{
  "title": "Press Release: IMF Executive Board Approves US$111.3 Million PRGF Arrangement for Nicaragua",
  "publication": "IMF News, October 5, 2007",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr07224",
  "canonical": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr07224",
  "overlayPath": "/en/news/articles/2015/09/14/01/49/pr07224/index.md",
  "summary": "The Executive Board approved a three-year, SDR 71.5 million (about US$111.3 million) arrangement under the Poverty Reduction and Growth Facility (PRGF) for Nicaragua.",
  "publishDate": "2007-10-05",
  "sections": [
    {
      "heading": "IMF decision and financial terms",
      "content": "- The Executive Board approved a three-year, SDR 71.5 million (about US$111.3 million) arrangement under the Poverty Reduction and Growth Facility (PRGF) for Nicaragua.\n- Immediate disbursement: an amount equivalent to SDR 11.9 million (about US$18.5 million).\n- PRGF facility terms: annual interest rate of 0.5 percent; repayable over 10 years with a 5½-year grace period on principal payments."
    },
    {
      "heading": "Program objectives and design",
      "content": "- Purpose: support the government's economic program to consolidate macroeconomic stability, reduce poverty, and achieve the Millennium Development Goals.\n- Emphasis on country-owned Poverty Reduction Strategy paper (PRSP) as the basis for PRGF-supported programs.\n- Program pillars:\n  - Create additional fiscal space to increase social spending and investment (notably energy, water, education, and health).\n  - Reduce public debt levels over the medium term.\n  - Address key structural challenges: power sector, transparency and governance of public sector institutions, explore future options for social security reform.\n  - Improve returns on high investment rates and bolster governance via strengthened fiscal and financial sector institutions."
    },
    {
      "heading": "Key conditional and policy features",
      "content": "- Fiscal policy:\n  - A temporary fiscal expansion planned for 2008 to accommodate urgent spending on priority social programs and infrastructure, particularly in the energy and water sectors.\n  - Improve targeting of social spending; better targeting, strengthened systems of budget control and investment planning, and transparent accounting for all development assistance.\n- Monetary policy:\n  - Maintain crawling peg exchange rate regime.\n  - Aim for a gradual decline in inflation and further accumulation of international reserves.\n  - Strengthen conduct of monetary policy through measures to improve central bank finances, independence, and accountability.\n- Structural reforms:\n  - Year 1: emphasize energy policy measures to improve electricity service and reduce fiscal risks.\n  - Year 2: further strengthen public financial management practices.\n  - Year 3: implement specific steps to address medium-term challenges, including the under-funded social security system.\n  - Reform sequencing is mindful of implementation and political constraints."
    },
    {
      "heading": "Mr. Murilo Portugal (Deputy Managing Director and Acting Chairman) — Principal observations",
      "content": "- Recognition of important strides: strengthened macroeconomic stability, reduced vulnerabilities, expanded poverty-reduction spending, and progress with structural reforms.\n- Past policies, with IMF and international community support including debt relief, facilitated growth and some social improvements.\n- The new program aims to consolidate gains and reduce poverty more decisively while maintaining debt sustainability.\n- Authorities commit to increasing private investment and strengthening the business climate.\n- Emphasis on steadfast implementation despite a more difficult external environment to support confidence."
    },
    {
      "heading": "Recent economic developments (annex highlights)",
      "content": "- Macroeconomic status:\n  - Growth has resumed; inflation contained; macro imbalances reduced since the 2000-01 financial crisis.\n  - Fiscal position strengthened substantially.\n  - Debt relief under enhanced HIPC and MDRI contributed to lower debt levels and some reduction in the current account deficit.\n  - Financial sector strengthened and fiscal reforms advanced.\n- Remaining vulnerabilities:\n  - Half of the population lives below the poverty-line; reduction in poverty has slowed.\n  - Public debt levels and the current account deficit remain high despite consolidation and debt relief.\n  - High dollarization and exposure to sudden reversals of investor sentiment and external shocks (e.g., higher oil prices and natural disasters)."
    },
    {
      "heading": "Nicaragua: Selected economic indicators (as presented)",
      "content": "- GDP growth (percent): 2004: 5.3; 2005: 4.3; 2006: 3.7; 2007: 4.2; 2008 (Prog.): 4.7; 2009 (Prog.): 5.0; 2010 (Prog.): (not listed).\n- CPI (eop, in percent): 2004: 9.3; 2005: 9.6; 2006: 9.5; 2007: 7.3; 2008 (Prog.): 7.0; 2009 (Prog.): 7.0.\n- CPI (avg, in percent): 2004: 8.5; 2005: 9.1; 2006: 8.2.\n- GDP deflator (percent): 2004: 9.4; 2005: 10.6; 2006: 7.9; 2007: 7.6.\n- Current account (US$ millions): 2004: -563; 2005: -724; 2006: -838; 2007: -896; 2008 (Prog.): -993; 2009 (Prog.): -998; 2010 (Prog.): -1,020.\n- Current account (in percent of GDP): 2004: -12.6; 2005: -14.9; 2006: -15.8; 2007: -16.3; 2008 (Prog.): -15.3; 2009 (Prog.): -14.6.\n- Exports of goods, f.o.b (US$ millions): 2004: 1,369; 2005: 1,654; 2006: 1,978; 2007: 2,185; 2008 (Prog.): 2520; 2009 (Prog.): 2878; 2010 (Prog.): 3,230.\n- Imports of goods, f.o.b. (US$ millions): 2004: -2,457; 2005: -2,956; 2006: -3,422; 2007: -3,735; 2008 (Prog.): -4,186; 2009 (Prog.): -4,590; 2010 (Prog.): -4,977.\n- Gross international reserves (US$ millions): 2004: 670; 2005: 730; 2006: 924; 2007: 925; 2008 (Prog.): 1,043; 2009 (Prog.): 1,183; 2010 (Prog.): 1,317.\n- Nonfinancial public sector — Revenue (percent of GDP) 1/: 2004: 17.2; 2005: 18.1; 2006: 18.8; 2007: 19.6; 2008 (Prog.): 19.7; 2009 (Prog.): 19.8; 2010 (Prog.): 19.9.\n- Nonfinancial public sector — Expenditure (percent of GDP) 2/: 2004: 22.2; 2005: 22.6; 2006: 22.5; 2007: 25.0; 2008 (Prog.): 25.6; 2009 (Prog.): 25.2.\n- Interest (percent of GDP): 2004: 2.1; 2005: 1.9; 2006: 1.8; 2007: 1.6; 2008 (Prog.): 1.4; 2009 (Prog.): 1.3.\n- Overall balance before grants (percent of GDP): 2004: -5.0; 2005: -4.5; 2006: -3.7; 2007: -5.4; 2008 (Prog.): -5.9; 2009 (Prog.): -5.3.\n- Combined public sector balance (percent of GDP): 2004: -6.5; 2005: -5.1; 2006: -4.2; 2007: -5.8; 2008 (Prog.): -6.4; 2009 (Prog.): -5.6; 2010 (Prog.): -5.5.\n- Grants (percent of GDP): 2004: 3.5; 2005: 4.6.\n- Primary balance after grants (percent of GDP): 2004: 0.8; 2005: 2.2; 2006: -0.1; 2007: 0.4.\n- Overall balance after grants (percent of GDP): 2004: -2.8; 2005: -1.6; 2006: -1.0; 2007: -1.8.\n- Debt of the combined public sector (percent of GDP): 2004: 150.7; 2005: 137.7; 2006: 106.5; 2007: 56.2; 2008 (Prog.): 55.9; 2009 (Prog.): 55.3.\n- Domestic debt (percent of GDP) 3/: 2004: 30.0; 2005: 27.5; 2006: 23.3; 2007: 16.6; 2008 (Prog.): 12.9; 2009 (Prog.): 9.9.\n- External debt (percent of GDP) 4/: 2004: 120.7; 2005: 110.2; 2006: 83.3; 2007: 36.3; 2008 (Prog.): 39.6; 2009 (Prog.): 42.9; 2010 (Prog.): 45.4.\n- Investment (percent of GDP): 2004: 28.0; 2005: 29.6; 2006: 29.5; 2007: 28.8; 2008 (Prog.): 29.3; 2009 (Prog.): 29.1; 2010 (Prog.): 28.6.\n- Private sector investment (percent of GDP): 2004: 21.3; 2005: 22.7; 2006: 23.7; 2007: 21.5; 2008 (Prog.): 21.4; 2009 (Prog.): 21.1; 2010 (Prog.): 20.7.\n- Public sector investment (percent of GDP): 2004: 6.7; 2005: 6.9; 2006: 5.8; 2007: 7.8; 2008 (Prog.): 8.0; 2009 (Prog.): 8.0.\n- Savings (percent of GDP): 2004: 15.4; 2005: 14.7; 2006: 13.7; 2007: 13.0; 2008 (Prog.): 13.8; 2009 (Prog.): 14.0; 2010 (Prog.): 12.5.\n- Memorandum items:\n  - Nominal GDP (C$ mn): 2004: 71,156; 2005: 81,233; 2006: 93,135; 2007: 104,702; 2008 (Prog.): 117,991; 2009 (Prog.): 132,452; 2010 (Prog.): 148,810.\n  - GDP (US$ mn): 2004: 4,465; 2005: 4,855; 2006: 5,301; 2007: 5,675; 2008 (Prog.): 6,092; 2009 (Prog.): 6,513; 2010 (Prog.): 6,970.\n  - Gross reserves (in months of imports of G&NFS excl. maquilas): 2004: 3.3; 2005: 3.1; 2006: 3.4; 2007: 3.2.\n  - NIR adjusted stocks (US$ mn): 2004: 211; 2005: 282; 2006: 535; 2007: 595; 2008 (Prog.): 665; 2009 (Prog.): 745; 2010 (Prog.): 835.\n  - External debt (legal situation) 5/: 2004: 85.4; 2005: 50.0; 2006: 52.2; 2007: 54.5; 2008 (Prog.): 56.1."
    },
    {
      "heading": "Notes on debt relief and projections (as presented)",
      "content": "- Debt relief: combined effects of enhanced HIPC initiative and MDRI contributed to lower debt levels.\n- 2007 external debt projection includes MDRI and HIPC debt relief from IDB and assumes settlement on HIPC-equivalent terms for outstanding debt to non-Paris Club bilaterals and private creditors.\n- Of the 50 percent reduction in external debt in 2007: 21 percent corresponds to IDB, 25 percent to non-Paris Club bilaterals, and 3.4 percent to private creditors.\n- Footnotes in the source specify data definitions and coverage for revenue, expenditure, domestic and external debt, and reserves.\n\nInternational Monetary Fund — Press Release No. 07/224, October 5, 2007.\n\n---\n\n\n References\n\n- Nicaragua and the IMF\n- Portugal and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr07224"
    }
  ],
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    "Published: October 5, 2007",
    "The Executive Board approved a three-year, SDR 71.5 million (about US$111.3 million) arrangement under the Poverty Reduction and Growth Facility (PRGF) for Nicaragua.",
    "Immediate disbursement: an amount equivalent to SDR 11.9 million (about US$18.5 million).",
    "PRGF facility terms: annual interest rate of 0.5 percent; repayable over 10 years with a 5½-year grace period on principal payments.",
    "Purpose: support the government's economic program to consolidate macroeconomic stability, reduce poverty, and achieve the Millennium Development Goals.",
    "Emphasis on country-owned Poverty Reduction Strategy paper (PRSP) as the basis for PRGF-supported programs.",
    "Program pillars:",
    "Fiscal policy:",
    "Monetary policy:",
    "Structural reforms:",
    "Recognition of important strides: strengthened macroeconomic stability, reduced vulnerabilities, expanded poverty-reduction spending, and progress with structural reforms.",
    "Past policies, with IMF and international community support including debt relief, facilitated growth and some social improvements.",
    "The new program aims to consolidate gains and reduce poverty more decisively while maintaining debt sustainability.",
    "Authorities commit to increasing private investment and strengthening the business climate.",
    "Emphasis on steadfast implementation despite a more difficult external environment to support confidence.",
    "Macroeconomic status:",
    "Remaining vulnerabilities:",
    "GDP growth (percent): 2004: 5.3; 2005: 4.3; 2006: 3.7; 2007: 4.2; 2008 (Prog.): 4.7; 2009 (Prog.): 5.0; 2010 (Prog.): (not listed).",
    "CPI (eop, in percent): 2004: 9.3; 2005: 9.6; 2006: 9.5; 2007: 7.3; 2008 (Prog.): 7.0; 2009 (Prog.): 7.0.",
    "CPI (avg, in percent): 2004: 8.5; 2005: 9.1; 2006: 8.2.",
    "GDP deflator (percent): 2004: 9.4; 2005: 10.6; 2006: 7.9; 2007: 7.6.",
    "Current account (US$ millions): 2004: -563; 2005: -724; 2006: -838; 2007: -896; 2008 (Prog.): -993; 2009 (Prog.): -998; 2010 (Prog.): -1,020.",
    "Current account (in percent of GDP): 2004: -12.6; 2005: -14.9; 2006: -15.8; 2007: -16.3; 2008 (Prog.): -15.3; 2009 (Prog.): -14.6.",
    "Exports of goods, f.o.b (US$ millions): 2004: 1,369; 2005: 1,654; 2006: 1,978; 2007: 2,185; 2008 (Prog.): 2520; 2009 (Prog.): 2878; 2010 (Prog.): 3,230.",
    "Imports of goods, f.o.b. (US$ millions): 2004: -2,457; 2005: -2,956; 2006: -3,422; 2007: -3,735; 2008 (Prog.): -4,186; 2009 (Prog.): -4,590; 2010 (Prog.): -4,977.",
    "Gross international reserves (US$ millions): 2004: 670; 2005: 730; 2006: 924; 2007: 925; 2008 (Prog.): 1,043; 2009 (Prog.): 1,183; 2010 (Prog.): 1,317.",
    "Nonfinancial public sector — Revenue (percent of GDP) 1/: 2004: 17.2; 2005: 18.1; 2006: 18.8; 2007: 19.6; 2008 (Prog.): 19.7; 2009 (Prog.): 19.8; 2010 (Prog.): 19.9.",
    "Nonfinancial public sector — Expenditure (percent of GDP) 2/: 2004: 22.2; 2005: 22.6; 2006: 22.5; 2007: 25.0; 2008 (Prog.): 25.6; 2009 (Prog.): 25.2.",
    "Interest (percent of GDP): 2004: 2.1; 2005: 1.9; 2006: 1.8; 2007: 1.6; 2008 (Prog.): 1.4; 2009 (Prog.): 1.3.",
    "Overall balance before grants (percent of GDP): 2004: -5.0; 2005: -4.5; 2006: -3.7; 2007: -5.4; 2008 (Prog.): -5.9; 2009 (Prog.): -5.3.",
    "Combined public sector balance (percent of GDP): 2004: -6.5; 2005: -5.1; 2006: -4.2; 2007: -5.8; 2008 (Prog.): -6.4; 2009 (Prog.): -5.6; 2010 (Prog.): -5.5.",
    "Grants (percent of GDP): 2004: 3.5; 2005: 4.6.",
    "Primary balance after grants (percent of GDP): 2004: 0.8; 2005: 2.2; 2006: -0.1; 2007: 0.4.",
    "Overall balance after grants (percent of GDP): 2004: -2.8; 2005: -1.6; 2006: -1.0; 2007: -1.8.",
    "Debt of the combined public sector (percent of GDP): 2004: 150.7; 2005: 137.7; 2006: 106.5; 2007: 56.2; 2008 (Prog.): 55.9; 2009 (Prog.): 55.3.",
    "Domestic debt (percent of GDP) 3/: 2004: 30.0; 2005: 27.5; 2006: 23.3; 2007: 16.6; 2008 (Prog.): 12.9; 2009 (Prog.): 9.9.",
    "External debt (percent of GDP) 4/: 2004: 120.7; 2005: 110.2; 2006: 83.3; 2007: 36.3; 2008 (Prog.): 39.6; 2009 (Prog.): 42.9; 2010 (Prog.): 45.4.",
    "Investment (percent of GDP): 2004: 28.0; 2005: 29.6; 2006: 29.5; 2007: 28.8; 2008 (Prog.): 29.3; 2009 (Prog.): 29.1; 2010 (Prog.): 28.6.",
    "Private sector investment (percent of GDP): 2004: 21.3; 2005: 22.7; 2006: 23.7; 2007: 21.5; 2008 (Prog.): 21.4; 2009 (Prog.): 21.1; 2010 (Prog.): 20.7.",
    "Public sector investment (percent of GDP): 2004: 6.7; 2005: 6.9; 2006: 5.8; 2007: 7.8; 2008 (Prog.): 8.0; 2009 (Prog.): 8.0.",
    "Savings (percent of GDP): 2004: 15.4; 2005: 14.7; 2006: 13.7; 2007: 13.0; 2008 (Prog.): 13.8; 2009 (Prog.): 14.0; 2010 (Prog.): 12.5.",
    "Memorandum items:",
    "Debt relief: combined effects of enhanced HIPC initiative and MDRI contributed to lower debt levels.",
    "2007 external debt projection includes MDRI and HIPC debt relief from IDB and assumes settlement on HIPC-equivalent terms for outstanding debt to non-Paris Club bilaterals and private creditors.",
    "Of the 50 percent reduction in external debt in 2007: 21 percent corresponds to IDB, 25 percent to non-Paris Club bilaterals, and 3.4 percent to private creditors.",
    "Footnotes in the source specify data definitions and coverage for revenue, expenditure, domestic and external debt, and reserves.",
    "[Nicaragua and the IMF](http://www.imf.org/external/country/NIC/index.htm)",
    "[Portugal and the IMF](http://www.imf.org/external/country/PRT/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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