Press Release No. 10/289

Press Release No. 10/289
July 12, 2010

On July 9, 2010, the Executive Board of the International Monetary Fund (IMF) reviewed Nicaragua’s Poverty Reduction Strategy, titled Updated National Human Development Plan (see Country Report No. 10/108) and a Joint IMF/World Bank Staff Advisory Note.

Following the Executive Board’s discussion, Mr. Murilo Portugal, Deputy Managing Director and Acting Chair, made the following statement:

“The Nicaraguan authorities have prepared a comprehensive Poverty Reduction Strategy (PRSP) that lays out the strategic priorities for accelerating growth and reducing poverty, while taking into account the impact of the global financial crisis. The PRSP is appropriately focused on preserving macroeconomic stability, promoting living standards through increased access to social services, improving governance, and boosting competitiveness through investments in infrastructure and renewable energy.

“Putting public debt on a firmly declining path, while creating space for infrastructure development and pro-poor spending, remains a key challenge. This requires broadening the tax base, rationalizing expenditures, containing the growth in public sector wages, and tackling imbalances in the pension system.

“Strengthening the governance and transparency of public sector institutions is crucial to boost the effectiveness and targeting of public spending. The authorities’ commitments to improve public financial management systems and practices is an important step in this regard, though increased resolve will be required to strengthen the procurement process and accountability. Efforts should continue to strengthen the monitoring and coordination of official assistance to ensure its most effective use.

“A priority for gauging progress in poverty reduction is to enhance the monitoring of social outcomes and spending, including by increasing the frequency and coverage of national household surveys. Strengthening the ex-post evaluation of social programs is also important.

“Close engagement with the international community will help the authorities implement the objectives of the PRSP," Mr. Portugal said.