IMF Executive Board Concludes 2025 Article IV Consultation with Nicaragua
IMF News, January 26, 2026
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- Published: January 26, 2026
Overview
- Executive Board concluded the 2025 Article IV consultation with Nicaragua on January 20, 2026, and considered and endorsed the staff appraisal without a meeting.
- The authorities consented to the publication of the Staff Report prepared for this consultation.
- Press Release No. 26/015; publication date on the landing page: January 26, 2026.
Recent economic performance
- Real GDP grew by 3.9 percent over 2022-25H1.
- Real GDP growth was 3.6 percent in 2024 and 3.8 percent in 2025 (staff projection).
- Drivers: favorable terms of trade, high remittances growth, sound macroeconomic and financial policies, substantial pre-2018 crisis buffers, and financing from international financial institutions during the pandemic.
- Current macro-financial strengths: low inflation, declining public debt-to-GDP ratio, twin fiscal and external surpluses, well-capitalized banks, sizeable buffers, sustainable NIIP, adequate reserve coverage, and an external position assessed as substantially stronger than the level implied by fundamentals and desirable policies.
Outlook and risks
- Short-term outlook: broadly favorable; growth expected to reach 3.8 percent in 2025 and moderate to 3.4 percent in 2026.
- Medium-term outlook: high uncertainty; staff expect real GDP growth to stabilize at around 3½ percent.
- Upside short-term risks: more favorable terms of trade and higher public capital spending.
- Downside medium-term risks: natural disasters; commodity price volatility; weaker global growth; tighter U.S. immigration and trade policies; stricter and wider international sanctions; geopolitical reorientation of official foreign inflows; transfers of private property to the state since 2022.
- Foreign reserves: expected to remain ample, albeit growing at a slower pace as current account surpluses narrow.
Executive Board assessment (key findings)
- Nicaragua’s economy remains resilient, supported by sound macroeconomic policies amid a shifting global policy landscape.
- Inflation remains low.
- Financial sector reportedly well capitalized with adequate liquidity and low NPLs.
- Fiscal position is strong; external and overall public debt at moderate risk of debt distress with substantial space to absorb shocks and strong debt carrying capacity.
- Current account and public sector positions: CA surpluses and public debt trends noted as supportive of resilience.
Policy recommendations (staff advice)
- Fiscal policy:
- Continue safeguarding fiscal sustainability and building buffers while supporting growth.
- Broad support for the 2026 capital and human development spending plans; proceed cautiously with budget execution in line with staff’s baseline scenario given downside risks, high uncertainty, limited external financing, and persistent imbalances in the pension system.
- Enhance tax collection and better target SOE transfers to create space for higher priority public investment and targeted social spending.
- In a downside scenario, deploy targeted and time-bound support to vulnerable groups.
- Monetary policy and financial markets:
- Monetary policy should continue preserving price and external stability; BCN should continue strengthening monetary policy transmission.
- Ongoing easing of monetary policy stance and the announced rate of crawl of 0 percent for 2026 are appropriate.
- Foster use of local currency and deepen capital markets to enhance monetary policy effectiveness.
- In a downside scenario, be ready to increase the monetary reference rate and recalibrate the rate of crawl, if needed.
- Support implementation of comprehensive financial laws approved in early 2025; strengthen crisis preparedness, prepare the analysis needed for activating the CCB and contingency plans, and stand ready to release CCBs in a downside scenario.
- Adjust financial regulations in consultation with banks to avoid excessive regulatory burden.
- Structural and social policies:
- Boost human and physical capital and diversify exports.
- Strengthen social safety nets and expand active labor-market policies to increase labor’s contribution to medium-term growth.
- Support expected public investment in transport and health.
- Work with export firms to scale up into higher value-added products by supporting needed skills.
- Governance, rule of law, and transparency:
- Strengthen the business climate and economic governance, especially significantly improving the rule of law.
- Strengthen business facilitation to reduce the cost of doing business and maintain fiscal integrity.
- Increase transparency, accountability, and effectiveness of administrative and judicial processes related to private property rights (including of third parties), including guaranteeing all adequate, effective, and fair legal recourse.
- Increase fiscal transparency by publishing consolidated financial statements and audit reports.
- Coordinate with private sector and NPOs to better understand AML/CFT risks and increase reporting of suspicious transactions as needed.
- Strengthen the anti-corruption framework by allowing automatic publication of asset declarations of top-level officials and ensuring effective management and oversight of all property of the state.
Data and statistical recommendations
- Data provided to the Fund remains broadly adequate for surveillance with some shortcomings.
- Staff recommend expanding data sources, improving timeliness of key statistics such as poverty rates, and enhancing publication of detailed balance of payments data, including remittances.
Selected social and economic indicators (as presented)
- I. Social and Demographic Indicators
- GDP per capita (current US$, 2024): 2,865
- GNI per capita (Atlas method, current US$, 2023): 2,360
- Population (millions, 2024): 6.9
- Unemployment (percent of labor force, 2024): 3.4
- GINI Index (2014): 46.2
- Income share held by the richest 10 percent (2014): 37.2
- Poverty rate ($3.65/day line in 2017 PPP, percent): 12.5
- Adult literacy rate (percent, 2015): 82.6
- Life expectancy at birth in years (2022): 74.5
- Infant mortality rate (per 1,000 live births, 2022): 10.7
- II. Economic Indicators (selected entries)
- GDP growth: 2024: 3.6; 2025: 3.8; 2026 (projection): 3.4
- GDP (nominal, US$ million): 2024: 19,694; 2025: 21,407; 2026: 22,737
- Consumer price inflation (period average): 2024: 4.6; 2025: 2.5; 2026: 2.7
- Gross domestic investment (percent of GDP): 2024: 24.7; 2025: 27.3; 2026: 28.0
- Private sector: 2024: 16.1; 2025: 18.2; 2026: 18.3
- Public sector: 2024: 8.6; 2025: 9.0; 2026: 9.7
- Gross national savings (percent of GDP): 2024: 28.9; 2025: 36.6; 2026: 33.2
- Consolidated public sector (overall balance after grants) (percent of GDP): 2024: 2.9; 2025: 2.4; 2026: 1.6
- Revenue (including grants) (percent of GDP): 2024: 33.3; 2025: 33.1; 2026: 33.5
- Expenditure (percent of GDP): 2024: 30.4; 2025: 30.8; 2026: 31.9
- Central Government overall balance (percent of GDP): 2024: 2.3; 2025: 2.2; 2026: 1.5
- Money and financial (annual percentage change): Broad money: 2024: 12.0; 2025: 22.3; 2026: 7.6
- Credit to the private sector (annual percentage change): 2024: 20.7; 2025: 12.5; 2026: 12.4
- Non-performing loans to total loans (ratio): 2024: 1.4; 2025: 1.3
- Regulatory capital to risk-weighted assets (ratio): 2024: 18.4; 2025: 18.5
- Current account (percent of GDP): 2024: 4.2; 2025: 9.3; 2026: 5.2
- Remittances (percent of GDP): 2024: 26.6; 2025: 29.5; 2026: 26.1
- Gross international reserves (US$ million)3/: 2024: 5,820; 2025: 8,018; 2026: 9,050
- Net international reserves (US$ million)4/: 2024: 5,115; 2025: 7,258; 2026: 8,157
- Non-financial public sector debt (percent of GDP)5/: 2024: 45.1; 2025: 43.2; 2026: 42.4
- Domestic public debt: 2024: 8.3; 2025: 7.8; 2026: (noted) 7.8 for 2025
- External public debt: 2024: 36.0; 2025: 34.9; 2026: 34.5
- Private sector external debt: 2024: 27.9; 2025: 25.5; 2026: 23.8
Press Release No. 26/015 — International Monetary Fund, January 26, 2026.