of advocacy: - Increased state participation in economy does not imply generating employment at government agencies to reduce unemployment; focus is on generating work opportunities in small producer private sector, improving labor conditions, strengthening regulatory framework, and protecting worker rights against arbitrary employer actions. - Three advocacy dimensions: - First: restoration of productive capabilities among small and medium producers living in poverty and a public investment program to generate employment. - Second: reforms to legal framework regulating labor market, institutional strengthening, citizen participation and legal advisory services. - Third: social security policies, mechanisms to enhance productivity, company compensation recognizing worker skills via training, scholarships and other stimulus mechanisms. - Progress and institutional strengthening: - A National Dignified Work Plan has been formulated with noteworthy citizen participation at mayor’s offices, unions and employers’ organizations. - A reform to the legal framework of the General Directorate of Occupational Health and Safety gives the Ministry of Labor greater capability to influence safe working conditions. ### Steps toward good public management and citizen participation - 2007 transformation priorities for good public management: - i) transparency and probity; - ii) citizen security; - iii) guarantee of the right to property; - iv) decentralization and municipal development; - v) strengthening of the state and public administration. - Specific government actions: - Establish direct relation between state and society via citizen participation through Citizen Power Councils and Cabinets. - Develop a national reconciliation and unity model based on direct democracy and citizen inclusion. - Continue state modernization and simplification, strengthen leadership role, decentralize institutions, avoid overlapping functions, and seek efficiency and savings in public spending. - Strengthen the active role of municipalities to improve service delivery and ensure effective struggle against poverty. - Encourage harmonization and joint work between branches of government to achieve human development across cultural, economic, social and political dimensions. - Citizen participation mechanisms: - Direct democracy exercised through Community Councils, Neighborhood and District Congresses, Municipal Congresses, Provincial Congresses and a National Congress; these spaces convey ideas, needs, demands and positions of the people for presidential consideration. *Source: Excerpt from IMF document chapter on social policies and public management (pages including paragraphs 133–160).* ### 161. Nicaragua will become a democracy in which the people participate in a real and effective ### _cr10108 - 161. Nicaragua will become a democracy in which the people participate in a real and effective ### Participation and democratic governance - The people are described as "an integral part in the process of decision-making, management and evaluation of government policy" based on "widespread participation by the different sectors of society and consultations" (small and medium industry, coffee-growers, large entrepreneurs, political actors and civil society). - Plans, programs and projects are framed as responsibilities of both the state and citizens, to be realized through "forums of participation" at neighborhood, community, rural district, municipality, province or autonomous region levels. ### Transparency and probity - The government commits to a "head-on struggle against corruption" with preventive actions and measures to honor public function. - Actions taken include scrapping "excessively high salaries for public officials." (Footnote: In prior administrations, high-level public officials in Nicaragua had the highest salaries in Central America, notwithstanding its ranking as one of the very poorest countries on the continent.) - Requirement that officials make "a declaration of probity before taking a post" to avoid misappropriation of public funds. - An Access to Public Information Law has been passed to allow citizen oversight of budget use. - Central government institutions and autonomous entities are required to provide access to public information; priority focus on institutions that manage funds accountable to the people. - Goal for GRUN: implement the Access to Public Information Law fully at all state institutions, joint private/public ventures, companies receiving state subsidies, and private entities that administrate, manage or receive public resources, fiscal or any other benefits, concessions or advantages (as stipulated in article 1 of the law). - The government is strengthening the Office of the Comptrollers General (CGR): - A new organic law for the CGR is under consideration at the National Assembly; it includes mechanisms for external financial, operative or management audits; evaluation of operative systems; organization and functioning of internal audits; evaluation of internal audit operation and management systems; evaluation of audits carried out by other persons or entities at state agencies; evaluation of compliance with goals, legality, efficiency and economic effectiveness; and declarations of administrative, civil or criminal responsibility. - An institutional modernization program for the CGR includes improvement of administrative processes, redefinition of functions, definition of organizational structure, training of employees, and updating ICT at the CGR computer center. - Progress noted in determining applications to optimize processes, especially regarding audits and subsequent external control; public officials are being trained to work harmoniously with the juridical control framework. ### Citizen security - Citizen security is defined broadly as the right to live "without threat to his/her physical integrity, assets or civic rights" for anyone in national territory. - Factors undermining citizen security are linked to poverty, unemployment and education; these foster alcoholism, drug addiction, domestic violence, and interruption of education. - Historical context: lingering effects of the 1980s war of intervention have left many weapons in civilian hands; culture of non-violence and alternative conflict resolution are only recently becoming more practiced. - Youth gangs, drug traffickers and organized crime are identified as threats that take advantage of social weaknesses. - Government identifies two dimensions of citizen security: - Quantitative: indicators in poverty, illiteracy, alcoholism, violence, drug addiction and health problems. - Qualitative: human dignity, participation in community affairs, restitution and respect for rights, promotion of positive use of spare time. - Policy approach: foster preventive measures while structural measures against poverty and unemployment take effect. - Institutional strengthening for the Citizen Security Program: adjust agendas of MIFAMILIA, JUVENTUD; DEPORTES, MINED, MINSA, mayor’s offices, National Police, Ministry of Home Affairs and Ministry of Transport and Infrastructure; strengthen state–community relations and inter-institutional coordination to establish a state policy on citizen security. ### Access and quality in delivering justice - Recent institutional reforms and developments: judicial branch infrastructure expansion; creation of the Public Ministry; role of the Office of the Human Rights Ombudsman; reform of the Criminal Procedures Code (CPP); judicial career improvements; Criminal Code; creation of a special unit on Coexistence and Citizen Security. - A Justice Sectoral Plan has been drawn up by judicial branch, Public Ministry, Ministry of Home Affairs (National Prison System, Migration and Aliens Service, Civil Inspector Corps, Technical Division), National Police General Directorate, Office of the Comptrollers General, Office of the State Prosecutor, and Office of the Human Rights Ombudsman to improve justice delivery. - Immediate objectives to expand access and quality: - Strengthen and expand the Directorate for Alternative Conflict Resolution to promote alternative conflict resolution and reduce costs. - Strengthen public defense services. - Mobilize Citizen Power Community Councils as alternative conflict resolution mechanisms in communities. - Improve and expand Public Ministry services and increase public knowledge of the Office of the State Prosecutor; extend coverage nationwide. - Strengthen National Police judicial assistance capacity and improve prison system infrastructure to ensure acceptable conditions for persons deprived of liberty. - Strengthen directorate of Migration and Aliens Service for detention management at border crossings. - Improve processes and procedures in Office of the State Prosecutor services with emphasis on stability and legality of property. - Institutional strengthening programs: strengthen regular services offices, judge's chambers, notifications offices and oversight of criminal proceedings; increase efficacy of jurisdictional actions under the Public Ministry; involve the Office of the Human Rights Ombudsman in expansion and promotion of human rights; improve detention and border-crossing infrastructure. ### Strengthening the state and capacity building for responsible public administration - Government view: the state is society’s instrument to promote, guide and regulate equitable economic development; the state must play a leading role in Nicaragua given serious structural problems. - The Government of Reconciliation and National Unity (GRUN) model: - Committed to Human Development. - Strengthened in regulatory and democratizing role, while remaining flexible, decentralized, strong and simplified, with no overlapping of functions. - Public sector structures to be brought closer to citizens, made strong, effective and efficient, and to move swiftly to take decisions and provide services focused on the struggle against poverty. - Continuous strengthening through full citizen participation via direct democracy. ### Harmonization among branches of government - GRUN will promote permanent dialogue between the executive and other branches to integrate efforts against poverty and corruption. - Legislative objectives: speed up and pass laws promoting human development, private investment and state participation as an active partner of private enterprises. - Judicial objectives: improve justice administration, overcome causes of retardation of justice, and bolster confidence among national and foreign investors. ### Decentralization and municipal strengthening - Development objective: achieve greater efficiency and efficacy in local public service production and delivery and in municipal human development management. - Decentralization aims: strengthen citizen linkages, grant more decision-making power, clarify responsibilities, and carry out fiscal and tax transfers harmoniously between government levels. - A National Decentralization and Local Development Plan is being prepared to contribute to fighting poverty and fostering economic growth with equity. - Citizens will be directly involved in negotiating decentralization policies and strategies with each sector. - Design a system of instruments to strengthen decentralization processes with technical assistance and monitoring, particularly in municipalities and autonomous regions. - Promote direct linkage between citizens and negotiation/decision-making regarding investments and municipal public resources through training and management instruments. - Support for micro-enterprises and small agricultural producers in poverty: direct allocation of resources, economic promotion, financing and productive investment to dynamize local economy. - Promotion of a Local Economic Fund to complement sectoral productive sectors and implement mechanisms for sectoral and territorial coordination and local economy management. - Improve efficiency of public spending and local taxation through fiscal decentralization to optimize output from budget transfers to municipalities. ### Security regarding property rights - Economic development strategy: guarantee security regarding property rights because juridical insecurity undermines key economic sectors. - Institutions to work on juridical framework and a plan for streamlining, certification and titling: Ministry of Finance and Public Credit (MHCP), Nicaraguan Institute of Territorial Studies (INETER), Office of the State Prosecutor (PGR), the Property Intendancy and regional governments on the Caribbean coast. - Activities to advance juridical security: - (i) Review and conclusion of a policy framework regarding land. - (ii) Demarcation of land, protected areas and indigenous lands. - (iii) Develop a short-term plan to legalize urban and rural properties nationwide. - (iv) Modernization of the cadastre and property registry systems. - (v) Implementation of a property registry system. - NHDP fundamental aim: reduce poverty and promote solid economic growth; property-rights security is required for small and medium producers, large entrepreneurs, and national and foreign private investors. - Reported progress in titling: - In 2007 the government granted 3,339 property titles nationwide, an increase of 58% over the year before. - It is foreseen that in 2008 some 10,500 titles will be issued for urban and rural properties. ### Environmental sustainability and forestry development - Current patterns of resource use and environmental protection described as "irrational" and leading to overexploitation and degradation. - If current trends continue unchecked, by the year 2050: - "the agricultural frontier will have reached the Caribbean coast," - "the pollution of the environment by wastewater, pesticides, industrial discharges and solid waste will dramatically reduce the country’s water resources potential." *Source: _cr10108 - 161. Nicaragua will become a democracy in which the people participate in a real and effective* ### 185. The Government of Reconciliation and National Unity promotes sustainable development ### _cr10108 - 185. The Government of Reconciliation and National Unity promotes sustainable development ### Environmental policy and NHDP objectives - Overall objective: contribute to human development based on citizen power, a return to the ancestral cultural values of respect for natural resources and the revival of lost habitats by means of education and training that emphasize values such as responsibility, solidarity and equity in the safekeeping of the country’s natural heritage. - Environmental policies reflect the Constitution, the General Environmental and Natural Resources Law, and other laws, regulations and national and international agreements. - Current and planned national policies include: - water sources conservation; - protection and development of coastal resources; - rational use of water for agricultural production, based on reservoirs; - conservation and management of protected areas and biodiversity; - forest protection and development; - a national reforestation campaign; - sustainable land use; - control and reduction of pollution; - sustainable solid waste management; - adaptation and mitigation measures vis-à-vis climate change; - environmental education for all Nicaraguans. - Specific technical/sectoral data noted: - agroforestry potential of Nicaragua is of around 72.8%, with 20.6% in agriculture/livestock; 43.9% in forests; and 28.9% in agroforestry and pastureland. - participation of the forest sector in GDP is only 1.3%. - rate of deforestation is of 70,000 ha per year (1948 to 2000). At this pace, within 50 years there will be no more forests in Nicaragua. ### GRUN policy on natural and man-made disasters — context and objectives - Context and vulnerabilities: - Natural phenomena: earthquakes, tsunamis, volcanic eruptions, hurricanes, landslides, draughts and floods. - Man-made disasters: infrastructure and forest fires; spillage of chemical substances; technology-originating disasters. - Contributing human factors: irrational practices in use of natural resources; excessive use of chemicals in agriculture; lack of adequate policies in soil use; failure to follow construction regulations. - Overriding objective (191): reduce the risks occasioned by natural and man-made phenomena that affect the security of persons, their assets and those of the country by: - fostering a culture and practice of prevention among the population and all social actors; - incorporating risk management into institutional and territorial development plans; - implementing mitigation programs; - strengthening the country’s response capacity when faced by disaster, whatever its origin. ### Disaster prevention, mitigation and relief strategy (guidelines) - The strategy is to be formulated with active citizen participation and is based on the following guidelines: i) Create organizational conditions for planning, training, raising awareness and commitment on the part of all institutional and social actors, in strict adherence to laws governing the matter. ii) Contribute to the insertion of integrated risk management to all processes in the economic and social life of the nation, and in particular to institutional, sectoral and territorial plans. Integrated risk management involves prevention, mitigation, preparation, response, rehabilitation and reconstruction. iii) Promote a culture of prevention among the population and all social and institutional sectors of the country, while strengthening local capacity in the various stages of risk management. iv) Improve the efficacy of the National System for Disaster Prevention, Mitigation and Relief (SINAPRED) through the training of human resources and securing of the financial, material and technological resources needed to guarantee efficient risk management. v) Coordinate environmental and risk management, for the purpose of guiding efforts that reduce vulnerability and mitigate the impact of disasters, whatever their origin. Every effort must be made to take measures in order to adapt to climate change and implement risk transfer policies. ### Caribbean Coast Development Strategy (CCDS) — purpose and context - The CCDS is an integral part of the NHDP and a key pillar in the poverty reduction strategy, reflecting autonomous, cultural and economic particularities of the Caribbean coast. - Geographic/economic facts cited about the Atlantic Coast: - 46% of Nicaraguan territory; - 72% of the forested area; - 95% of the watersheds drain into the Caribbean; - 70% of fishery production; - 23% of the agricultural area; - 60% of mining resources; - contains 45,000 km2 of the Continental platform and some 700 km of coastline on the Caribbean Sea. - Hurricane Felix (September 2007) impacts: - losses caused exceeded 7% of GDP for 2006 (preliminary ECLAC evaluation). - sectoral impact in RAAN: 72.6% in damages to the productive sector (agriculture, livestock, fishery and livestock) and 27% in social sectors, mainly housing (ECLAC). - Medium-term reconstruction priorities after Hurricane Felix: - housing, schools, health centers and means of communications (roads, wharves); - restore access to most affected communities; - provide productive and other inputs to replace lost food harvests within the Hambre Cero program. ### CCDS development objective, specific objectives and 2012 goals/results - Main development objective (195): restore the rights of the inhabitants of the Caribbean coast and the Upper Wangki-Bocay river, with basic but good quality human services, equitable and fair productive opportunities, and autonomous citizen participation, contributing to reduce poverty and improve human development on the Caribbean coast by 2020. - Specific objective (196): lay the foundation for sustainable and equitable human development with concrete benefits, basic but good quality human services, equitable and fair productive opportunities, supported by strengthened autonomous institutions and autonomous, dynamic and coordinated citizen participation as a result of the first stage (2009-2012). - Goals and results expected by 2012 — socioeconomic well-being goals: - a) A drop in the illiteracy rate from 38% in 2008 to 10% in 2012. - b) A drop in the mortality rate from 21% in 2008 to 10% in 2012. - c) An increase in the number of families with access to drinking water, from 40% in 2008 to 60% in 2012. - d) A reduction in extreme poverty from 37% of the population in 2008 to 30% in 2012. - Goals — equitable and sustainable economic transformation: - a) Increase of productivity among the poorest sectors of the population, from 16% in 2008 to 32% in 2012. - b) Increase in access to electrical services among the poorest families, from 25% in 2008 to 50% in 2012. - c) Improvement in the communications and transport infrastructure by at least 40% in 2012. - Goals — autonomous institutions: - a) Regional governments and territorial governments in the Upper Coco and Bocay areas formulate and implement expanded planning and multi-annual budgets aligned with the Nicaraguan Caribbean Coast Development Plan (100% by 2012). - b) One hundred percent of donor and national budget resources are aligned to the Plan. Starting with C$ 50 million, there is to be an increase of at least C$ 150 million per year. - c) Eight key sectors (health, education, environment, natural resources, tourism, transport and infrastructure, fishery, forestry, agrosylvopastoral systems) regionalize their administration and management at the regional councils and governments, from 0% in 2008 to 100% in 2012. - Expected results by 2012: - a) Improvement of the socioeconomic well-being of the population living on the Nicaraguan Caribbean coast. - b) An equitable and sustainable economic transformation, in which humans and nature live in harmony. - c) The autonomous institutions are strengthened and lead human development on the Caribbean coast. ### CCDS pillars and programs - Pillars: - Pillar 1: Socioeconomic well-being of the population living on the Nicaraguan Caribbean coast. - Pillar 2: Equitable and sustainable economic transformation, humans and nature live in harmony. - Pillar 3: Autonomous institutions are strengthened and lead human development on the Nicaraguan Caribbean coast. - Programs prepared (summary list): - Pillar 1 programs: 1) Mother Earth Program 2) Food Sovereignty Program 3) Cultural and Sporting Identity Revitalization Program 4) Autonomous Regional Education Program 5) Regional Health Program 6) Access to Water and Sanitation Program 7) Community Coexistence Program - Pillar 2 programs: 1) Environmental Protection Program 2) Economic Infrastructure Program 3) Agro-Industrial Development Program 4) Fishery Development Program 5) Tourism Development Program 6) Access to Water and Sanitation Program 7) Community Coexistence Program - Pillar 3 programs: 1) Program to Strengthen Territorial Autonomous Institutions and Regional Public Administration 2) Program to Strengthen Citizen Participation Capacity on the Caribbean Coast and Upper Wangki-Bocay ### Strategic framework, indicators and financial framework implications - Directive Matrix: designed to quantify and follow-up on NHDP strategic objectives through 2011, focusing on six perspectives with strategic objectives, results indicators and goals through 2011. - Action Furtherance Matrix: reflects major achievements from 2007 to July 2009 for each results indicator and goal. - Baseline figures for indicators are from 2007 and will be measured during the 2009-2011 period; monitoring will use the Government of Reconciliation and National Unity Information System (SIGRUN). - Financial framework and projected crisis impact (2009-2011): - cumulative losses of US$997.1 million in the government’s expenditure budget; - US$980.7 million in regular revenues; - US$403.1 million in grants and loans; - budget gap multiplied from US$109.6 million (forecast before the crisis) to US$402.4 million with the crisis; - net gap increase of approximately US$292.8 million. - Sectoral impact on social spending (2009-2011): - total reduction in social spending: US$555.2 million, representing 55.7% of total cumulative losses (US$997.1 million). - social sectors absorbed 92.5% (US$513.7 million) of the total reduction in social spending (US$555.2 million). - education goals lost US$244.7 million. - health lost US$165.1 million. - housing construction/improvement and community services lost US$103.9 million. *Source: _cr10108 - 185. The Government of Reconciliation and National Unity promotes sustainable development* ### 205. The Directive Matrix has been designed in the context of a profound international financial ### _cr10108 - 205. The Directive Matrix has been designed in the context of a profound international financial ### Crisis context and framework - The Directive Matrix is designed against a "profound international financial and economic crisis" that severely impacts Nicaragua’s fiscal situation and is a critical factor for the sustainability of projections. - Framework of priorities established for this crisis stage will remain in effect despite possible year-to-year changes in goal fulfillment. - In 2009 a process began to align results indicators and annual goals with institutional strategic objectives; achieving these goals requires procurement of new technical assistance and external financial resources beyond those already allocated. ### Reduce extreme poverty and chronic child malnutrition — findings and targets - Extreme poverty (LSMS 2005): 17.2% of Nicaraguans lived in conditions of extreme poverty. - National Development Plan (2005) anticipated an 11.5% reduction by 2010 under assumptions: i) long-term growth > 5% annually; ii) significant increases in social spending; iii) improved efficiency of public policies; iv) donor support aligned, harmonized and based on mutual responsibility. The Plan’s assumptions "obviously has not happened." - Progress began in 2007 but was slowed by the international crisis, oil price increases and the food crisis; these shocks threaten to reverse achievements. - Projected extreme poverty: the percentage of the population living in conditions of extreme poverty is projected to be reduced to 16.2% by 2011. - Regression-based estimate (footnote): - Elasticity of reduction of extreme poverty given growth in per capita income is -2.4. - With 1.0 % growth in per capita income, extreme poverty would decrease 2.4 %. - Applied to initial extreme poverty 17.2% and per capita income growth of 1.8% for 2007: anticipated decrease of 4.32% of that universe, reaching 16.4%. - Using same method and per capita growth hypothesis, population in extreme poverty in 2011 will be 16.2%. - Programs and interventions targeting chronic child malnutrition and food security: - Food Production Program; Zero Usury Micro-credit Program; School Snack and Garden Program; National Program for the Eradication of Chronic Child Malnutrition. - National-level interventions: - Comprehensive Child Care: children under five — child health, Growth and Development Surveillance and Development (VPCD), immunizations, vitamin A and ferrous sulfate supplements, integrated management of childhood illness. - Comprehensive Care for Women: prenatal, birthing, postpartum; detection/prevention/treatment of anemia; promotion of exclusive breastfeeding until six months and continued breastfeeding until two years. - Community Health and Nutrition Program (PROCOSAN): personalized counseling for dietary behavior change targeting children under two in poor rural communities. - National Micronutrient Program: food supplementation and fortification with information, education and communication. - National Breastfeeding Program: promote, protect and maintain natural breastfeeding. - Ministry of the Family, Adolescents and Children — AMOR Program: care of children under six of mothers that work in rural areas/towns; comprehensive care in Urban and Community Child Development Centers and Base Houses. - Ministry of Agriculture and Forestry (MAGFOR) — Vulnerable Groups Assistance Program: targets pregnant women, breastfeeding mothers, and children < two years; distributes complementary food rations quarterly in Base Houses and Health Posts. ### Macroeconomic and financial perspectives - Macroeconomic stability measured by real GDP growth, per capita GDP, inflation rate; goals revised downward due to oil/food price variations and the international crisis. - Growth and inflation projections: - Economy anticipated to contract by about 1.0% in 2009 (instead of 4.5% growth estimated in October 2008 NHDP). - Forecast growth in 2011: 2.5%. - Per capita GDP expected to begin recovery in 2011 by 1.2 %, after decreases in 2009 and 2010. - Inflation rate adjusted to 2-3% for 2009 and 6% for 2011, down from previous estimates of 11.7% and 8%. - Public finance efficiency and sustainability: - Level of execution of public spending relative to updated budget expected to climb to 95% in 2011. - Proportion of primary spending in the non-financial public sector directed at fighting poverty expected to remain at an average of 43% throughout 2009-2011. - Percentage of primary spending in the non-financial public sector directed at the Public Investment Program increasing from 17.9 % in 2007 to 19.8 % in 2011. - Foreign cooperation: - Average annual support expected from donor community during 2009-2011: US$546.3 million. ### Social welfare and equity perspectives — food security, education, health, social protection, water and sanitation - Food Security: - Indicator: "Number of poor rural and urban families capitalized through the Production Package" (component of Food Production Program). - Food Production Program began operations June 2007, benefiting 12,217 families that year. - Total target: 75,000 families over 2007-2011. - Education: - Anticipated illiteracy rate by 2011: 3.0%. - "From Martí to Fidel" National Literacy Campaign decreased illiteracy to 4.1 %; on July 19, 2009 Nicaragua was declared a territory free of illiteracy. - School retention and promotion targets by 2011: - School retention: preschool 89.5%, primary 91.5%, secondary 88%. - Grade promotion: primary 90%, secondary 86.5%. - Net schooling rate for primary school: 88.5 % in 2011. - Health and maternal/child mortality: - National Health Policy priorities: care for women (pregnancy, birth, postpartum), care for children under one, elimination of access barriers. - Maternal mortality: - 94 per 100,000 live births (2006). - 80 (2007). - 67 per 100,000 live births attained in 2008 expected to be maintained, decreasing to 62.8 in 2010 and to 55 in 2011. - Infant mortality: - 27 per 1,000 live births in 2009, 26 in 2010, 25 in 2011. - Health service commitments: - Comprehensive Care for Children components (VPCD for children under one), Integrated Management of Childhood Illness, immunizations (tuberculosis, diphtheria–whooping cough–tetanus–influenza–hepatitis B, polio, measles/mumps/rubella), rotavirus-diarrhea vaccine, community-based health and nutritional education, follow-up on minimum expected weight (WHO standards), surveillance of perinatal and infant mortality. - Outpatient medical care provided nationwide to all who seek it; medications guaranteed free of charge; routine and specialized laboratory examinations provided in health units and hospitals. - AMOR Program and child protection: - AMOR Program restores rights of children: education, health care, security, sports, art, recreation. - Each year: - 5,000 children and adolescents are taken off the streets and 3,000 of these are enrolled in public schools. - 3,000 children and adolescents whose labor is exploited under the worst conditions will be sponsored and incorporated and retained in school. - 4,300 children under six receive holistic attention in Child Development Centers. - Care will be provided for 87,027 children in Community Child Development Centers and Base Houses. - Rights restoration includes family care, specialized care for those with disabilities, attention to children of migrant parents, mothers deprived of liberty, or in situations of sexual exploitation. - Access to drinking water and sanitation: - Urban drinking water coverage: from 65% in 2007 to 86 % in 2011. - Sanitary sewerage coverage in urban areas: from 36.5% to 48% in 2011. - Rural drinking water coverage: from 56.3 % in 2007 to 64.1 % in 2011. - Rural sanitation coverage: from 73.2 % to 81.0 % in 2011 (via ecological latrine construction projects). - Presidential mandate elevated access to drinking water and sanitation to a roundtable (established June 2009) to update Sectoral Drinking Water and Sanitation Strategy; consultation with Citizen Power Councils, international donors, private sector, social and labor movements. ### Production perspective — energy, transport, agriculture - Energy generation and transmission: - Generation Expansion Plan reflects gradual change of the energy matrix. - Additional energy production capacity accumulated in 2009 and 2010: 320 MWe. - Total additional capacity to the National Energy System from 2007 to 2011: 344 MWe. - Transmission expansion (2009-2011): install 153.9 kilometers of new 138 and 230kilovolt (KV) transmission lines and connect new sub-stations. - Transformers with additional power of 760 megavolt-amperes (MVA) to be supplied and installed during 2009-2011 in existing and new sub-stations. - Rural electrification 2009-2011: bring energy service to 37,549 households; build small hydroelectric plants, install solar panels, promote concessions for generation and distribution among local companies. - Roads and transport: - Focus on road-building to facilitate access to basic services, stimulate production and market access. - Road Maintenance Fund (FOMAV) to maintain trunk roads; Ministry of Transportation and Infrastructure (MTI) to improve all-weather roads and build new roads in productive zones using gravel or cement blocks. - Agriculture: - Expected increase in agricultural production beginning 2009/2010 and 2010/2011 production cycles due to production support programs: certified seeds, fertilizers, technical assistance, technology transfer, financing for small/medium farmers; increased trade with ALBA countries (notably Venezuela). - Environmental/climatic vulnerability and crop losses: - 2007/2008 agricultural cycle: total area of staple food crops lost approximately 80,000 ha, equivalent to 9.7% of total area planted. - 2008/2009 cycle: loss of 95,000 ha, equivalent to 12.1% of total area planted. - Causes: climate irregularities (impact of Hurricane Felix in September 2007), rodent/insect/plant disease damages. *Source: _cr10108 - 205. The Directive Matrix has been designed in the context of a profound international financial* ### 237. In the industrial sector, based on a projection that assumes the decrease of industrial and ### _cr10108 - 237. ### Industrial sector projection - Government projection assumes a decrease of industrial and agricultural sector exports in 2009, followed by growth beginning in 2010 and 2011 with: - reactivation of the agricultural sector; and - onset of support projects for micro-, small and medium enterprises, especially in manufacturing activities. - Scenario assumption: reactivation of the global economy. ### 5.6. Natural disasters and environmental perspectives — Environment - Institutional program: National Reforestation and Natural Resources Restoration Crusade to recover water sources, forest and soils, strengthen natural livelihoods and fight poverty. - Forest cover loss: - Estimated annual loss of forest cover in Nicaragua: 70,000 ha; at this pace, forests will have disappeared in less than 40 years time. - Anticipated slowdown of deforestation to approximately 19,000 ha annually between 2009 and 2011, with increases in areas with vegetation coverage. - Impact exacerbation: physical damage to the environment caused by Hurricane Felix. ### 5.6. Control and reduction of pollution - Economic context: Pressure to increase production and efficiency while decreasing negative environmental impacts. - Policy instrument: Environmental management plans to continuously apply a comprehensive environmental protection strategy to processes, products and services, increasing eco-efficiency and reducing risks to human health and the environment. - Target outcome: Sustained increase in the number of registered companies that implement environmental management plans to reduce pollution. ### 5.6. Natural disaster prevention, mitigation and relief - Strategy components: - Development of a culture of disaster prevention using technical advances to reduce impact of natural disasters. - Expansion and integration of Early Warning Systems to the most vulnerable areas. - Organization and strengthening of Municipal Committees (COMUPRED) in all municipalities to enhance planning, awareness, response, and care for affected families. ### 5.7. Development of the Caribbean coast — Strategy objective - Objective: Develop an economic, political and social reality restoring rights of inhabitants of the autonomous regions of the Caribbean to receive quality basic human services and equitable opportunities for production, supported by dynamic and coordinated autonomous citizen power. - Desired outcome: Increase social and economic well-being, achieve an economic transformation that is equitable, sustainable and harmonious for humans and nature, and strengthen autonomous institutions to lead human development in the Caribbean region. ### 5.7. Reduction of illiteracy - Bilingual intercultural literacy campaign across the Caribbean Coast addressing needs of autonomous regions, fostering mother tongue development and Spanish as a second language. - Educational materials: Appropriate to Miskito, Mayangna and English languages. - Activities: Training of monolingual teachers for bilingual intercultural programs; mapping and a school census for the Caribbean regions. - Targeted impact: Reduce illiteracy rate for people 10 years of age and older from 28.6% in 2007 to 1.2% in 2011. ### 5.7. Secure property rights (Caribbean coast) - Priority: Address and resolve property conflicts in high risk areas to support social and political stability. - Action: Property Administration Office working on demarcation and titling of indigenous communities’ territories in observance of culture, traditions and customs. - Anticipation: Demarcation and titling of indigenous and Afro-descendent territories and complementary areas will be finalized in the short term. ### 5.7. Equitable and sustainable economic transformation - Core element: Productive rehabilitation of thousands of families in indigenous and Afro-descendent territories and poorest municipalities; increase access to electricity services. - Targets and activities: - By 2001, some 10,000 families living in indigenous and Afro-descendent territories will have been subjects of productive rehabilitation. - Establishment of a seed bank and processing facility. - Formulation of strategies for processing of rice and management of beans and corn, among other projects. - Planned increase of up to 40.0% in access to electricity services through rural electrification programs, construction of small hydroelectric plants, micro-turbines, unconventional energy systems, and research into renewable and environmentally-friendly energy. ### 5.7. Strengthened autonomous institutional development - Institutional strengthening to include: - Good governance, capacity building of leaders and professionals, mechanisms for dialogue, accountability, conflict resolution, and coordination among levels of government. - Support for dynamic execution of regional, municipal and community plans to improve public administration of regional autonomy. - Ongoing implementation: - Development Strategy and Plan to Strengthen the North Atlantic Autonomous Government (GRAAN). - Caribbean Coast Development Plan. - Pending tasks: Formulation and implementation of Institutional Strengthening Strategy and Plan for the municipality of Rosita and the South Atlantic Autonomous Government (GRAAS). - Implementation of Results-based Integrated Management System in both regions. ### 5.8. Actions for good public management — Transparency and integrity - Direct democracy model: Restore right to access understandable and timely public information for exercise of citizen power. - Implementation: Since 2008, establishing offices at government institutions to provide public information in physical form and/or via web pages. - Target: Increase number of institutions with such offices from eight in 2008 to 48 in 2011. ### 5.8. Strengthening public management - Priority: Modernization of the financial administration to improve public management processes. - Instrument: Plan for Modernization of the Financial Administration Systems (PMSAF) to strengthen budget, accounting, treasury, public credit, public operations functions, public investment, procurement and contracting, internal auditing and modernization of Integrated Financial, Administrative and Auditing Management System (SIGFA). - PMSAF assessment findings: - (i) Current SIGFA only encompasses the central government. - (ii) Need to gradually expand SIGFA coverage to the public sector in general. - (iii) Need to modernize the SIGFA technological platform. - Expected actions and outcomes: - Integration of administrative processes to minimize duplication and improve administrative efficiency. - Definition of a new conceptual model for financial and administrative management to modernize public administration and improve quality of public spending. - Strengthening of the Medium-Term Budget Framework (MTBF) as a planning instrument to support sustainability of public finances and evaluation of NHDP public policy results. - Long-term modernization of the SIGFA technological platform to expand coverage to decentralized and autonomous entities. - Medium-term consolidation providing reliable and timely financial information for central government decision-making and public sector consolidation. - For citizens: reliable and timely information on the use of public resources to strengthen accountability and state–citizen relations. ### 5.8. Citizen security - Government strategy: Treat citizen security as a multi-factor phenomenon beyond crime alone. - Programs included: - Programs against domestic violence. - Control and reintegration of youth gangs. - Frontal struggle against criminal activity in general. - Monitoring: Calculate percentage of deceleration of crime compared to the demographic crime index with indicators measured every two years, aiming for a downward trend. - Additional follow-up indicators: - Number of young people at social risk incorporated into recreational activities. - Number of volunteer promoters involved in the struggle against domestic violence. - Number of promoters working to stop the use of firearms. - Number of training sessions at schools on prevention of domestic and sexual violence. - Number of prisoners permanently incorporated into school instruction, vocational activities, and cultural and recreational activities. ### 5.8. Secure property rights (national) - Priority: Legalization of urban and rural property, especially for traditionally excluded populations (farmers, homemakers, those demanding land, disarmed combatants). - Expected contribution: Improved physical property planning in Nicaragua. - Indicator: “Property titles issued by the government” to account for total number of property documents issued and to be issued (2007-2011), including urban titles, rural titles, certificates of good standing under Laws 85, 86 and 88, and certificates of compliance. - Progress note: Between 2007 and 2008, accelerated progress was made in solving many cases. As of 2011, the tendency is toward a decrease in the pace of property conflict resolution, as more cases are solved. *Source: Excerpt from the provided IMF content unit.* ### 259. There follows the NHDP Directive Matrix. ### _cr10108 - 259. There follows the NHDP Directive Matrix. ### Directive Matrix — Key objectives and cross-cutting indicators - Fight extreme poverty - % reduction in extreme povety 1/: Baseline 17.2 (2007) → Goal 16.2 (2011). Institution responsible: GRUN/INIDE. - Align international cooperation with national priorities - Amount of external resources disbursed (millions of dollars): Baseline 630.7 (2007) → Goals 417.8 (2008), 560.8 (2009), 556.7 (2010), 521.5 (2011). Institution responsible: BCN-SREC-MINREX. ### Macroeconomic and financial perspectives - Establish macroeconomic stability that supports human development priorities - Real GDP growth rate: Baseline 3.2 (2007) → Goals 3.2 (2008), -1.0 (2009), 1.0 (2010), 2.5 (2011). Institution: BCN. - Real per capita GDP growth rate 2/: Baseline 1.8 (2007) → Goals 1.9 (2008), -2.3 (2009), -0.3 (2010), 1.2 (2011). Institution: BCN. - Inflation rate: Baseline 11.1 (2007) → Goals 19.8 (2008), 4.0 (2009), 5.0 (2010), 5.9 (2011). Institution: BCN. - Ensure fiscal effort to fight poverty through efficient and sustainable public finances - % execution of public expenditures relative to the updated budget 3/4/: Baseline 93.3 (2007) → Goals 94.9 (2008), 95.0 (2009), 95.0 (2010), 95.0 (2011). Institution: MHCP. - % of non-financial public sector primary expenditures directed at the Public Investment Program 4/: Baseline 17.9 5/ (2007) → Goals 17.1 5/ (2008), 20.4 (2009), 19.6 (2010), 19.8 (2011). Institution: SNIP/BCN. - % of non-financial public sector primary expenditures directed at fighting poverty 4/: Baseline 47.9 (2007) → Goals 46.2 (2008), 42.9 (2009), 42.9 (2010), 43.2 (2011). Institution: SEPRES. ### Social welfare and equity perspectives — Food security, education, health, children, water and sanitation - Food security - Cumulative number of families that receive the Production Package: Baseline 12,217 (2007) → 2008: 12,217; 2009: 31,576; 2010: 47,486; 2011: 75,000. Institution: MAGFOR. - Quality education for all - Net rate of primary schooling: Baseline 86.5 (2007) → Goals 87.2 (2008), 88.0 (2009), 88.0 (2010), 88.5 (2011). Institution: MINED. - % of preschool retention: Baseline 86.0 (2007) → Goals 87.4 (2008), 88.0 (2009), 89.0 (2010), 89.5 (2011). Institution: MINED. - % of primary school retention: Baseline 87.6 (2007) → Goals 89.6 (2008), 90.5 (2009), 91.0 (2010), 91.5 (2011). Institution: MINED. - % of secondary school retention: Baseline 83.0 (2007) → Goals 84.4 (2008), 85.8 (2009), 87.0 (2010), 88.0 (2011). Institution: MINED. - % of grade promotion in primary school: Baseline 86.4 (2007) → Goals 87.6 (2008), 88.0 (2009), 89.0 (2010), 90.0 (2011). Institution: MINED. - % of grade promotion in secondary school: Baseline 86.1 (2007) → Goals 85.3 (2008), 85.5 (2009), 86.0 (2010), 86.5 (2011). Institution: MINED. - Illiteracy rate among persons 10 years of age or older (22.0 % in 2005 Census): Baseline 20.2 (2007) → Goals 7.5 (2008), 5.0 (2009), 4.0 (2010), 3.0 (2011). Institution: MINED. - Restitution of the Human Right to Health - Maternal mortality rate per 100,000 live births: Baseline 80.0 (2007) → Goals 67.0 (2008), 67.0 (2009), 62.8 (2010), 55.0 (2011). Institution: MINSA. - Infant mortality rate per thousand live births: Baseline 29.0 (2007) → Goals 28.0 (2008), 27.0 (2009), 26.0 (2010), 25.0 (2011). Institution: MINSA. - AMOR Program — children and adolescents - Number of children and adolescents on the streets incorporated to school: Goals 6,000 (2008), 8,000 (2009), 8,000 (2010), 8,000 (2011). Institution: MIFAM. - Number of children under six years receiving comprehensive care at Child Development Centers (CDI): Goals 84,307 (2008), 90,048 (2009), 96,132 (2010), 96,990 (2011). Institution: MIFAM. - Access to drinking water and sanitation - % of effective coverage of drinking water in urban areas: Baseline 72.0 (2007) → Goals 77.0 (2008), 80.0 (2009), 82.0 (2010), 86.0 (2011). Institution: ENACAL. - % of effective coverage of drinking water in rural areas: Baseline 56.3 (2007) → Goals 57.9 (2008), 59.4 (2009), 62.1 (2010), 64.1 (2011). Institution: FISE. - % of access by the urban population to sewerage service: Baseline 36.5 (2007) → Goals 37.0 (2008), 38.0 (2009), 43.0 (2010), 48.0 (2011). Institution: ENACAL. - % of sanitation coverage of the population in rural areas: Baseline 73.2 (2007) → Goals 74.8 (2008), 76.3 (2009), 79.0 (2010), 81.0 (2011). Institution: FISE. ### Production perspective — energy, transmission, rural electrification, roads, agriculture, industry - Electricity generation capacity additions (cumulative number of additional MW of energy capacity produced) 6/: - Baseline 60 (2007) → Goals 60 (2008), 120 (2009), 280 (2010), 344 (2011). Institution: MEM. - Electrical transmission and rural electrification - Number of new kilometers of transmission lines: Goals 141.8 (2008), 16.1 (2009), 14.5 (2010), 123.3 (2011). Institution: ENATREL. - Number of additional megavolt-amperes (MVA) for increased transformation capacity: Goals 26.3 (2008), 40.0 (2009), 175.0 (2010), 545.0 (2011). Institution: ENATREL. - Number of rural households with electricity: Baseline 9,102 (2007) → Goals 11,423 (2008), 10,227 (2009), 9,148 (2010), 18,174 (2011). Institution: MEM. - Roads - Number of new kilometers of secondary roads: Baseline 19.5 (2007) → Goals 20.4 (2008), 80 (2009), 146 (2010), 124 (2011). Institution: MTI. - Number of rehabilitated kilometers of secondary roads: Baseline 82.5 (2007) → Goals 102.4 (2008), 27 (2009), 56 (2010), 48 (2011). Institution: MTI. - Agriculture and industry - % increase in agricultural production 7/: Baseline 5.1 (2007). Additional yearly figures: -3.2, -1.5, 5.8, 10.4, -0.4, 0.9, 1.7, 10.5, 1.3 (presented in the matrix across years). Institutions: MAGFOR/BCN. - % increase in yields of corn and beans: Goals -5 (2008), -2 (2009), 15 (2010), 3 (2011), 1 (2011?). Institution: MAGFOR. - % increase of industrial value added 7/: Baseline 7.4 (2007) → Goals 2.2 (2008), -1.5 (2009), 0.5 (2010), 2.4 (2011). Institution: MIFIC/BCN. ### Natural disasters and environmental perspective - Environment and pollution control - Number of hectares reforested (National Reforestation Campaign): Baseline 14,713 (2007) → Goals 10,451 (2008), 20,287 (2009), 19,860 (2010), 16,000 (2011). Institutions: INAFOR, MARENA. - Number of registered companies implementing environmental management programs to reduce pollution: Baseline 137 (2007) → Goals 158 (2008), 209 (2009), 220 (2010), 240 (2011). Institution: MARENA. - Natural disaster prevention, attention and mitigation - Number of early warning systems (EWS): Baseline 2 (2007) → Goals 5 (2008), 10 (2009), 13 (2010), 15 (2011). Institution: INETER. - % of Municipal Committees for Disaster Prevention, Mitigation and Relief (COMUPRED) organized: Baseline 60 (2007) → Goals 80 (2008), 85 (2009), 95 (2010), 100 (2011). Institution: SINAPRED. - % of families affected by natural disasters that receive solidary attention: Baseline 80 (2007) → Goals 90 (2008), 95 (2009), 100 (2010), 100 (2011). Institution: SINAPRED. ### Development of the Caribbean Coast - Literacy and property rights - Illiteracy rate for people 10 years of age or older: Baseline 28.6 (2007) → Goals 20.4 (2008), 6.4 (2009), 3.8 (2010), 1.2 (2011). Institution: MINED. - Number of indigenous and Afro-descendent territories and complementary areas demarcated and titled: Baseline 5 (2007) → Goals 2 (2008), 3 (2009); 2010 and 2011: -. Institution: Property Administration Office/SDCC. - Economic transformation and access to services - % increase in access to electricity services: Goals 25.0 (2008), 35.0 (2009), 40.0 (2011). Institution: SDCC. - Number of families productively rehabilitated living in indigenous and Afro-descendent territories and the most impoverished municipalities: Baseline 4,135 (2007) → Goals 3,125 (2008), - (2009), - (2010), 2,740 (2011). Institution: SDCC. - Institutional development - Multi-year planning and budgeting: target of "80 % aligned and in harmony with the Development Plan of the Caribbean Coast by 2011" (formulation and implementation milestones described in matrix). Institution: SDCC. ### Actions for good public administration - Transparency and integrity - Number of State institutions with offices that provide public information to citizens: Goals 8 (2008), 15 (2009), 30 (2010), 48 (2011). Institution: SEPRES. - Strengthening public administration - Number of accredited public servants: Baseline 7,620 (2007) → Goals 3,500 (2008), 2,500 (2009), 2,500 (2010), 2,000 (2011). Institution: MHCP/DGFUP. - Budgetary entities implementing MTBF: Goals 18 (2007), 25 (2008), 33 (2009), 45 (2010). Institution: MHCP. - Audit of PGR: 2006 Audit of PGR presented 2007; subsequent annual presentation: 2008, 2009, 2010. - Number of entities publishing key phases of contracting procedures on the portal www.nicaraguacompra.gob.ni: Baseline 14 (2007) → Goals 32 (2008), 50 (2009), 60 (2010), 70 (2011). Institution: MHCP/DGCE. - % of non-financial public sector institutions that maintain the SIGRUN up-to-date: Baseline - (2007) → Goals 17.8 (2008), 80.3 (2009), 92.8 (2010), 100 (2011). Institution: SEPRES. - Citizen security and property rights - % of deceleration of the crime rate relative to the demographic crime index: Baseline 11.0 (2007) → Goals 6.0 (2008), 6.0 (2009), 5.0 (2010), 5.0 (2011). Institutions: National Police/MINGOB. - Number of property titles issued by the government: Baseline 8,904 (2007) → Goals 19,355 (2008), 19,000 (2009), 19,000 (2010), 14,500 (2011). Institution: Property Administration Office. - Number of beneficiaries with property documents issued: Baseline 40,068 (2007) → Goals 87,097 (2008), 90,013 (2009), 90,000 (2010), 69,750 (2011). Institution: Property Administration Office. ### Notes and methodological clarifications (as presented) - 1/: Base year 2007 extreme poverty rate calculated via the consumption method for LSMS-05; estimate used regression method, support from WB experts, elasticity of reduction of extreme poverty given growth in per capita income = -2.4. Example: with 1.0 % growth in per capita income, extreme poverty decreases 2.4 %. Applied to initial 17.2% and per capita growth hypothesis 1.8% for 2007 produces 16.4%; following same method yields 16.2% for 2011. - 2/: Rates differ from per capita GDP growth rates published by the BCN because those BCN figures are based on nominal GDP; figures here are based on real GDP to harmonize annual variation rates. - 3/: The updated budget equals the Expenditure Budget of the Central Government updated with latest reforms and modifications at the time the indicator is calculated. - 4/: Calculation takes into account the level of fulfillment of the schedule of external resources (loans and grants). - 5/: Only gross capital formation is included in this calculation. - 6/: Inclusion of the power contribution made by the Hugo Chávez plants that came on line in 2007 with effective capacity of 45 MWe causes a figure that differs from Table 6 “2008-2017 Generation Expansion Plan”. - 7/: Source: MAGFOR and MIFIC, based on the real variation of gross production (base year for prices: 1994) and the BCN. ### Chapter VI — Impact of the international economic crisis, budget framework and financing strategy (summary) - The international economic and financial crisis necessitated updating the NHDP summary; the crisis is the major reason for the update and its impact is described in section 6.1. - Government seeks a budgetary balance while facing high rigidity from legally required expenditures, resistance to paying taxes in sectors with preferential tax policies, and social commitment to reduce poverty. - Government introduced structural reforms to reduce public administration costs, but the public sector still faces significant financial imbalances, requiring corrective measures to manage fiscal balance. - Fiscal strategy aims to reduce quasi-fiscal losses of the Central Bank, operational deficits of public enterprises, and the persistent central government deficit; social security effects on the public sector budget are a major concern. - Updated NHDP budget framework and financial strategy include: - A macro-stability factor related to the Nicaragua Central Bank's capacity to guarantee a level of international reserves consistent with the monetary base and to assist commercial banks if necessary, maintaining inflation at one-digit rates and exchange rate stability. - Contingency financing mechanisms sought by the Central Bank to create trust and stability in the system 22. - A sector-wide growth factor aligned with poverty reduction priorities. - The macro-stability factor is addressed in the section on monetary policy. *Content derived from the NHDP Directive Matrix and Chapter VI text provided in the source PDF.* ### 263. This chapter addresses the changes in the budget framework that are necessary due to the ### _cr10108 - 263. This chapter addresses the changes in the budget framework that are necessary due to the ### Impact of the international economic crisis and changes in the macroeconomic context - The macroeconomic context envisaged in the 2007 EFP changed substantially due to adverse factors, notably a historic increase in the price of oil that raised the inflation rate to two digits in 2008. - The international economic and financial crisis caused a more direct and profound effect in volume than in prices for 2009, deteriorating the economic base for taxes. - Growth projections: - Projected average annual growth before the crisis for 2009-2011: 5.0 % - Revised projected average annual growth for 2009-2011: 0.8 % - Estimated drop for 2009: 1.0 % - Estimated nominal cumulative loss of gross domestic product for 2009-2011: US$4.8 billion. - Activity-specific estimated nominal losses for 2009-2011: - Primary activities: US$897 million - Secondary activities: US$1.073 billion - Tertiary activities: US$2.375 billion - Public and private consumption contraction: US$5.192 billion - Gross public and private investment fall: US$2.509 billion - Losses in exports: US$1.999 billion - Decrease in imports: US$4.884 billion - Relative measures: - The cumulative loss of US$4.8 billion for 2009-2011 represents 75.6% of the GDP obtained in 2008 and is 3.23 times exports for 2008. - Nominal GDP projected for 2011 with the crisis is 88.9% of the nominal GDP projected for 2009 before the crisis and 75% of nominal GDP projected for 2011 before the crisis. - Cumulative growth rate for 2009-2011 before the crisis: 15.3% - Revised cumulative growth rate for 2009-2011: 2.5% - Cumulative loss in economic growth: -12.8% ### Budget framework 2009-2011: adjustments and impacts - The 2007 EFP budget framework was adjusted across outlooks for the international economy, performance through June 2009, budgetary reforms, and crisis programs; new macroeconomic framework and financial profile emerged from IMF-GRUN second and third reviews. - Three major factors affecting the budget framework: 1. Drop in fiscal revenue (decreased economic base and increased tax arrears). 2. Increased costs due to inflation above projected rates, reducing purchasing power and increasing costs of consumption and investment. 3. Decreased spending capacity due to drop in tax revenue, suspension of BSG budgetary support, and delayed multilateral disbursements—affecting social expenditures and infrastructure investment. - Central government revenue impact: - Revenue decrease estimated for 2009-2011: more than 21.5 % of GDP - Estimated decrease in central government income as a result of the crisis and extra-economic internal factors: US$1.3838 billion - Tax revenue impact: - Estimated decrease in government tax revenue for 2009-2011 due to the crisis: US$897.4 million - External resources: - External supply of resources reduced by 6.2 % of GDP for 2009-2011, including loans and grants. - Estimated decrease in external resources for 2009-2011: US$403.1 million - Of the decrease in external resources, estimated fall in donations: US$388.1 million, including US$188.4 million of free availability funds. - Tied vs. liquid components noted; pace of loan disbursements remains manageable due to accumulated undisbursed loans rather than new donor assistance. ### Financial strategy: closing the gap - Government assessment: cannot adjust public spending equally with the forecast reduction of income; adjustments necessary especially for spending tied to external resources. - Measures to close the gap include spending reductions, tax policy revisions, and internal debt. - Temporary internal debt instrument: - Government may place treasury bonds up to 21.2 % of the amount of the reduction of tax revenue. - Composition of gap coverage: - 21.2 % via treasury bond placement (as above) - 37.0 % associated with the decrease in foreign grants and loans - Remainder covered by fiscal containment on lower priority spending - Dependency on external resources: - Estimated coefficient of spending dependency on external resources for 2009-2011: approximately 23.6 % - Central government spending adjustments: - Reduction in spending allocated to gross capital formation: US$265.9 million (explained by a decrease of US$320.3 million in external loans and grants tied to projects; residual adjustments to non-infrastructure capital spending) - Net decrease in external liquid resources directed at social programs and ordinary spending (including BSG donations): US$82.7 million, accounting for about 15.6 % total drop in ordinary spending - Estimated reduction in ordinary and capital transfers compared to the original program: US$377.4 million - Complementary measures: reductions in operating expenditures, freeze on hiring for open positions, lower salary increases - Estimated reduction in current government expenditures compared to pre-crisis forecast: US$531.3 million - Internal debt renegotiation outcomes (2008 execution): - Freed up US$43 million from the national budget in 2008 for social programs, energy, transportation, reconstruction, and other areas - Renegotiation extended financing term to 20 years and reduced interest rates from 8.3% to 5.0% during first 10 years and to 5.5% for remaining 10 years - Estimated reduction in internal debt amortization for 2009-2011 compared to pre-crisis EFP/NHDP forecast: US$67.9 million - External support and extraordinary financing: - IMF grant to Nicaragua as part of G-20 multilateral support: US$164.3 million (equivalent to SDR105.1 million) - IADB seeking disbursement mechanisms for US$300.0 million over and above the offer it made - World Bank announced increases in cooperation for production and social programs; disbursements depend on procedures - Availability of these resources would allow covering fiscal gap without excessive internal debt, invigorating Public Investment Program and protecting social spending ### Key fiscal and budgetary figures (selected extracts from Tables) - TOTAL INCOME (millions of dollars) - Budget Before/Crisis 2009: 1,880.3 - Budget with/Crisis 2009: 1,578.8 - Impact (difference) 2009-2011 total: -1,383.8 - TOTAL INCOME (in relation to GDP) impact for 2009-2011: -21.5 - Current income (millions of dollars) - Budget Before/Crisis 2009: 1,384.8 - Budget with/Crisis 2009: 1,132.2 - Impact 2009-2011 total: -980.7 - Current income (in relation to GDP) impact for 2009-2011: -15.3 - Tax revenue (millions of dollars) - Budget Before/Crisis 2009: 1,273.2 - Budget with/Crisis 2009: 1,041.5 - Impact 2009-2011 total: -897.4 - External income (millions of dollars) - Budget Before/Crisis 2009: 495.5 - Budget with/Crisis 2009: 446.6 - Impact 2009-2011 total: -403.1 - Grants (millions of dollars) - Budget Before/Crisis 2009: 247.2 - Budget with/Crisis 2009: 166.6 - Impact 2009-2011 total: -388.1 - Liquid grants impact (2009-2011): -188.4 - TOTAL EXPENDITURES (millions of dollars) - Budget Before/Crisis 2009: 1,910.3 - Budget with/Crisis 2009: 1,696.8 - Impact 2009-2011 total: -1,090.9 - TOTAL EXPENDITURES (in relation to GDP) impact for 2009-2011: -16.9 - Current expenditures (millions of dollars) - Budget Before/Crisis 2009: 1,216.4 - Budget with/Crisis 2009: 1,154.0 - Impact 2009-2011 total: -531.3 - Capital expenditures (millions of dollars) - Budget Before/Crisis 2009: 457.8 - Budget with/Crisis 2009: 377.7 - Impact 2009-2011 total: -465.7 - Fixed capital formation impact 2009-2011: -265.9 - Debt payment (millions of dollars) - Budget Before/Crisis 2009: 179.8 - Budget with/Crisis 2009: 165.3 - Impact 2009-2011 total: -54.3 - FISCAL GAP (millions of dollars) - Budget Before/Crisis 2009: -30.0 - Budget with/Crisis 2009: -118.0 - Impact 2009-2011 total: -292.8 - FISCAL GAP (in relation to GDP) impact for 2009-2011: -4.6 - Placement of Treasury Bonds (millions of dollars) - Budget with/Crisis 2009: 30.0 - Placement total 2009-2011: 292.8 - Memorandum: - Real GDP growth (%) before/with crisis: 5.0 -1.0 (series shown) - Nominal GDP (Millions US$) before/with crisis 2009: 7,353.66 / 6,310.07 (impact series leads to -4,789.0 total impact 2009-2011) *Source: M HCP/SEPRES; NHDP October 2008 and NHDP September 2009; IMF and GRUN program reviews.* ### 280. Despite GRUN efforts, social expenditures have been affected to an undesirable extent, ### _cr10108 - 280. Despite GRUN efforts, social expenditures have been affected to an undesirable extent, ### Impact on social expenditures and budgetary adjustment - Social spending during 2009-2011 is estimated to decrease by 8.6% of GDP (US$555.2 million) relative to the resources projected in the EFP framework and the NHDP. - Government prioritized programs for the population living in poverty: food programs, transportation subsidies, electricity and other social services. - The adjustment burden fell on education, health and housing sectors due to their large budgetary shares. - Government measures that mitigated a worse outcome: - Programmed cuts in complementary operations spending equivalent to 6.9% of GDP (US$441.8 million). - Issued treasury bonds on the market for 4.6% of GDP (US$292.8 million). ### Sectoral vulnerability and dependence on external financing - Sectors highly dependent on external funding are more vulnerable to decreases in international liquidity and suspension of foreign cooperation; the government lacks savings capacity to replace these resources. - Sectors relying on internal financing are more flexible to reallocate funding during the crisis. - Sectors that traditionally absorb the greatest budgetary allocation will suffer most from adjustments. ### Concentration of resources and affected sectors - Education (MINED), health (MINSA) and infrastructure (MTI) traditionally absorb 40.0% of the expenditure budget. - These three sectors demand 47.5% of all external resources budgeted each year for the central government, explaining their large share of the automatic spending adjustment. - Budget analysis for the NHDP financial strategy for 2009-2011: - Funds available for education and health will be reduced by US$409.8 million, or 73.8% of the total adjustment of social spending. - It is estimated that 42.1% of the reduction is to be allocated for construction of schools and health centers. - Deficiency of resources in sectors closely identified with poverty reduction takes priority over any eventual unexpected flow of resources. ### Key budget figures (selected from Table No. 9 summary) - Total Central Government Expenditures (millions of dollars): 1,674.2; 1,531.7; 1,819.9; 1,453.0; 2,018.1; 1,530.5; -142.5; -366.9; -487.6; -997.1 - (As a percentage of GDP) corresponding line: 22.8; 24.3; 22.8; 22.9; 23.3; 23.3; -2.3; -5.8; -7.4; -15.5 - Social Expenditures (millions of dollars): 911.7; 834.1; 1,025.9; 819.1; 1,120.8; 850.0; -77.6; -206.8; -270.8; -555.2 - (As a percentage of GDP) corresponding line: 12.4; 13.2; 12.8; 12.9; 12.9; 12.9; -1.2; -3.3; -4.1; -8.6 - Education (millions of dollars): 389.9; 356.7; 446.7; 356.7; 502.4; 381.0; -33.2; -90.1; -121.4; -244.7 - Health (millions of dollars): 266.6; 243.9; 302.5; 241.5; 337.2; 255.8; -22.7; -61.0; -81.4; -165.1 - Complementary Expenditures (millions of dollars): 762.6; 697.6; 794.0; 633.9; 897.3; 680.4; -64.9; -160.1; -216.8; -441.8 - (As a percentage of GDP) corresponding line: 10.4; 11.1; 9.9; 10.0; 10.4; 10.4; -1.0; -2.5; -3.3; -6.9 - Memorandum: GDP millions of dollars: 7,353.6; 6,310.0; 7,995.6; 6,349.9; 8,666.9; 6,567.2; -1,043.6; -1,645.7; -2,099.7; -4,789.0 - Social Expenditures / Total Expenditures: 54.5; 54.5; 56.4; 56.4; 55.5; 55.5; 0.00; 0.00; 0.00; 0.0 ### Gross capital formation and investment prioritization (2009-2011) - GRUN prioritized investment in infrastructure given capital investment’s correlation with growth and employment. - Critical mass of prioritized investment: US$1.448 billion, excluding capital expenditures not associated with gross capital formation. - This is US$663.0 million less than the amount originally projected in the medium-term budget framework presented in 2008. - 77.3% of these resources correspond to the central government. - Sectoral allocation (selected figures from Table No. 10): - Total investment (millions of dollars): 559.1; 458.5; 745.8; 496.0; 806.1; 493.5; 2,111.0; 1,448.0; -663.0 - (In relation to GDP) corresponding line: 7.6; 7.3; 9.3; 7.8; 9.3; 7.5; 26.2; 22.6; -3.6 - Central Government total (millions of dollars): 457.8; 377.7; 536.9; 366.5; 590.8; 375.6; 1,585.6; 1,119.8; -465.7 - Social (central government) (millions of dollars): 125.8; 104.6; 205.7; 102.3; 220.9; 121.6; 552.3; 328.4; -223.9 - Education (millions of dollars): 47.5; 42.5; 78.6; 40.8; 95.3; 44.0; 221.3; 127.3; -94.1 - Health (millions of dollars): 38.5; 29.2; 62.3; 29.4; 86.1; 49.7; 186.9; 108.3; -78.6 - Drinking water and sanitation (millions of dollars): 28.2; 22.2; 46.4; 17.9; 19.8; 15.6; 94.4; 55.7; -38.7 - Production (central government) (millions of dollars): 182.8; 152.4; 200.6; 142.1; 200.1; 131.6; 583.6; 426.2; -157.4 - Aggregate prioritization outcome: - Government will allocate 74.8% of resources available to the production and social sectors (including autonomous entities). - Public sector projected allocations 2009-2011: - Social sector (central government and autonomous entities) US$498.1 million — 34.4% of all resources for 2009-2011. - Production US$584.7 million — 40.4% of the total available. - Combined, these two sectors receive US$578.5 million less than originally projected, between central government and autonomous entities. ### External financing program (2009-2011 disbursement program) - GRUN’s crisis strategy is financially supported through an agreed disbursement program with the international community. - Given HIPC status, the government excluded acquiring non-concessionary external debt. - Government treats the next disbursement program as a baseline scenario that may change as new financing is negotiated. - External support characteristics: - Critical mass of external resources estimated at US$1.6567 billion, signifying 25.6% of GDP. - 82% of these resources are tied to the Public Investment Program, amounting to US$1.3562 billion (20.9% of GDP). - Some 75.3% (US$1.2481 million) of cooperation comes from multilateral sources; of that, 75.0% will be disbursed by the IADB, the World Bank and CABEI. - Loans comprise 65.3% of the program; grants comprise the remainder. - Liquid resources represent 13.7% of the total provided by the World Bank and the IADB. - Selected totals and shares (from Table No. 11): - TOTAL RESOURCES (US$ Mill. and % GDP): 560.8; 8.9; 556.7; 8.8; 521.5; 7.9; 546.3; 8.5; 1,656.7; 25.6 - Multilateral (US$ Mill. and % GDP): 430.2; 6.8; 431.0; 6.8; 373.3; 5.6; 411.5; 6.4; 1,248.1; 19.2 - Bilateral (US$ Mill. and % GDP): 130.6; 2.1; 125.7; 2.0; 148.2; 2.3; 134.8; 2.1; 408.6; 6.3 - Loans (US$ Mill. and % GDP): 378.5; 6.0; 366.2; 5.8; 325.5; 5.0; 356.7; 5.6; 1,082.0; 16.7 - Grants (US$ Mill. and % GDP): 182.3; 2.9; 190.5; 3.0; 196.0; 3.0; 189.6; 3.0; 574.7; 8.9 - Liquid Resources (US$ Mill. and % GDP): 91.6; 1.5; 63.7; 1.0; 69.9; 1.1; 75.1; 1.2; 227.7; 3.5 - Tied to projects (PIP) (US$ Mill. and % GDP): 433.1; 6.9; 457.4; 7.2; 451.6; 6.9; 447.4; 7.0; 1,356.2; 20.9 - Observations: - Program reflects scarcity of budget support and a donor tendency toward grants tied to projects and fragmentation of foreign cooperation. - Loans are most prevalent (65.3% of program), reflecting lower donated resources to social projects and budget support. - GRUN is accelerating procurement of rapid disbursement resources with flexible allocation, targeting budgetary gaps and unemployment/social protection needs. ### Risks and threats - Government recognizes multiple risks to NHDP objectives and will maintain contingency plans at sectoral and macroeconomic levels to reduce impact. - Global financial crisis risks: - Reduced global demand for products from developing countries. - Heightened interest rates making international financing more expensive. - Increasing unemployment among emigrants reducing family remittances. - World food crisis drivers (as identified in the text): - Impact of worldwide increase in oil prices on inputs, energy, transportation and thus food production. - Industrialized countries’ policies fostering use of food to produce bio-fuels (biodiesel and ethanol). - Growing demand for commodities futures contracts as speculative activity in major stock exchanges, in response to the weak dollar, further increasing the price of food and affecting oil prices. - Additional international policy risks: - Non-compliance by industrialized nations with Doha agreements (elimination of protectionist barriers and agricultural subsidies) disadvantages agricultural production in low-income countries. - Non-compliance with the Kyoto Protocol and greenhouse gas mitigation measures has generated climate changes negatively affecting food production and ecosystems. - Regional response: - GRUN promoted meetings of Central American countries, Mexico and ALBA members in May 2008 (two ministerial, one presidential) to analyze the world food crisis and seek solutions. - Presidential Summit finding: developed-country agricultural subsidies surpass US$327 billion annually, representing 34% of the agricultural income of those countries; reported shares of agricultural income subsidized: 21% of the income of farmers in the U.S, 35% of the income of European farmers and 59% the income of Japanese farmers — a situation that seriously distorts international trade in agricultural products. *Source: M HCP/SEPRES (excerpt from NICARAGUA: 2009-2011 program tables and accompanying analysis)* ### 298. The current international economic order and the economic policies that are adverse to food ### 298. The current international economic order and the economic policies that are adverse to food ### Causes of the food and agricultural crisis, and related external risks - The current international economic order and economic policies adverse to food and agricultural sustainability in developing countries have led to the present crisis in food prices and availability. - Agricultural production in developing countries should be used to meet the right to food of people everywhere through comprehensive policies to support poor farmers. - Natural disasters have become a more frequent, near-annual threat to population, production and the environment; examples include El Niño and La Niña maritime currents, floods, and droughts. - Disaster impacts are magnified when populations live in high risk areas, when events occur in productive zones, or when populations and governments are unprepared to face emergencies. - Economic impacts of disasters extend beyond loss of life to damages to infrastructure, loss of homes and harvests, and increased government reconstruction expenditures, which complicate implementation of the NHDP. ### Risks from external cooperation and political dynamics - A latent annual risk is delay or suspension of foreign cooperation due to donors imposing conditions tied to perceived political performance, sometimes running counter to the country’s Constitution and legal framework. - Donor behavior (delayed disbursements pending observable results) can seriously affect NHDP implementation and create national uncertainty. - The Government of Reconstruction and National Unity (GRUN) has diversified external financing sources: - Participation in the Bolivarian Alternative for the Americas (ALBA). - Cooperation agreements with Brazil, Iran, Taiwan and other friendly countries in Asia and Europe. - Strengthened regional cooperation and Central American integration. - Incentives to enhance direct foreign investment. - Political conflicts around electoral processes create risks to the constitutionality of public policies and development plans; acute, prolonged conflicts convert political uncertainty into a negative economic factor. - Electoral progress noted: - Nicaragua has carried out five presidential and legislative electoral processes since 1984 with good success. - Electoral processes are progressing and will be strengthened in the medium term through modernization of the legal framework. ### Fiscal programming and institutional capacity risks - Inflating resource programming in support of the NHDP is a significant risk; political enthusiasm can contaminate technical viability and create false expectations. - Government mitigation measures: - Only include resources that are truly available for execution in financial programming. - Include in medium-term projections only resources that are in final stages of negotiation and have clear donor commitments to future disbursements. - Institutional capacity constraints affect execution of budgeted resources: - Projects are executed by the private sector and financed largely by foreign cooperation, with disbursements mostly in the second half of the year, affecting Public Investment Program execution. - A sudden spike in public and private investment could run into serious bottlenecks in project implementation and foreign cooperation flows. - Urgent need to understand real national capacity for project construction. ### Implementation, follow-up and evaluation — responsibilities and enabling factors - Effective NHDP execution requires: - Regular review of the international crisis impact on the country and on the NHDP. - Proper programming to fulfill goals. - Timing and forecasting of resources, and timely fulfillment of donor conditions. - Creation of awareness and popular mobilization, and contributions from municipal governments, social, production and business organizations. - Responsibility for NHDP implementation lies with respective government institutions, individually and within sector-wide action. ### 8.1 National Planning System (SNP) - GRUN proposed to have complete design for the National Planning System (SNP) finished by January 2010; SNP should begin operations during the first quarter of 2010. - Existing planning instruments contribute to NHDP implementation and visualize medium-term implementation phases. - In-depth sector-based dialogue has begun to develop inter-sectoral relationships and synergies; examples: National Social Welfare System (SNBS), Rural and Agricultural Public Sector (SPAR), education, health, environment/natural resources/disaster prevention. - Citizen participation and budget formulation: - By presidential mandate, at the end of 2007 GRUN fostered the 2008 Citizen Action Plan to use territorial inputs in budgeting and the Public Investment Program. - In 2009, 52 results-based operational institutional plans were designed consistent with the NHDP; these plans consider the crisis context and use simple language to facilitate rights-based communication. - Public Investment Program (PIP) improvements: - PIP prioritized gross capital formation in 2009 following current expenditure “clean-ups” in 2007 and 2008. - Historic PIP execution record: 90.9 % in 2008. - Budgetary alignment: - Progress in aligning the Medium-Term Budget Framework (MTBF) as the financial expression of the NHDP. - MTBF must ensure total consistency with the Economic and Financial Program (EFP), which establishes budget ceilings consistent with inflation goals. - Existence of a Prioritized Budget to Fight Poverty to strictly measure programs directed at poverty reduction. ### 8.2 Follow-up and evaluation — systems and recent advances - Follow-up is framed as an instrument to generate information and knowledge for timely decision-making, beyond oversight of goals. - Follow-up covers physical and financial execution of strategic goals, results and impact, and monitors external factors (international crisis, environmental vulnerability, risks). - Priority follow-up areas: compliance with policies, reforms to be translated into laws, performance of international cooperation and commitments, and quantitative goals. - Institutional information systems and linkages: - Integrated Financial Management and Auditing System (SIGFA-MHCP). - Debt Management and Financial Analysis System (SIGADE-MHCP/BCN). - Official Development Cooperation Information System for Nicaragua (SYSODA-MINREX). - Projects Bank of the National Public Investment System (BP-SNIP/SEPRES). - Qualitative advances between 2008 and 2009: - Formation of two national commissions to follow up on institutional plans and on the PIP, reviewing execution and defining actions to meet goals and strengthen human capacity. - Operation of the Information System of the Government of Reconciliation and National Unity (SIGRUN), automating the 52 institutional operating plans with a follow-up system that generates early warnings and consolidates a monthly fulfillment report; gaps are re-examined through weekly review. - Public Investment Program follow-up improved with the Physical – Financial System for Follow-up by Contract, enabling weekly execution monitoring. - Institutional strengthening imperative: - Strengthen planning units in each institution and the Planning Division of the Secretariat of the Presidency to raise physical and budgetary execution capacity. ### 8.3 Strengthening the national statistics system (SEN / INIDE) - Government prioritizes strengthening and modernization of the National Development Information Institute (INIDE) and incorporation of the National Statistics System (SEN). - INIDE strengthening measures: update legal framework, adjust structure, modernize processes, develop capacities, and ensure financial sustainability. - Two lines of action in 2009: - (a) Incorporate a system for ongoing production of information on indicators related to employment, income and poverty and standard of living, based on an integrated household survey system. - (b) Progress in review and improvement of statistical and administrative records of institutions to complement surveys and census inputs to the National Statistics System. - SEN integration actions: - Define mechanisms and instruments for integration and planning of the System. - Develop communications links among sectors by connecting databases and developing capacities, with INIDE providing instrumental assistance as governing institution. - Include gender variable analysis across all sub-systems (census, survey and special research). - SEN implementation to include these systems: - Statistics Information System with gender breakdown. - Statistics Yearbook. - Vital Statistics System and Yearbook. - Statistical indicators for international and regional commitments, including the Millennium Development Goals and Central American Integration. - Statistical Information System for Children and Adolescents. - Information System on Indicators by Sector. - Presidential Information System. - All to be complemented with household survey information. ### CHAPTER IX. Agenda — medium-term actions and coordination - GRUN will continue to seek consensus to implement medium- and long-term economic and social strategy linked to the citizen power model. - The document serves as a basic strategy to address the international financial crisis and lay foundations for stable, prosperous progress toward NHDP goals; a complete NHDP revision is planned during the second semester of 2009. - The Economic and Financial Program (EFP) review with the IMF is ongoing; a technical mission worked with GRUN Economic Cabinet during several months in 2009 on Review Two and Three of the EFP. - Public spending levels consistent with inflation goals and prioritized poverty-fighting expenditures were derived from this effort. - External cooperation flows are updated, incorporating new contingency agreements attained in 2009 and eliminating cooperation with serious disbursement delays. - GRUN will continue to strengthen NHDP follow-up, monitoring and evaluation systems to improve public management information. - Initiate national budget formulation for 2010 by sector to determine institutional amounts, wage policy, subsidies, transfers, and foreign debt to finance the PIP, providing a basis for the 2010-2012 medium-term budget review. - Continued dialogue via three donor coordination roundtables: National Dialogue and Governance; Macroeconomy; and Updating of the NHDP. - Continued dialogue with farming, professional and union sectors to align actions with the Updated Summary of the 2009-2011 NHDP. *Source: _cr10108 - 298. The current international economic order and the economic policies that are adverse to food* ### 326. In 2011 it will be critical to measure poverty levels nationwide, in order to redirect and ### _cr10108 - 326. In 2011 it will be critical to measure poverty levels nationwide, in order to redirect and ### Poverty measurement and evaluation of social programs - "In 2011 it will be critical to measure poverty levels nationwide, in order to redirect and intensify social policies." - "The food production programs, the literacy program, the health campaigns and the entire context for the anti-poverty strategy must be evaluated after five years of implementation." ### NHDP review and national planning system - "An overall review of the NHDP is to take place in 2010, while simultaneously formulating and initiating the implementation of the GRUN National Planning and Information System." ### Long-term strategy formulation (2011-2021) - "In 2010 the design and formulation of national consensus will begin around the long-term strategy that will map the road Nicaragua is to travel over the longer term (2011 - 2021)." ### Key macroeconomic indicators and projections (selected figures preserved exactly) - Real GDP (growth rates) by year: - 2006: 3.9 - 2007: 3.2 - 2008: 3.2 - 2009: (1.0) - 2010: 1.0 - 2011: 2.5 - Per capita GDP (in US$): - 2006: 1,122.8 - 2007: 1,096.7 - 2008: 1,094.1 - 2009: 1,109.5 - Per capita GDP (growth rates): - 2006: 10.4 - 2007: (2.3) - 2008: (0.2) - 2009: 1.4 - Inflation, at end of period: - 2006: 13.8 - 2007: 2.6 - 2008: 5.0 - 2009: 6.0 - Inflation, annual average: - 2006: 19.8 - 2007: 4.0 - 2008: 5.0 - 2009: 5.9 - Current account (% of GDP): - 2006: (23.8) - 2007: (15.0) - 2008: (18.2) - 2009: (17.9) - Trade Balance in goods (% of GDP): - 2006: (34.7) - 2007: (24.9) - 2008: (27.2) - 2009: (27.1) - FOB exports of merchandise (in millions US$): - 2006: 1,488.7 - 2007: 1,340.1 - 2008: 1,412.0 - 2009: 1,531.7 - FOB imports of merchandise (in millions US$): - 2006: 4,017.5 - 2007: 3,190.3 - 2008: 3,424.2 - 2009: 3,608.2 - Net from free trade zone (in millions US$)1/: - 2006: 284.2 - 2007: 263.6 - 2008: 261.0 - 2009: 289.2 - Current income from combined public sector (% GDP): - 2006: 25.6 - 2007: 25.6 - 2008: 27.0 - 2009: 27.8 - Total expenditures of the combined public sector (% GDP): - 2006: 30.3 - 2007: 33.3 - 2008: 33.2 - 2009: 33.7 - Balance of the combined public sector a/d (% GDP): - 2006: (4.6) - 2007: (7.7) - 2008: (6.2) - 2009: (5.9) - Donations (% GDP): - 2006: 3.1 - 2007: 2.9 - 2008: 3.0 - 2009: 3.0 - Balance of the combined public sector d/d (% GDP): - 2006: (1.5) - 2007: (4.9) - 2008: (3.2) - 2009: (2.9) - Balance of gross international reserves (in millions US$): - 2006: 1,140.8 - 2007: 1,142.6 - 2008: 1,189.1 - 2009: 1,196.1 - Balance of net international reserves (in millions US$): - 2006: 1,029.8 - 2007: 996.0 - 2008: 1,007.4 - 2009: 1,014.4 - GIR / imports CIF: - 2006: 3.2 - 2007: 3.5 - 2008: 3.5 - 2009: 3.3 - GIR / monetary base: - 2006: 2.2 - 2007: 2.3 - 2008: 2.4 - 2009: 2.3 - Savings = Investment: - 2006: 34.3 - 2007: 25.7 - 2008: 28.5 - 2009: 30.5 - National savings: - 2006: 10.6 - 2007: 10.7 - 2008: 10.3 - 2009: 12.4 - Foreign savings: - 2006: 23.7 - 2007: 15.0 - 2008: 18.2 - 2009: 18.0 - Investment (% GDP), Private sector: - 2006: 28.6 - 2007: 19.7 - 2008: 21.7 - 2009: 23.5 - Investment (% GDP), Public sector: - 2006: 5.7 - 2007: 6.0 - 2008: 6.8 - 2009: 6.9 ### Selected GDP and exchange-rate memoranda (exact figures) - GDP (in 1994 prices), by year: - 2006: 33,893.4 - 2007: 34,986.8 - 2008: 34,641.6 - 2009: 34,993.7 - 2010: 35,877.9 - Nominal GDP (current córdobas): - 2006: 104,982.8 - 2007: 123,307.3 - 2008: 128,092.3 - 2009: 135,887.6 - 2010: 146,508.9 - Nominal GDP (in millions of US$): - 2006: 5,690.6 - 2007: 6,365.3 - 2008: 6,297.7 - 2009: 6,362.8 - 2010: 6,533.5 - Average exchange rate C$ x US$: - 2006: 18.4 - 2007: 19.4 - 2008: 20.3 - 2009: 21.4 - 2010: 22.4 *Source: Excerpt from the provided IMF chapter/section content.* ### 1. Consumption ### _cr10108 - 1. Consumption ### Gross domestic product (expenditure focus) - GROSS DOMESTIC PRODUCT (millions of córdobas) - 2006: 93,016.6 - 2007: 104,982.8 - 2008: 123,307.3 - 2009: 128,092.3 - 2010: 135,887.6 - 2011: 146,508.9 - Growth rates (year-on-year) - 2006: 14.1 - 2007: 12.9 - 2008: 17.5 - 2009: 3.9 - 2010: 6.1 - 2011: 7.8 ### 1. Consumption (national currency series) - Total Consumption (millions of córdobas) - 2006: 92,810.3 - 2007: 105,784.9 - 2008: 127,859.5 - 2009: 131,072.1 - 2010: 139,551.6 - 2011: 148,017.8 - Consumption growth rates - 2006: 14.3 - 2007: 14.0 - 2008: 20.9 - 2009: 2.5 - 2010: 6.5 - 2011: 6.1 - Public Consumption (millions of córdobas) - 2006: 18,348.1 - 2007: 20,546.7 - 2008: 25,289.0 - 2009: 24,406.8 - 2010: 24,501.1 - 2011: 25,536.3 - Public Consumption growth rates - 2006: 20.1 - 2007: 12.0 - 2008: 23.1 - 2009: (3.5) - 2010: 0.4 - 2011: 4.2 - Private Consumption (millions of córdobas) - 2006: 74,462.2 - 2007: 85,238.3 - 2008: 102,570.5 - 2009: 106,665.2 - 2010: 115,050.5 - 2011: 122,481.5 - Private Consumption growth rates - 2006: 13.0 - 2007: 14.5 - 2008: 20.3 - 2009: 4.0 - 2010: 7.9 - 2011: 6.5 ### 1. Consumption (other currency/series block) - Total Consumption (other series, numeric block) - 2006: 30,482.5 - 2007: 31,720.7 - 2008: 32,959.5 - 2009: 33,136.4 - 2010: 33,728.4 - 2011: 35,115.6 - Total Consumption growth rates (other series) - 2006: 4.0 - 2007: 4.1 - 2008: 3.9 - 2009: 0.5 - 2010: 1.8 - 2011: 4.1 - Public Consumption (other series) - 2006: 4,488.4 - 2007: 4,659.1 - 2008: 4,865.7 - 2009: 4,504.3 - 2010: 4,321.3 - 2011: 4,435.1 - Public Consumption growth rates (other series) - 2006: 8.6 - 2007: 3.8 - 2008: 4.4 - 2009: (7.4) - 2010: (4.1) - 2011: 2.6 - Private Consumption (other series) - 2006: 25,994.2 - 2007: 27,061.6 - 2008: 28,093.8 - 2009: 28,632.1 - 2010: 29,407.1 - 2011: 30,680.5 - Private Consumption growth rates (other series) - 2006: 3.3 - 2007: 4.1 - 2008: 3.8 - 2009: 1.9 - 2010: 2.7 - 2011: 4.3 ### 2. Gross Investment - Gross Investment (millions of córdobas) - 2006: 28,054.3 - 2007: 34,891.2 - 2008: 42,290.1 - 2009: 32,902.8 - 2010: 38,725.3 - 2011: 44,639.5 - Gross Investment growth rates - 2006: 14.4 - 2007: 24.4 - 2008: 21.2 - 2009: (22.2) - 2010: 17.7 - 2011: 15.3 - Fixed investment (millions of córdobas) - 2006: 27,119.5 - 2007: 31,825.1 - 2008: 38,392.9 - 2009: 33,558.0 - 2010: 37,009.1 - 2011: 40,781.9 - Fixed investment growth rates - 2006: 16.9 - 2007: 17.4 - 2008: 20.6 - 2009: (12.6) - 2010: 10.3 - 2011: 10.2 - Inventory change (millions of córdobas) - 2006: 934.8 - 2007: 3,066.1 - 2008: 3,897.2 - 2009: (655.2) - 2010: 1,716.2 - 2011: 3,857.6 ### Detailed investment components (national currency series) - Construction (fixed investment) - 2006: 14,279.8 - 2007: 15,551.8 - 2008: 18,275.1 - 2009: 18,316.5 - 2010: 19,752.3 - 2011: 21,404.6 - Buildings - 2006: 11,015.1 - 2007: 11,632.7 - 2008: 13,414.2 - 2009: 13,072.9 - 2010: 13,486.5 - 2011: 14,502.4 - Civil engineering works - 2006: 3,264.7 - 2007: 3,919.1 - 2008: 4,860.8 - 2009: 5,243.6 - 2010: 6,265.7 - 2011: 6,902.2 - Machinery and equipment - 2006: 10,741.3 - 2007: 13,694.8 - 2008: 17,098.0 - 2009: 12,627.8 - 2010: 14,227.7 - 2011: 15,999.8 - Other Investments - 2006: 2,098.4 - 2007: 2,578.5 - 2008: 3,019.8 - 2009: 2,613.7 - 2010: 3,029.2 - 2011: 3,377.5 ### Public investment (national currency series) - Public Investment (millions of córdobas) - 2006: 4,706.5 - 2007: 5,659.4 - 2008: 7,077.7 - 2009: 7,649.0 - 2010: 9,188.5 - 2011: 10,143.6 - Public Investment growth rates - 2006: (8.9) - 2007: 20.2 - 2008: 25.1 - 2009: 8.1 - 2010: 20.1 - 2011: 10.4 ### Private investment (national currency series) - Private Investment (millions of córdobas) - 2006: 23,347.8 - 2007: 29,231.8 - 2008: 35,212.4 - 2009: 25,253.8 - 2010: 29,536.8 - 2011: 34,495.9 - Private Investment growth rates - 2006: 20.6 - 2007: 25.2 - 2008: 20.5 - 2009: (28.3) - 2010: 17.0 - 2011: 16.8 ### 3. Exports - Exports (millions of córdobas) - 2006: 29,553.3 - 2007: 35,516.9 - 2008: 42,719.9 - 2009: 41,289.4 - 2010: 44,958.8 - 2011: 50,929.7 - Exports growth rates - 2006: 25.2 - 2007: 20.2 - 2008: 20.3 - 2009: (3.3) - 2010: 8.9 - 2011: 13.3 - Alternative exports block (other series) - 2006: 10,883.9 - 2007: 11,863.8 - 2008: 12,175.4 - 2009: 11,743.2 - 2010: 11,876.5 - 2011: 12,375.3 - Alternative exports growth rates - 2006: 12.6 - 2007: 9.0 - 2008: 2.6 - 2009: (3.6) - 2010: 1.1 - 2011: 4.2 ### 4. Imports - Imports (millions of córdobas) - 2006: 16,356.8 - 2007: 18,390.3 - 2008: 20,259.9 - 2009: 18,995.7 - 2010: 19,654.1 - 2011: 20,676.1 - Imports growth rates - 2006: 6.8 - 2007: 12.4 - 2008: 10.2 - 2009: (6.2) - 2010: 3.5 - 2011: 5.2 - Alternative imports/expenditure block (millions of córdobas) - 2006: 30,482.5 (total consumption block; see Consumption section for full breakdown) *Source: GEE-SGIE-DO8/27/2009 11:00* ### 4. Imports ### 4. Imports ### Imports — values and growth rates - Imports (levels): 57,401.2; 71,210.3; 89,562.3; 77,172.0; 87,348.1; 97,078.0 - Growth rates (corresponding periods): 20.1; 24.1; 25.8; (13.8); 13.2; 11.1 ### Consolidated Operations of the Non-Financial Public Sector — key aggregates (Millions of Córdobas; Percentage of GDP) - 1. Total income: 32,851.4; 36,772.4; 40,849.1 — 25.6; 27.1; 27.9 - 1.1 Current income: 32,777.5; 36,706.6; 40,788.6 — 25.6; 27.0; 27.8 - Tax income from Central Government: 29,307.9; 33,174.5; 36,808.8 — 22.9; 24.4; 25.1 - Surplus from Oper. of NFPE exc.TI of C4: 28.5; 115.5; 208.6 — 0.3; 0.1; 0.1 - Non-tax income: 1,719.3; 1,837.1; 1,997.8 — 1.3; 1.4; 1.4 - Current transfers: 80.0; 80.0; 100.0 — 0.1; 0.1; 0.1 - Other current income: 1,241.8; 1,499.6; 1,673.3 — 1.0; 1.1; 1.1 - 1.2 Capital income: 73.9; 65.8; 60.5 — 0.1; 0.0; 0.0 - 2. Total spending: 41,202.6; 43,742.7; 47,906.4 — 32.2; 32.2; 32.7 - 2.1 Current expenses: 31,027.2; 31,922.0; 35,991.0 — 24.2; 23.5; 24.6 - foreign interest: 598.5; 682.9; 1,047.9 — 0.5; 0.5; 0.7 - domestic interest: 1,252.6; 1,313.4; 1,136.8 — 1.0; 1.0; 0.8 - 2.2 Capital expenditures and net lending: 10,175.4; 11,820.8; 11,915.4 — 7.9; 8.7; 8.1 - Fixed capital formation: 6,544.5; 7,723.7; 7,542.7 — 5.1; 5.7; 5.1 - Capital transfers: 3,584.4; 4,067.0; 4,341.0 — 2.8; 3.0; 3.0 - Loans (Net): 46.5; 30.1; 31.7 — 0.0; 0.0; 0.0 - 3. Current surplus or deficit (1.1 - 2.1): 1,750.2; 4,784.7; 4,797.5 — 1.4; 3.5; 3.3 - 4. Overall deficit (-) before grants (1 - 2): (8,351.2); (6,970.3); (7,057.4) — (6.5); (5.1); (4.8) - 5. Foreign grants: 3,697.5; 4,061.3; 4,392.5 — 2.9; 3.0; 3.0 - 6. Overall deficit (-) after grants (4 + 5): (4,653.7); (2,909.0); (2,664.9) — (3.6); (2.1); (1.8) - 7. Financing: 4,653.7; 2,909.0; 2,664.9 — 3.6; 2.1; 1.8 - 7.1 Net Foreign: 5,870.9; 6,028.0; 6,303.0 — 4.6; 4.4; 4.3 - Loans: 6,831.1; 7,065.9; 7,302.4 — 5.3; 5.2; 5.0 - Payments: 960.2; 1,038.0; 999.4 — 0.7; 0.8; 0.7 - 7.2 Net Domestic: (1,376.0); (3,280.8); (3,806.9) — (1.1); (2.4); (2.6) - Central Bank and rest of financial system: 42.9; (1,209.5); (4,100.9) — 0.0; (0.9); (2.8) - Central Government: 4.2; (1,067.5); (1,159.3) — 0.0; (0.8); (0.8) - Suppliers (aggregate): (1,418.9); (2,071.3); 294.1 — (1.1); (1.5); 0.2 - 7.3 Income from privatization: 0.0; 0.0; 0.0 — 0.0; 0.0; 0.0 - Gap: 158.8; 161.9; 168.8 — 0.1; 0.1; 0.1 - ENACAL: 158.8; 161.9; 168.8 — 0.1; 0.1; 0.1 ### Nicaragua: Foreign financing available (Table No. 19) - Total foreign resources: 417.8; 560.8; 556.7 — 521.5 - Liquid resources: 30.7; 92.1; 64.0 — 69.9 - Budgetary support: 30.0; 91.6; 63.6 — 69.9 - Loans: 0.0; 91.6; 63.6 — 69.9 - Grants: 30.0; 0.0; 0.0 — 0.0 - Balance of payment support: 0.7; 0.5; 0.4 — 0.0 - Loans: 0.0; 0.0; 0.0 - Grants: 0.7; 0.5; 0.4 - Resources for Public Investment: 358.2; 433.1; 457.4 — 451.6 - Loans: 190.6; 251.3; 267.2 — 255.7 - Central Government: 134.0; 187.9; 171.4 — 173.0 - Public Enterprises: 33.1; 55.9; 95.8 — 82.7 - FNI: 6.5; 6.1; 0.0 - Rest of non-consolidated NFPS: 17.0; 1.4; 0.0 - Grants: 167.6; 181.8; 190.2 — 195.9 - Central Government: 153.5; 166.3; 143.9 — 145.2 - Public Enterprises: 14.1; 15.5; 46.2 — 50.6 - IMF Resources: 28.9; 35.6; 35.2 — 0.0 ### Central Government Operations and projections (Tables No. 20–26; Thousands of Córdobas; %GDP or % where indicated) - Table No. 20 — Central Government Operations YEARS 2009 - 2011 (Thousands of Córdobas) - Total Income: 22,984,421; 25,262,760; 27,415,252 — 17.9; 18.6; 18.6 - Current Income: 22,984,421; 25,262,760; 27,415,252 — 17.9; 18.6; 18.6 - Tax revenue: 21,142,824; 23,300,866; 25,268,529 — 16.5; 17.1; 17.2 - Total Expenses: 31,093,536; 31,093,536; 34,282,431 — 24.3; 22.9; 23.3 - Current expenditures: 23,425,220; 23,250,975; 25,869,316 — 18.3; 17.1; 17.6 - Capital Expenses and Net Loans: 7,668,316; 7,842,561; 8,413,115 — 6.0; 5.8; 5.7 - Total Balance (-) before grants: (8,109,115); (5,830,776); (6,867,179) — (6.3); (4.3); (4.7) - Foreign Grants: 3,381,533; 3,073,742; 3,257,058 — 2.6; 2.3; 2.2 - Total Balance (-) after grants: (4,727,582); (2,757,034); (3,610,121) — (3.7); (2.0); (2.5) - Total Financing: 4,727,582; 2,757,034; 3,610,121 — 3.7; 2.0; 2.5 - Net Foreign (financing): 4,742,046; 4,002,191; 4,477,163 — 3.7; 2.9; 3.0 - Net Domestic: (14,464); (1,245,157); (867,042) — (0.0); (0.9); (0.6) - Placement of Treasury Bills/Rep. Of Nicaragua: 2,395,400; 2,769,160; 3,472,000 — 1.9; 2.0; 2.4 - Table No. 21 — Central Government Ordinary Income 2009-2011 (Thousands of Córdobas) - Total Collections: 22,984,421; 25,262,760; 27,415,252 — 17.9; 18.6; 18.6 - Tax Revenue breakdown: - On Income: 7,507,547; 9,096,474; 9,854,678 — 5.9; 6.7; 6.7 - On Production, Consumption and Int. Trans.: 7,614,126; 8,095,779; 8,791,530 — 5.9; 6.0; 6.0 - VAT: 3,425,231; 3,633,691; 3,933,659 — 2.7; 2.7; 2.7 - SCT: 4,160,975; 4,432,468; 4,825,806 — 3.2; 3.3; 3.3 - Taxes on Foreign Trade: 6,021,151; 6,108,613; 6,622,321 — 4.7; 4.5; 4.5 - Import Customs Duties (ICD): 888,516; 1,071,146; 1,200,276 — 0.7; 0.8; 0.8 - VAT on Imports: 5,093,064; 4,993,962; 5,372,721 — 4.0; 3.7; 3.7 - Non-tax Income: 1,670,886; 1,788,254; 1,949,068 — 1.3; 1.3; 1.3 - Other Non-Tax Income: 1,418,797; 1,517,276; 1,654,863 — 1.1; 1.1; 1.1 - Special Tax for FOMAV: 537,431; 587,633; 640,346 — 0.4; 0.4; 0.4 - Table No. 22 — Revised Projected Expenditures 2009-2011 (Thousands of Córdobas) - Current Expenditures: 23,425,220; 23,250,975; 25,869,316 — 18.3; 17.1; 17.6 - Consumption Expenditures: 13,843,896; 13,916,349; 15,622,634 — 10.8; 10.2; 10.6 - Wages and salaries (Remuneration): 8,712,356; 9,142,353; 9,799,860 — 6.8; 6.7; 6.7 - Interest on Public Debt: 1,816,896; 1,933,229; 2,111,086 — 1.4; 1.4; 1.4 - Capital Expenditures: 7,668,316; 7,842,561; 8,413,115 — 6.0; 5.8; 5.7 - TOTAL EXPENDITURES + PAYMENTS: 34,692,677; 35,312,190; 38,697,610 — 27.1; 26.0; 26.3 - Tables No. 23–26 — Detailed allocations by transfer, ministries, and projections - TOTAL MINISTRIES (Total expenditures): 20,536,204; 19,896,468; 22,141,911 — 16.0; 14.6; 15.0 - TOTAL ALLOCATIONS AND SUBSIDIES: 8,740,392; 9,263,840; 10,029,436 — 6.8; 6.8; 6.8 - TOTAL OPERATIONAL FUNDING: 21,614,913; 21,317,746; 23,758,230 — 16.8; 15.6; 16.1 - TOTAL CURRENT EXPENDITURES: 23,431,808; 23,250,975; 25,869,316 — 18.2; 17.1; 17.5 - TOTAL CAPITAL EXPENDITURES: 7,661,683; 7,842,562; 8,413,117 — 5.9; 5.7; 5.7 ### Balance of Payments (millions of dollars; projections) - 1. Current Account: (1,512.9); (946.4); (1,160.7); (1,166.8) - As percentage of GDP: -23.8%; -15.0%; -18.2%; -17.9% - Trade Balance in Goods: (2,211.3); (1,570.5); (1,732.0); (1,767.4) - Exports: 2,537.6; 2,298.2; 2,363.7; 2,584.8 - Merchandise: 1,488.7; 1,340.1; 1,412.0; 1,531.7 - Manufactured goods (FTZ): 1,015.6; 942.0; 932.5; 1,033.2 - Other goods: 33.3; 16.0; 19.2; 19.9 - Imports: (4,748.9); (3,868.7); (4,095.7); (4,352.2) - Merchandise: (4,017.5); (3,190.3); (3,424.2); (3,608.2) - Other goods: (731.4); (678.4); (671.5); (744.0) - Trade Balance in Services: (209.1); (193.7); (252.8); (290.6) - Income: 399.1; 410.2; 413.0; 430.4 - Expenditures: (608.2); (603.9); (665.8); (721.0) - Net income: (160.6); (183.4); (197.5); (221.7) - Interest on Public Debt: (40.5); (41.5); (42.4); (47.5) - Private transfers: 1,068.1; 1,001.2; 1,021.7; 1,112.9 - Family remittances: 818.1; 771.2; 801.7; 912.9 - 2. Capital and Financial Account: 1,534.8; 929.5; 1,195.7; 1,163.2 - Official Capital: 332.8; 478.5; 486.0; 451.0 - Grants: 198.3; 182.3; 190.6; 195.9 - Loans: 219.5; 378.5; 366.1; 325.6 - Payments: (75.1); (80.9); (70.7); (70.5) - Private Capital 1/: 1,202.0; 451.0; 709.8; 712.2 - Direct foreign investment: 626.1; 513.8; 562.0; 577.1 - Capital transfer: 176.7; 216.1; 144.0; 136.2 - 3. Balance of payments balance (1 + 2): 21.9; (16.8); 35.1; (3.6) - Changes in reserve assets (- increase): (37.5); (1.8); (46.6); (7.0) - Exceptional financing 2/: 15.6; 18.6; 11.5; 10.6 - Memorandum: GDP in millions of dollars: 6,365.3; 6,297.7; 6,362.8; 6,533.5 *Source: GEE-SGIE-DO8/27/2009 11:00; BCN; MHCP* ### ANNEX No. 2: ECONOMIC AND SOCIAL MANAGEMENT 2007-2008 ### ANNEX No. 2: ECONOMIC AND SOCIAL MANAGEMENT 2007-2008 ### Introduction - GRUN took power on January 10, 2007, proposing a shift from a neoliberal model to a "Citizen Power" model centered on human beings. - Objectives and immediate measures: - Resolve daily 12-hour electrical cuts through ALBA-provided thermal plants. - Establish an Economic and Financial Program (EFP) to facilitate rapid agreement with the IMF and establish macroeconomic stability. - Policies to combat poverty and foster productive capacities, including: food security and sovereignty in rural areas; recovery of free health services and education; ending illiteracy in two years; a National Social Welfare System; anti-poverty programs (Zero Hunger, Zero Usury, seed and urea plan); strengthening small and medium enterprises; and environmental harmony. - First-day decrees to defend buying power: - Free public education and health care. - Subsidized urban bus fares of C$2.50 for Managua. - Subsidized social electricity rate for domestic consumers consuming less than 150 KWH. - Subsidized social water rate for poor families consuming less than six cubic meters. - Measures to stabilize food prices and energy: - Reactivated ENABAS and a network of small neighborhood shops. - Lowered tariffs on imports of chicken and eliminated tariffs on imports of wheat flour, beans, pasta, oat and barley by-products, soy-based preparations and non-refined oils. - Increased national thermal energy capacity by 120 MW. - Program to reactivate production and exports for growth and employment: - Prioritizes food for nutritional and food security and sovereignty, exports, and labor-intensive activities. - Emphasizes mass use of public investment to generate economic activity, invigorate tourism, agro industry and free trade zones, and maximize public spending on wealth-generating activities. ### Development and Social Equity - GRUN challenge: transform from neoliberal model of unprotected social rights to a model promoting awareness and practice of rights, solidarity, and expanded capacities. #### Free and Quality Health Care - Policy actions: - Implemented policy of free health care. - Expanded high-cost medical services for needy populations with chronic diseases. - Extended specialized services via surgical medical brigades and mobile medical brigades. - Family and Community Health Model: - As of 2008, visits to 128,891 families, of which 65% live in rural areas. - Utilization and outputs: - Total medical consultations: 6,630,743 in 2006 to 9,899,885 in 2008 (increase of 49.3% over 2006). - Prescriptions dispatched: 10,916,833 in 2006 to 20,443,542 in 2008 (increase of 87.3%). - Total discharges of hospitalized patients increased 19% in 2008 over 2006. - Access to surgery increased 46.5% in 2008 compared to 2006. - Misión Milagros attended 770 patients in Cuba and 3,021 patients in Venezuela. - 37,002 operations performed in Ophthalmological Centers in Ciudad Sandino, Bluefields and Puerto Cabezas. - Maternal and child health outcomes: - Maternal deaths: 114 in 2007; 94 in 2008 (Maternal Mortality Containment Plan in effect). - Deaths of children less than one year: 1,308 in 2008 (1,349 in 2006). - Contributors to improvement: VPCD Program monitoring, National Health Campaigns, immunizations. #### Child Protection: Amor Program - Program began in 2008; by end-2008: - 2,100 of 25,000 street-at-risk children enrolled in school for the cycle beginning in February 2009. - 205 incorporated into homes of origin or substitute families. - Network of solidarity homes strengthened with 380 families willing to welcome a child. - Comprehensive care for 4,000 children less than six years of age in 37 Child Development Centers (CDI). - 19 CDIs rebuilt; reconstruction and equipping of four additional CDIs underway. - 60 units for basic physical medical care in different health centers. - Identified 1,960 children and adolescents without birth certificates; 800 were registered. - 5,974 child and adolescent workers enrolled in school for the 2009 academic year. #### Free and Quality Education - End of privatization of education in 2007; five educational policies: More Education, Better Education, Another Education, Participatory and Decentralized Educational Management, and All Educations. - Literacy: - "From Martí to Fidel" National Literacy Campaign (begun 2007) taught 246,209 citizens to read and write. - Illiteracy rate decreased from 20.2% in January 2007 to 7.5% at the end of 2008. - Enrollment and coverage: - Preschool registration 2008: 220,529 children (5,914 more than 2007; 10,579 more than 2006). - Net schooling rate (school-age children registered) rose from 52.1% in 2006 to 55.1% in 2008. - Primary school enrollment 2008: 944,341 children. - Primary net schooling rate increased from 86.5% in 2007 to 87.1% in 2008. - Secondary school enrollment 2008: 446,868 students (decrease of 4,215 compared to 2007; 21,150 more than 2006). - Secondary net schooling rate: 46% for 2008 and 2007 (43.6% in 2006). - School retention: 90.9% in 2008 (83% in 2007; 86% in 2006). #### Quality Model: Progress in Curriculum Reform - 2007 Great National Curriculum Consultation included 17,500 people. - In 2008, curriculum documents were formulated for preschool, primary and secondary education and a new concept for the Regular Basic and Secondary Education sub-system (TEPCEs, Classrooms, RED-CAP, etc.). #### Linkages between Formal and Non-formal Systems - MINED proposed creation of two General Divisions: - General Division for Regular Basic and Secondary Education. - General Division for Irregular Basic and Secondary Education. - Objective: link formal and non-formal systems and prioritize out-of-school population aged three to seventeen. #### Regional Autonomous Educational System (SEAR) - Adjustments to primary and secondary education to reflect multi-ethnic, multi-cultural Caribbean realities via SEAR and PEBI. - PEBI implemented mainly in Sumu-Mayangna, Miskito and Creole areas: Waspam, Puerto Cabezas, Siuna, Rosita, Bonanza, Prinzapolka (RAAN); Corn Island, Bluefields, Pearl Lagoon, La Desembocadura (RAAS). - PEBI supports recovery and strengthening of indigenous and Afro-descendant languages and cultures. #### Drinking Water and Sanitation - Investment policy aimed at restoring deteriorated water and sanitation systems to reduce technical losses, increase effective coverage, and protect water resources. - Environmental Sanitation Program for the Lake and City of Managua: - Physical advancement of 87%; first phase anticipated to conclude in the first quarter of 2009. - Infrastructure improvements and beneficiaries: - Expansion of Juigalpa drinking water system benefiting 68,500 users. - Water systems constructed for six Managua neighborhoods (including Las Viudas and Jocote Dulce) benefiting 36,834 people. - Drinking water and sanitary sewerage improvements in Estelí, Ocotal, Ciudad Sandino, Boaco, Chinandega, Masaya and Carazo benefiting 482,500 citizens. - Program to optimize supply systems and improve measurement rates completed. ### Production and Commercial Strategy #### Agricultural Production - Food Production Program (first five-year phase 2007-2012): - Goal: capitalize 75,000 peasant families. - Average annual cost of approximately US$30 million. - Per-family investment ranges between US$1,500 and US$2,000. - Progress by end-2008: - 32,000 families received the Production Package (43% of the goal). - Contributions to national production: - 2.5 million liters of cow’s milk. - 3,200 liters of goat’s milk. - 31,400 suckling pigs. - 5.5 million eggs. - 19,500 quintals of corn. - 11,700 quintals of beans. - Value added for staple crops increased 12.8% (after -18.1% in 2007), driven by first planting season harvest increases, particularly beans. - Agro-Seeds Program began in 2008 to provide improved seeds, urea fertilizer and technical assistance as credit to small-scale farmers. #### Financing (Agricultural and Rural) - Credit disbursed through government and private entities (reimbursable financing): C$542.2 million in 2007 to C$2.4205 billion in 2008 (4.5 times more than previous year). - Other non-reimbursable funds aimed at capitalization of small and medium farmers (mainly in kind) and productive infrastructure. - Funding sources for Food Production Program: 88% financed by the national budget; remaining 12% from international cooperation (European Union, IFAD, Sweden, Taiwan and ALBA). - 2008 program activity: - 19,359 production packages distributed (1,524 are backyard packages) to women under the “Zero Hunger” Program. - “Zero Usury” Microcredit Program served 68,221 members (increase of 64,916 members over 2007). #### Small and Medium Enterprises - 2008 achievements: - 160 enterprises prepared to become formal entities. - 88 service and production cooperatives and credit unions legally constituted. - Five traditional fishing cooperatives legally established. - 46 cooperatives organized in fishing. - Tourism sector micro- and small enterprises: - 3,486 registered; 894 first-time operations generating 3,577 new jobs. - In 2007, 408 new micro- and small tourism enterprises generated 2,801 new jobs. - Total of 6,378 new jobs in 2007-2008. - Harvest collection and storage centers: - Centers opened in Managua, Masaya, Granada, Rivas, León, Chinandega, Matagalpa, Estelí, Boaco, Chontales and Bluefields. - Twelve centers opened in Jinotega served 9,700 small and medium scale business owners in 2008. #### Free Trade Zones - National Free Trade Zone Commission attracted investments of US$96.3 million in 2008 (some US$50 million more than in 2007). - Institutional strengthening: - Installation of a tri-partite roundtable (union organizations in free trade zones, ANITEC, FCNZFP, and State institutions). - Establishment of a Corporate Social Responsibility Committee for companies within the Free Trade Zone Regimen. *ANNEX No. 2: ECONOMIC AND SOCIAL MANAGEMENT 2007-2008* ### 365. Nicaragua shows positive performance in terms of attracting direct foreign investment (DFI). ### _cr10108 - 365. Nicaragua shows positive performance in terms of attracting direct foreign investment (DFI). ### Direct Foreign Investment (DFI) performance - Total DFI for 2007-2008 surpasses the total investment for the three previous years. - 2008 DFI: US$505.83 million — first year in Nicaragua’s history reporting annual investment over US$400 million. - 2008 growth over 2007: more than 42.0% (2007: US$355.28 million). - DFI as a share of regional index: - 2006: 5.4% (third place, including Panama). - 2007: 5.9% (moved to second place). - 2008 (preliminary): 7.0%. - Sector concentration in 2008 (representing 86.6% of all investments): - Telecommunications: US$284.7 million. - Free trade zones: US$213.0 million. - Energy: US$192.0 million. - Major projects accounting for 61.2% of total investments: - ENITEL: US$73.3 billion. - Amayo Wind Power Consortium: US$69.0 million. - ALBANISA: US$51.0 million. - América Móvil: US$50.0 million. - Inmobiliaria Santo Domingo: US$38.3 million. ### Generation of Employment - National open unemployment rate: - July 2008: 6.1%. - July 2007: 6.4%. - 2005: 7%. - National overall employment rate (July 2008): 93.9%. - Men: 94.4%. - Women: 93.1% (INIDE, 2008). - New minimum wage levels established in 2008 benefited 138,864 workers in the formal sector. - This number increased by 12% over 2007 and 34% over 2006. ### Electrical Energy: crisis response and renewable expansion - 2007 inherited energy capacity: existing 822 megawatts. - Additional capacity incorporated: 180 megawatts. - Amayo wind plant: - 19 aero-generators. - Capacity: 40 megawatts. - Location: province of Rivas. - Status: connected to the National Interconnected System (SIN) and contributing to the system. - Foreign cooperation supporting small hydroelectric plants: UNDP and Swiss Development Cooperation (SDC). - Private investment in renewable energy: US$5,331,928.00 (equivalent C$108,446,084.00). - Geothermic investment (C$88,634,209.00) by: - Polaris Energy de Nicaragua S.A (PENSA) — San Jacinto Tizate Project. - Geotérmica Nicaragüense (GEONICA) — El Hoyo - Monte Galán and Managua-Chiltepe Projects. - Wind generation (C$19,811,874.00) — Amayo Consortium. - Rural electrification goal for 2007-2008: approximately 18,000 rural homes. - Achievement: 100% fulfilled; 400 rural communities now have access to the electrification system. - 2007-2008 Public Investment Program (energy sector) initiatives and projects: - Small hydroelectric plants: Río Bravo and Bilampi complete; El Naranjo, Salto Negro, Wapí and Wiwilí under construction. - Two plants with capacity of 60 megawatts installed in Los Brasiles Sub-station and Las Brisas Station. - Project to install new generator units with additional 180 megawatts in Masaya, Managua, Tipitapa and Timal (development begun). - Larreynaga Hydroelectric Plant: feasibility and design finalized; will contribute 17 megawatts; anticipated construction start in 2009. - Bluefields-El Bluff Electrical Interconnection Project completed at a cost of US$2.3 million. - Granada Sub-station and Transmission Line completed at a cost of US$7.3 million. - Matiguás-Siuna Sub-transmission Line completed at a cost of US$5.7 million. - Rural distribution networks: 488 kilometers installed for 47,127 residents across fifteen provinces and two autonomous regions at a cost of US$8.1 million. ### Public Investment Policy and infrastructure achievements - Public Investment Program (PIP) composition change: - 2006: 53% of capital expenditures. - 2008: 82% of capital expenditures. - Expectation: 2009 budget PIP will not contain any current expenditure. - Administrative and execution improvements: - Creation of a high-level committee to follow-up on PIP coordinated by the Presidency. - PIP execution rate: - 2006: 77%. - 2008: 91%. - Roads and highways (selected works and metrics): - Rehabilitation and construction projects with lengths specified: - Telica - Malpaisillo: 24 km. - Chinandega - El Viejo - El Congo: 41.7 km. - Chinandega - Corinto: 19.5 km. - La Virgen - San Juan del Sur: 51.25 km. - Sébaco - Matagalpa: 27.3 km. - Guayacán - Jinotega: 4.47 km. - Improvement of 3,169 kilometers of roadways (prioritizing secondary and rural roads). - Feasibility study and design completed for Acoyapa - San Carlos (153 km.); anticipated construction begin in 2009 with approximate cost of US$51.0 million. - Education and health infrastructure: - Health: construction/rehabilitation of 8 Health Posts, 26 Health Centers and 9 Maternity Houses. - Rio San Juan Hospital maternity and neonatology building cost: US$0.25 million. - Boaco Hospital construction and equipping cost: US$12.5 million. - Education infrastructure: - 710 classrooms repaired, replaced and/or expanded at a cost of US$16.8 million. - 165 portable classrooms and 150 pre-fabricated classrooms installed at a cost of US$3.1 million. - Drinking water and sanitation projects and costs: - Environmental Sanitation Program for the Lake and City of Managua: 87% physical advancement; first phase anticipated conclusion in first quarter of 2009; investment US$36.0 million in 2007-2008. - Juigalpa drinking water system expansion benefiting 68,500 users — US$16.5 million (first phase). - Water systems for six neighborhoods in Managua and Ciudad Sandino benefiting 36,834 people — US$3.3 million. - Drinking water and sanitary sewerage improvements in Estelí and Ocotal — US$1.7 million. - Program to optimize supply systems and improve measurement rates completed at a cost of US$11.5 million. - Housing: - 1,465 houses constructed in urban and rural areas across 22 municipalities, targeting most socially vulnerable sectors — investment US$7.9 million. ### Macroeconomic program, growth, inflation, external balances - 2007 Economic and Financial Program growth assumption: 4.75% (2008-2012 period). - Actual economic growth 2008: 3.2% (equal to 2007). - Causes of lower growth: increases in oil and food prices, international financial crisis (decrease in exports and international prices for raw materials and contraction of investment), and negative impact of Hurricane Felix. - Sector contributions to 2008 growth: - Agriculture: 9.5%. - Commerce and services: 1.4%. - Construction: -2.8%. - Other sectors: livestock and manufacturing contributed to growth to a lesser degree; fishing and mining showed decreases. - Fixed private investment: - Telecommunications investments totaling US$453 million — highest amount in the last five years. - Inflation: - Cumulative inflation 2008: 13.77% (2007: 16.88%). - Underlying inflation reduction: from 6% in the first quarter to 3.54% in the second quarter (2007-2008). - Current account and external gap: - External gap: 23.2% of the GDP (2007: 17.6%). - Capital and financial account flows: US$1.489 billion directed mostly to the private sector via transfers, net loans, commercial credits and DFI (mainly in energy and telecommunications). - Reserves and ANIR: - Accumulation of international reserves increase: US$37.5 million. - Adjusted net international reserves (ANIR) decrease: US$27.4 million (due to less demand for monetary base and delays in incoming liquid external resources and budgetary support). - Combined Public Sector (CPS) balance after grants in 2008: - Smaller deficit of C$1,871.9 million compared to forecasted C$2,339.9 million. - Compared to 2007, CPS after grants increased due to expansion of current spending (salary demands, poverty programs, pensions, electoral spending, and PIP activity). - Fiscal and revenue developments: - External budgetary support financing decline in 2008: US$87 million less. - Central government tax revenues in 2008: 16% less than 2007 (and 17% less than forecast) — largely affecting income tax and value added tax, particularly customs-collected VAT. - Domestic VAT increased by 1.2% due to more refunds, mainly to the energy sector. - Central government expenditures: - Total non-financial public sector spending in 2008: C$2.8263 billion less than anticipated due to fewer capital expenditures. - Central government current expenditures registered a 27% increase over 2007 driven by salary increases and new positions: - Education: 1,500 teachers. - Health: 600 workers. - Army and police: 500 police officers. - Payroll adjustments: 12% to 16% for prioritized sectors; 6% for the rest of the public payroll. - Transfers to municipalities increased from 7% to 8% of tax revenue. - Capital expenditures in the non-financial public sector in 2008 were C$2.82 billion less than anticipated. - Capital expenditure reclassification: transfer of 1.8 billion to current spending, a reclassification not incorporated into the program. - PIP execution: - Central government execution: 90.9%. - Execution including public companies: 81.4%. ### External debt relief and public debt - 2008 total foreign debt relief obtained: US$59.1 million. - Total nominal relief formalized under HIPC and MDRI: US$6.8064 billion (equivalent to 84% of the total nominal relief anticipated for Nicaragua under these initiatives). - Notable commercial creditors participating in repurchase operation: - Beogradska Banka AD of Serbia: US$18.2 million. - Bulgargeomin LTD of Bulgaria: US$14.1 million. - External public debt as of December 31, 2008: US$3.5115 million, representing: - 55% of the GDP (2007: 59.5%). - 156.5% of exports of goods and services (2007: 175.8%). ### 2007–2008 budgetary effort to combat poverty - Annual average budgetary effort during 2007-2008: US$791.3 million (13.2% of the GDP). - This is US$254.5 million higher than the annual average executed during 2002-2006 (US$536.8 million; 11.7% of the GDP). - Financing composition: - Fiscal effort to sustain this level of spending is around 50.0% (almost half of spending on poverty financed with internal resources). - Comparison: 2002-2006 period allocated an average of barely 35.0% from internal resources. - Composition of current expenditures (annual averages): - 2007-2008: US$417.8 million (6.9% of the GDP). - 2002-2006: US$209.7 million (4.6% of the GDP). - Main drivers of increased current expenditures: - Government decision to guarantee free education and health care. - Introduction and expansion of programs targeting the poorest families: - Food Production Program (Zero Hunger). - Zero Usury. - Expansion of Pound for Pound Program for rural production development. *Source: _cr10108 - 365. Nicaragua shows positive performance in terms of attracting direct foreign investment (DFI).* ### 397. The great dependency on external financing for capital expenditures and the rigidity of ### _cr10108 - 397. The great dependency on external financing for capital expenditures and the rigidity of ### Public Investment Program and Capital Spending - Capital spending reached an annual average of US$373.6 million (6.2% of the GDP). - Execution levels were US$46.5 million higher than the annual average invested from 2002 to 2006 (US$327.1 million). - Factors affecting the Public Investment Program: great dependency on external financing for capital expenditures; rigidity of disbursements from international cooperation (particularly in the first year of the new administration); increased project costs due to the rise in oil prices. ### Monetary and Financial Program - Adjusted Net International Reserves (ANIR) at end-2008 totaled US$37.4 million. - ANIR accumulation associated with: - fewer transfers from the central government due to a US$86.9 million decrease in external resources for budgetary support; - less demand than anticipated for the monetary base (US$33.7 million) owing to lower real demand for money amid the international financial crisis. - Coverage remained higher than two times the Gross International Reserves/Monetary Base (GIR/MB). - Net Domestic Assets (NDA) goal met with a margin of US$27.1 million. - Open Market Operations (OMO): net loans made US$42 million (programmed at US$35.9 million) due to higher inflation and delays in the entrance of liquid resources. ### Exchange Policy, Balance of Payments and Foreign Trade - Actions in 2008 focused on seeking new export markets. - Within ALBA, Nicaragua consolidated a commercial exchange agreement with Venezuela facilitating access for agricultural exports (black beans, cattle on the hoof and beef). - Trade agreement developments: - Continued CA–EU negotiations for an association agreement in 2009, including a free trade agreement. - Protocol for the free trade agreement between Panama and Nicaragua signed January 2009, with 85% of products enjoying immediate tariff exemption. - Trade agreement signed with Taiwan in 2006 entered into effect on January 1, 2009. - Modified free trade agreement with Mexico to allow procurement of Mexican textile materials for clothing exports to the United States and vice versa. - Signing promoted of a Reciprocal Cooperation Agreement to facilitate commercial and investment exchange. - Central America signed the new Central American Uniform Customs Code (CAUCA IV) and its regulations (RECAUCA). - Anti-inflationary measures: decrease or temporary elimination of tariffs on imports of bulk food oils, beans, soy-based products, pastas, oatmeal and barley; contingencies issued for scarce supply of unhulled rice, yellow corn, butter and corn syrup. ### Debt Policy and Foreign Cooperation - External financing received by the public sector amounted to US$417.8 million, US$284.9 million less than programmed. - Cooperation flows for budgetary support and balance of payments decreased by US$106.7 million, mainly due to: - delays by the National Assembly in approving loans for US$40 million from the IADB and the World Bank; - non-disbursement of grants of US$46.7 million from members of the Budget Support Group (BSG) reprogrammed for the second half of the year. - Lower incoming loan resources totaled US$161.0 million versus grant amounts of US$123.9 million. - Venezuelan cooperation in 2008 was US$457 million, with investments in electricity estimated at US$98.5 million for generation of 100 megawatts. - Under PETROCARIBE, US$293 million was received: non-refundable financing US$99 million and loans US$194 million. Funds channeled through Albacaruna for production activities of cooperatives, electrical energy subsidies, collective and selective transportation, social infrastructure, food security and other areas. ### Development Strategy of the Caribbean Coast — Key Outcomes - Strengthened Development Council of the Caribbean and consolidation of autonomous management of the Territorial Government of the Alto Wangki and Bocay; installation of Indigenous Territorial Government and Special Development Regimen for three Bosawás territories with special national budget allocations. - Implementation of the Development Plan of the Caribbean Coast (PDCC) and Plan for Regionalization of Health Care; Coordinating Commission for Regionalization of Education installed. Most significant achievements: - Seven indigenous territories titled and demarcated, covering 8,903 square kilometers with 102 Mayagna and Miskito communities. - More than 63,000 basic grains farmers provided means to plant beans, rice and corn. - Harvests processed and commercialized locally: 3,500 quintals of beans and 17,000 quintals of rice. - Distribution of 7,571 production packages representing an investment of more than US$15 million for poor families, mainly native peoples and Afro-descendants. - Medical coverage expanded by an additional 150,271 consultations compared to 2007. - Maternal mortality rates decreased: RAAS from 262 to 102 and RAAN from 250.9 to 190. - Prenatal care coverage increased by more than 5%. - Infant mortality rate decreased from 16.6% to 8.22% in the RAAS and from 19.8% to 15.5% in the RAAN. - Transportation: maintenance of the Bilwi-Río Blanco road and completion of four bridges on the Bilwi-Río Blanco road. - Electrical grid expansion completed between Matiguas-Mulukuku-Siuna and Bluefields-El Bluff Rama-Kukra Hill-Pearl Lagoon; electricity service expanded and improved in four municipalities; energy ensured for seven indigenous and Afro-descendant territories with community units. ### Measures for Good Public Administration and Transparency - Broad political consensus in parliament on most laws and decrees, aligning with the National Human Development Plan and PRGF guidelines. - Ministry of Finance and Public Credit (MHCP) promoted transparent and austere management and public access to information. - Medium-Term Institutional Expenditure Framework coverage rose from 25 institutions (2008 formulation) to 33 institutions (2009 formulation). - Implementation of a physical follow-up module in the Integrated Financial Management and Auditing System (SIGFA) to evaluate public spending with product indicators. - Sub-system for Monthly Cash Programming (MCP) operates in a decentralized fashion, modernizing Treasury Sub-system (SITE) and enabling the National Treasury Office to approve financial limits and control cash flows. - State Purchasing and Contracts Efficiency and Transparency Program (PREFTEC), financed by Loan 1064/SF-NI and Cooperation 2/CL-NI, established a National Public Contracts Training Center to train public officials and suppliers. - Technical and legal assistance provided to central administration agencies, municipalities and the municipal sector; workshops organized for procurement and management officials. - Project Execution Units incorporated into MHCP under the General Financial Administration (DGAF), including PSTAC, SIGFA components, PRSC, OAFE, SNIP, INIDE, SEPRES Monitoring and Planning Division. - Public Finance Modernization Plan defined priority actions to modernize public finances and strengthen subsystems and associated systems of the Financial Administration System (FAS); 2008-2012 Training Plan developed to strengthen MHCP Budget. - Transparency: key budget documents and execution reports (2009 National Budget and annex, 2009-2012 Medium-Term Budget Framework, 2008 National Budget, Report on Liquidation of the 2007 Budget, Budgetary Execution Reports for January/March, January/June and January/September 2008, Evaluation Report on the Use of Municipal Transfers for 2007 and first half of 2008, Evaluation Report on 2007 Municipal Budgetary Execution) made available on the MHCP web site. ### Annex No. 3 — Determining Budget Efforts to Fight Poverty: Strategic Classification - New criteria focus on the person, the environment and institutional capacity to prioritize policies that directly affect the poor structurally and expand real capacity and state implementation efficiency. - Spending divided into three levels. First Level of Impact: Directly improving income redistribution — included spending categories: - i. Literacy, preschool, primary, adult and special education, including school feeding programs and provision of educational materials; primary and secondary health services including nutrition and reproductive health programs. - ii. Programs to capitalize families and small impoverished production units in urban and rural sectors with financing, improved seed, inputs, training and technical assistance. - iii. Basic infrastructure: construction, refurbishing and maintenance of streets and rural roads; small ports, bridges and docks on lakes and rivers to improve rural productivity and access to markets, and facilitate attendance at schools and health centers, especially during the rainy season. - iv. Construction of social interest housing and provision of water and basic sewage, primarily in rural and marginalized urban areas. - v. Subsidies to low income sectors to prevent increases in the cost of transportation and basic services. - vi. Programs to prevent and mitigate damages caused by disasters covering food security and support to affected populations. - vii. Construction and operation of shelters, homes, feeding centers, and child development centers for assistance and social protection of the extremely poor, particularly youth and children. - Note: Excluded from this group are expenditures to support associations and foundations, and Current Transfers to Municipalities covering municipal operating expenses. Second Level of Impact: Strengthening capitalization of the poor and increasing productivity — included programs: - Productive development programs for small and medium enterprises, technical assistance and credit (including the Zero Usury Microcredit Program). - Property Regularization Program; secondary and technical education. - Rural electrification projects, major trunk roads, secondary paved and unpaved roads, collector roads. - Reforestation, environmental restoration and protection programs. - Severe Soil Erosion Protection Strategy in 21 water basin areas (national scope). *Source: _cr10108 (excerpts provided).* ### 427. In terms of capital expenditures, investments in ports and airports are excluded from this ### _cr10108 - 427. In terms of capital expenditures, investments in ports and airports are excluded from this ### Capital expenditures: exclusions and inclusions (paragraph 427) - Excluded from capital spending: investments in ports and airports, because "the poor have historically been marginalized from these forms of travel." - Included in capital spending: spending aimed at the modernization of the energy sector, despite the assessment that "the structural deficiencies in the infrastructure of the country can only be overcome in the medium and long term with significant involvement by private investment." ### Current expenditures: sectoral exclusions (paragraph 428) - Excluded from current expenditures: - Services provided by MAGFOR and MIFIC for regulating and organizing the agricultural, forestry, industrial and commercial sectors. - Programs for MAGFOR supervision of agricultural production in general, including: - plant health and seed programs, - animal health and livestock improvement services, - agrosanitary services. ### Third Level of Impact: Increasing operational efficiency of expenditures in health, education and social protection (paragraph 429) - Purpose of spending in this group: - To fight poverty by addressing bureaucratic and programming inefficiencies. - To overcome difficulties in identifying vulnerable groups who will be beneficiaries of programs. - To strengthen processes for planning, designing, evaluating and providing follow-up on programs and projects. - Intended outcome: increase the impact of services in the identified sectors to improve the well-being of the poor. *Source: Excerpt from the supplied IMF content unit (paragraphs 427–429).* ### 430. Expenditures in the NHDP to fight poverty exclude programs that pay for consultants, ### _cr10108 - 430. Expenditures in the NHDP to fight poverty exclude programs that pay for consultants, ### Combat Extreme Poverty and Child Malnutrition - Results indicator: sustained and permanent reduction of chronic malnutrition in children under five years of age. - Achievements (2004–2007): - Malnutrition (height-age indicator) decreased from 21% in 2004 to 15% in 2007. - National Food and Nutritional Security Commission (CONASAN) and Technical Commission on Food and Nutritional Security (COTESAN) established. - MOH and programmatic actions: - Comprehensive Child Care: revised growth and development standards; adoption of WHO minimum expected weight standards. - Community Health and Nutrition Program (PROCOSAN); National Micronutrient Program; National Breastfeeding Program. - AMOR Program (MINED, MOH): Comprehensive Child Care for children under six; Vulnerable Groups Assistance Program distributing complementary food rations (MAGFOR, WFP and MOH). - Furtherance actions 2009-2011: - Maintain and expand surveillance (SIVIN) and program implementation; institutional plans and budgets with SIGRUN, BP-SNIP and SIGFA follow-up. ### Macroeconomic and Financial Perspective - Strategic objective: ensure the fiscal effort necessary to fight poverty through efficient and sustainable public finances. - Tax and customs management achievements: - UNCTAD approved technical cooperation to move from ASYCUDA++ to ASYCUDA World in 2008. - ASYCUDA World installed as pilot in Central Air Customs in 2009. - Risk Management Module installed in Level One customs offices; TIM II installation process begun. - Project to incorporate five Tax Administration Offices into the SIT approved in 2008; installation begun in 2009. - Policy and budget execution: - Incorporation of the Zero Hunger Program and the Zero Usury Program into the budget. - Better coordination between Planning Division and Financial Administration and Procurement Division. - Furtherance actions 2009-2011: - Complete ASYCUDA World and TIM II installations; incorporate five Tax Administration Offices into SIT; implement SIT assessment recommendations; strengthen DGI/DGA information exchange. - Strengthen follow-up on execution of plans and PIP; strengthen National Follow-up Commissions; improve inter-institutional coordination for execution of external resources. - Results indicators (as presented): - % execution of public expenditures relative to the updated budget. 1/2/ - % of non-financial public sector primary expenditures directed at fighting poverty. 2/ - % of non-financial public sector primary expenditures directed at the Public Investment Program. 2/3/ ### Social Welfare and Equity Perspectives — Food Security and Education - Food production and Production Package: - Since 2007, 33,721 families benefited from the Production Package: 12,217 in 2007, 19,359 in 2008 and 2,145 in the first half of 2009. - PRORURAL restructuring and Sector-wide Food Security and Sovereignty Policy under the Food Security and Sovereignty Law. - Education achievements and actions: - Elimination of fees in public schools; National Curriculum Commission established. - School feeding expanded beyond prior School Snack Program; approximately one million preschool and primary school children to receive school food. - Construction of more than 1,300 classrooms; distribution of more than 200,000 student desks. - National Training and Formation Center for Human Resources in Education planned. - Literacy: - Illiteracy decreased from 20.7% in 2007 to 4.1% in June 2009 via the National Literacy Campaign (CNA). - 57,631 volunteer facilitators participated; technical teams in 153 municipalities strengthened. - Furtherance actions: continue CNA; incorporate out-of-school children, adolescents and youth. - Health and maternal/child outcomes: - Maternal mortality rate: 94 in 2006; 80 in 2007; 67 in 2008 (per 100,000 live births). - Infant mortality rate: estimated at 29 deaths per one thousand live births (DHS 2006/2007); 28 deaths per one thousand live births in 2008. - Actions: implement Family and Community Health Model; Plan for Eradication of Maternal Mortality; strengthen protocols, birth plans, maternity houses, family planning, micronutrient surveillance and Child- and Mother-Friendly Health Units. - AMOR Program results: - 10,670 children and adolescents removed from the streets; 6,976 enrolled and attending school. - Child Development Centers (CDI): - Comprehensive care provided to 4,737 children under six in urban CDIs; 83,884 children under six in rural Community CDIs and Base Houses. - Drinking water and sanitation: - Urban water strategy enacted; projects to improve service in Districts V and VI of Managua benefiting more than 30 neighborhoods planned for second half of 2009. - Rural Water and Sanitation Strategy (October 2007); more than 60% of FISE investments in municipalities with severe and high poverty. - Constructed 14,892 latrines in rural areas (period summarized). ### Production Perspective — Energy, Roads, Agriculture, Industry - Energy generation and grid: - Energy rationing eliminated via new plants: - 2007: ENEL and ENATREL installed and began commercial operations of 60 MW (Hugo Chávez Plants 1 and 2). - 2008: coordination to install 220 MW based on fuel oil; ENEL and ENATREL installed 60 MW in Ernesto Ché Guevara Plants 1, 2 and 3. - First half 2009: ALBANISA initiated operation of 40 MW Monimbó Plant. - AMAYO Consortium (US$95.0 million) completed 40 MW wind generation in February 2009. - Planned projects and capacities: - San Jacinto-Tizate Geothermal Project (72 MW): 24 MW to go on line in the second half of 2011; remaining capacity in first half of 2012. - Tumarín Hydroelectric Project anticipated operation in 2014 (Special Law approved). - Larreynaga Hydroelectric Plant: 12 MW, begin operating in 2012. - Salto Y-Y (25 MW) and Hydropantasma (12 MW) to begin operating in 2012. - El Hoyo (40 MW) and Managua-Chiltepe (40 MW) geothermal development planned. - Casita-San Cristóbal geothermic concession with estimated potential of 100 MW. - Rural electrification and transmission: - 2007 and 2008: 20,525 houses received electricity, benefiting 123,150 residents in rural areas. - First half 2009: 939 houses connected to meters; networks and internal installations completed allowing installation of 915 additional meters. - New substations and transformer upgrades in 2008–2009: Siuna sub-station 6.25 MVA 69-24.9 kV (2008); Nandaime transformer changed from 5 MVA to 15 MVA (2009); new Granada sub-station 25/40 MVA, 138 - 13.8 kV (40 MVA). - Roads (secondary roads) executed: - 2007: 19.46 kilometers new. - 2008: 20.43 kilometers new. - First half of 2009: 51.09 kilometers new. - Rehabilitated kilometers: - 2007: 82.52 kilometers. - 2008: 102.38 kilometers. - First half of 2009: 12.27 kilometers. - Agriculture and industrial production: - Seed distribution and farmer coverage: - 2007-2008 cycle: 94,247 bean, rice and sorghum farmers attended with 65,470 quintals of seed distributed. - 2008-2009 cycle: program serving 140,000 farmers with 82,625 quintals of seeds for basic grains. - % increase in yields of corn and beans: 2% in 2007; decreasing with 5% in 2008. - Industrial support: - Non-refundable Financial Assistance Fund of C$5.6 million operating to equip industrial microenterprises, benefiting 200 industrial microenterprises and 10 credit unions. - More than 7,000 micro-, small and medium enterprise owners assisted. - Furtherance actions: implement PRORURAL INCLUSIVE; National Seed System; Cattle Ranching Policy; agricultural insurance; access to inputs, financial services, technical assistance; implement PROMIPYME phases; gender-focused microenterprise support. ### Natural Disasters and Environmental Perspective - Reforestation: - National Reforestation Crusade to repopulate 25,164 hectares in degraded watersheds, improving quality of life for 37,000 families in 49 municipalities. - Pollution control: - Support and monitoring of 307 environmental management plans and six manuals on good environmental practices in prioritized sectors (dairy, tannery, coffee, slaughterhouse, shrimping). - Early Warning Systems (EWS) and disaster mitigation: - 2007: two EWS installed in El Rama, Bluefields and Kukra Hill; Cerro Negro Volcano monitoring with eight seismic stations and six webcams. - 2008: three EWS installed (tsunami in San Rafael del Sur with three sirens and two seismic stations; Telica Volcano with six seismic stations and three webcams; floods in urban Quilalí). Flood maps developed for Río Grande de Matagalpa watershed and Quilalí urban sector. - First half 2009: Community EWS installed in the Mining Triangle (Kahka, Waspuk and Pis Pis Rivers) with six limnimeters. - Relief provided to 355,049 people affected by natural disasters (food, provisions and construction materials). - Furtherance actions: seek cooperation resources; select sites; acquire and operate EWS; implement National Disaster Response Fund; strengthen COMUPRED and SINAPRED; improve Damage Assessments and Needs Analyses (DANA) to attend 100% of affected people. ### Caribbean Coast Perspective - Education and literacy: - Coordinating commission and three sub-commissions for Regionalization of Education established; Bonanza and Corn Island declared Illiteracy-Free Territories. - Curriculum redesigned for intercultural bilingual education. - Furtherance actions: formulate Regionalization Plan; declare more urban centers Illiteracy-Free; train monolingual teachers; conduct mapping and school census. - Property and land rights: - Since 2007, nine indigenous territories demarcated and titled, benefiting 53,000 inhabitants of 121 communities in a total area of 10,310 km2 in RAAS, RAAN and Alto Wanki-Bocay. - Furtherance actions: issue and distribute indigenous land titles; develop conflict resolution and demarcation assessments. - Economic transformation and electrification: - Targets: increase access to electricity services of 40% by 2011. - Achievements: Y-Y (25 MW) and Tumarin (160 MW) developments; National Interconnected System in Siuna, Bluff, Kukra Hill and Pearl Lagoon-Kahkabila benefiting 20,000 users; generation units in Corn Island, Karawala, Rama Key and Sahsa totaling 185 KW and 1,600 beneficiaries. - 10,000 families productively rehabilitated target; Food Production Program benefiting 7,571 families to date. - Furtherance actions: seed banks, processing units, strategy for rice processing and bean/corn management; install Seed Processing Unit in Kukra Hill. ### Actions for Good Public Administration - Transparency and access to information: - Decree 117-2007 (Law 621) ordered Offices for Access to Public Information (OAIP); institutional web publication and use of communications resources ongoing. - Furtherance: classify and make information available physically and on web pages. - Public administration strengthening: - Accreditation of public servants: 1,761 in 2007; 4,397 in 2008; total of 12,535 accredited from 2005 to June 30, 2009. - Furtherance: coordinate accession into public administration career; provide technical assistance and training. - SIGRUN and planning: - 52 institutional plans automated in SIGRUN on the Presidency intranet, enabling monthly consolidated reporting and early warnings for decision-making. - Furtherance: design and implement National Planning System; strengthen follow-up on execution of plans, budgets and investments; strengthen Planning and PIP Follow-up Commissions. - Public procurement transparency: - Proposed Law on Administrative Contracts pending National Assembly review. - 124 workshops conducted with 1,856 trainees; 28,746 contracting procedures published. - Furtherance: massive training on electronic portal use; on-site technical assistance; monitoring and follow-up of publication quality and timeliness. - Citizen security and property rights: - Homicide rate per 100,000 inhabitants: 13.0% in 2006 and 2007; 12.0% in 2008. - Crime variation rate per 100,000 inhabitants: decreased to 14.7% in 2008 from 15.7% in 2006–2007. - Crime decelerated by 5.0% compared to the demographic crime index, decreasing to 6.0% in 2008 from 11.0% in 2007. - Property documents and titles: - 2007 to first half of 2009: 29,232 property documents issued (urban and rural titles, certificates under Laws 85, 86 and 88, certificates of compliance). - 2007 to first half of 2009: 149,991 Nicaraguan families received property documents. - Furtherance actions: prioritize topographic measurement of State properties; inter-institutional commissions with Property Administration Office, BCN and PGR; speed inscriptions to declare social interest properties for titling. *Source: Technical Summary of the 2009-2011 NHDP (excerpt provided).* --- _Source: https://www.imf.org/-/media/websites/imf/imported-full-text-pdf/external/pubs/ft/scr/2010/_cr10108.pdf_