## IMF Staff Concludes Visit to Nicaragua

_IMF News, October 31, 2018_

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**Canonical URL:** [IMF Staff Concludes Visit to Nicaragua](https://www.imf.org/en/news/articles/2018/10/31/pr18402-imf-staff-concludes-visit-to-nicaragua)

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## Bibliographic details
- Published: October 31, 2018

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### Mission overview
- An International Monetary Fund (IMF) team led by Roberto Garcia-Saltos visited Managua from October 24-30 to take stake stock of recent economic developments.
- The mission held discussions with senior government officials, representatives from the private sector, and the donor community.
- The mission has agreed to conduct the next Article IV consultation during the first half of 2019.

### Economic impact and outlook
- Multiple shocks are affecting the Nicaraguan economy, with political instability since April affecting consumer and investor confidence.
- Sectoral effects:
  - Temporarily affected: transportation, retail, and the service sector.
  - Lasting impacts from reduced demand: tourism and construction.
- Labor, investment, and credit dynamics:
  - Contraction in formal employment.
  - Retrenchment in FDI.
  - Reduction in credit to the private sector.
- Forecasts and fiscal outcome:
  - The mission forecasts a decline of 4 percent in real GDP in 2018.
  - The consolidated public sector (CPS) deficit for 2018 is projected to increase by 2.4 percentage points to 4.6 percent of GDP.
- Household and private-sector effects:
  - A fall in disposable income due to continued job losses and reduction in bank credit is projected to lead to a drop in private consumption and investment.

### Positive signs observed
- Authorities’ efforts to support commercial banks’ continued liquidity are commendable.
- Measures to contain the expansion in public expenditures to partially offset tax revenue shortfalls because of the economic downturn are positive.

### Main challenges and policy priorities
- Preserve macroeconomic and financial stability for 2019 and beyond.
- Address medium-term fiscal challenges and undertake structural reforms to safeguard fiscal sustainability; these require obtaining broad support.
- Restore private sector confidence and prevent negative feedback loops arising from:
  - Lower activity and employment,
  - Deterioration in asset quality,
  - Credit contraction,
  - Deposit outflows.
- Adopt measures to mitigate identified risks affecting the economy to promote economic recovery and offset an increase in poverty.

### Contact (from press release)
- PRESS OFFICER: Raphael Anspach
- Phone: +1 202 623-7100
- Email: MEDIA@IMF.org

*Press Release No. 18/402, October 31, 2018.*

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## References

- [Nicaragua and the IMF](http://www.imf.org/external/country/NIC/index.htm)
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- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2018/10/31/pr18402-imf-staff-concludes-visit-to-nicaragua_