Nicaragua: Selected Issues
IMF Staff Country Reports, June 27, 2017
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- Nicaragua: Selected Issues
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Bibliographic details
- Published: June 27, 2017
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484305645.002
Overview findings
- The social security system is projected to run out of liquid reserves by 2019.
- The anticipated exhaustion of reserves occurs several years earlier than previously expected.
- To avoid burdening the budget, reforms to the system are urgently needed.
- A politically acceptable, pragmatic solution appears within reach, but authorities should act quickly to avoid a costly bailout of the system.
Projections and risks
- Projection: liquid reserves exhausted by 2019.
- Risk: exhaustion would likely require a fiscal bailout that would burden the budget.
- System type: defined-benefit, pay-as-you-go, which must be sustained for another generation of workers while maintaining improved health care benefits.
Analysis needs and reform design
- Required analyses:
- A deep actuarial analysis.
- A deep economic analysis.
- A deep operational analysis.
- Purpose of analyses: to design a comprehensive reform program that ensures the sustainability of pension benefits and the maintenance of improved health care benefits.
Policy recommendations (high level)
- Implement a comprehensive reform program informed by actuarial, economic, and operational analysis.
- Ensure reforms allow the defined-benefit, pay-as-you-go system to sustain itself for another generation of workers.
- Preserve improved health care benefits alongside pension sustainability.
- Act quickly to implement reforms to avoid a costly fiscal bailout.
International Monetary Fund. Nicaragua: Selected Issues. June 27, 2017.
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- Country Report