{
  "title": "IMF Executive Board Concludes 2023 Article IV Consultation with Nicaragua",
  "publication": "IMF News, January 19, 2024",
  "sourceUrl": "https://www.imf.org/en/news/articles/2024/01/19/pr2415-imf-concludes-2023-article-iv-consultation-with-nicaragua",
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  "summary": "Nicaragua’s economy has remained resilient in the face of multiple shocks, supported by appropriate economic policies, substantial buffers, and multilateral support. After a very strong rebound in 2021, the economy grew at a steady pace since 2022 and is expected to grow by 4 percent in 2023.",
  "publishDate": "2024-01-19",
  "sections": [
    {
      "heading": "Macroeconomic overview and recent performance",
      "content": "- Real GDP growth:\n  - \"very strong rebound in 2021\"\n  - 2021: 10.3\n  - 2022: 3.8\n  - 2023: 4.0\n- Inflation:\n  - Consumer price inflation (period average) series shows recent values: 4.9, 3.7, 10.5 (years not separately labeled in text)\n  - Consumer price inflation (end of period): 3.9, 6.1, 2.9, 7.2, 11.6, 6.0, 4.8\n- Fiscal stance:\n  - Central government maintaining a small surplus and healthy government deposits.\n  - Consolidated public sector (overall balance after grants): -3.8, -1.2, -3.0, -1.9, 0.1, -0.7, -0.5\n  - Central Government overall balance (of which): -3.2, -2.7, -1.6, 0.3, 0.6, 0.7\n  - Central government revenue (series): 17.6, 19.0, 21.1, 21.7, 20.2, 20.9, 20.0, 21.8, 22.7, 21.3\n- External sector and reserves:\n  - Remittances projected to reach about 28 percent of GDP at end-2023 (double their end-2021 level).\n  - Current account balance turned to a projected surplus of about 4 percent of GDP in 2023.\n  - Gross international reserves: US$5 billion by end-October; Table shows gross international reserves (US$ million): 2,080; 2,199; 3,003; 3,828; 4,173; 5,153; 5,734.\n  - Reserves in months of imports excluding maquila: 4.7; 5.2; 5.1; 5.5; 6.4.\n  - Net international reserves (US$ million): 1,146; 1,374; 1,887; 2,531; 3,011; 3,818; 4,285.\n- Exchange rate:\n  - Period average (córdobas per US$): 31.6; 33.1; 34.3; 35.2; 35.9; 36.4; 36.6\n  - End of period (córdobas per US$): 32.3; 33.8; 34.8; 35.5; 36.2; 2023 value 36.2 (table lists up to 36.2)"
    },
    {
      "heading": "Outlook and growth projections",
      "content": "- 2024 and medium-term growth:\n  - Real GDP projected to grow by about 3½ percent in 2024 and over the medium term.\n  - Historical average (2000-17) GDP growth: 3.9 percent.\n  - Growth drivers: supported primarily by private consumption; constrained by cautious recovery in investment, limited approved new official financing, and lower labor contribution due to recent emigration.\n- External and fiscal sustainability:\n  - \"The external and fiscal positions are assessed to be sustainable under the baseline scenario, given the current policy mix and financing plans.\"\n  - Nicaragua is assessed at moderate overall risk of external and public debt distress.\n  - Public sector debt (percent of GDP): 47.6; 49.1; 56.8; 54.9; 52.0; 50.8; 49.6\n  - External Public Debt: 38.0; 41.2; 46.3; 44.8; 42.5; 40.3; 40.0\n  - Private sector external debt: 44.2; 43.6; 44.1; 39.7; 35.6; 29.0"
    },
    {
      "heading": "Risks—upside and downside scenarios",
      "content": "- Upside risks:\n  - More sustained recovery in domestic demand, including investment.\n  - Stronger remittances than projected, especially in the near term.\n- Downside risks:\n  - Deterioration of the terms of trade.\n  - A more severe global downturn than incorporated into the baseline, reducing exports and remittances.\n  - Vulnerability to natural disasters given high exposure and dependence on climate-sensitive sectors.\n  - Stricter and wider international sanctions could negatively affect the outlook."
    },
    {
      "heading": "Executive Board assessment",
      "content": "- Board action:\n  - On January 16, 2024, the Executive Board concluded the Article IV consultation and \"considered and endorsed the staff appraisal without a meeting.\"\n- Key assessments reiterated by Directors:\n  - Economy \"has remained resilient\" supported by appropriate macroeconomic policies, substantial buffers, and multilateral support.\n  - Policy mix in 2023 was \"consistent and adequate,\" with tight fiscal and monetary policies and continued reserve accumulation.\n  - External position at end-2022 assessed as stronger than the level implied by medium-term fundamentals and desired policies."
    },
    {
      "heading": "Staff recommendations and policy advice",
      "content": "- Fiscal policy:\n  - Support for authorities’ plans to maintain prudent fiscal policy and multi-year fiscal consolidation plans.\n  - Recommended \"more ambitious fiscal efforts\" to entrench fiscal sustainability, build fiscal buffers, and create space for higher social and capital spending in the medium term.\n  - Suggested measures: tax administration measures, better targeting subsidies, and reallocating current expenditures.\n- Monetary and exchange rate policy:\n  - Monetary policy should remain geared towards supporting the exchange rate regime, while safeguarding price stability.\n  - Support for the authorities’ decision to continue adjusting the rate of crawl of the exchange rate.\n  - Emphasis on vigilance and readiness to adjust monetary and exchange rate policies as needed.\n  - Continued reserve accumulation over the medium-term deemed essential to maintain the exchange rate regime.\n- Financial sector resilience:\n  - While banks are well-capitalized and liquid, staff recommended increasing provisions for distressed assets.\n  - Support for activating countercyclical buffers as needed and increasing minimum payments for credit cards.\n  - Encourage aligning crisis preparedness framework with best international practices, obtaining complete data for credit and savings cooperatives, and expanding oversight if needed.\n  - Continue monitoring FX risks and strengthen FX risk mitigation measures.\n- Structural and medium-term growth policies:\n  - Continue investment in infrastructure and human capital.\n  - Implement policies to raise labor force participation and enhance the business climate by strengthening institutions and frameworks in contract enforcement, protection of property rights, and resolution of insolvencies.\n- Governance, AML/CFT, and rule of law:\n  - Improve effective application of the AML/CFT framework in line with FATF recommendations to sustain performance after removal from the \"gray list\" in 2022.\n  - Authorities have taken steps to enhance governance and anti-corruption frameworks, but major efforts needed to strengthen effective application and the rule of law.\n  - Specific recommendations following recent progress on the Law of Access to public Information and asset declarations:\n    - (i) publish the asset declarations of politically exposed persons;\n    - (ii) implement risk-based assessments of these declarations;\n    - (iii) enact whistleblower protection regulations.\n  - Strengthen the rule of law by guaranteeing adequate, effective, and fair administrative and judicial recourse to legal proceedings, especially those with consequences for property rights.\n- Fiscal transparency and data:\n  - Commended efforts to improve fiscal transparency; urged sustaining publication of all audit reports regarding pandemic-related funds, promptly publishing annual financial statements of the central government and their audit reports, and expanding publication of SOEs financial statements.\n  - Recommended continuing to improve data quality and enhance institutional capacity in fiscal, monetary, financial, and statistical issues."
    },
    {
      "heading": "Key social and demographic indicators (selected)",
      "content": "- GDP per capita (current US$, 2022): 2,371.7\n- GNI per capita (Atlas method, current US$, 2022): 2,090.0\n- Income share held by the richest 10 percent (2014): 37.2\n- GINI Index (2014): 46.2\n- Poverty rate ($3.65/day line in 2017 PPP, percent, 2014): 14.4\n- Population (millions, 2022): 6.5\n- Unemployment (percent of labor force, 2022): 7.5\n- Adult literacy rate (percent, 2015): 82.6\n- Life expectancy at birth in years (2021): 73.8\n- Infant mortality rate (per 1,000 live births, 2021): 11.4\n\nIMF Press Release No. 24/15, January 19, 2024.\n\n---\n\n\n References\n\n- Nicaragua and the IMF\n- IMF Policy Advice -- A Factsheet\n- Press Releases\n- PRESS CENTER\n- 2\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2024/01/19/pr2415-imf-concludes-2023-article-iv-consultation-with-nicaragua"
    }
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    "Published: January 19, 2024",
    "Real GDP growth:",
    "Inflation:",
    "Fiscal stance:",
    "External sector and reserves:",
    "Exchange rate:",
    "2024 and medium-term growth:",
    "External and fiscal sustainability:",
    "Upside risks:",
    "Downside risks:",
    "Board action:",
    "Key assessments reiterated by Directors:",
    "Fiscal policy:",
    "Monetary and exchange rate policy:",
    "Financial sector resilience:",
    "Structural and medium-term growth policies:",
    "Governance, AML/CFT, and rule of law:",
    "Fiscal transparency and data:",
    "GDP per capita (current US$, 2022): 2,371.7",
    "GNI per capita (Atlas method, current US$, 2022): 2,090.0",
    "Income share held by the richest 10 percent (2014): 37.2",
    "GINI Index (2014): 46.2",
    "Poverty rate ($3.65/day line in 2017 PPP, percent, 2014): 14.4",
    "Population (millions, 2022): 6.5",
    "Unemployment (percent of labor force, 2022): 7.5",
    "Adult literacy rate (percent, 2015): 82.6",
    "Life expectancy at birth in years (2021): 73.8",
    "Infant mortality rate (per 1,000 live births, 2021): 11.4",
    "[Nicaragua and the IMF](http://www.imf.org/external/country/NIC/index.htm)",
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