## Nicaragua: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nicaragua

_IMF Staff Country Reports, February 27, 2020_

## Source details

**Canonical URL:** [Nicaragua: 2019 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nicaragua](https://www.imf.org/en/publications/cr/issues/2020/02/27/nicaragua-2019-article-iv-consultation-press-release-staff-report-and-statement-by-the-49129)

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## Bibliographic details
- Published: February 27, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513532622.002

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### Key findings and recent developments
- Social unrest and its aftermath eroded confidence and caused large capital and bank deposits outflows that resulted in a prolonged output contraction.
- Banks cut lending, which exacerbated the downturn.
- Faced with sharply lower revenues and a severe tightening in available financing, including on account of sanctions, the government was forced to cut spending and adopt a procyclical tax package.
- The sharp contraction in credit will continue to depress investment.
- The tight fiscal and external financing situation will continue to drag down medium-term growth.

### Near-term outlook and projections
- The economy is projected to continue to contract in the near term as it adjusts to weaker confidence and lower external financing.
- Key risks:
  - Further erosion in confidence and renewed deposit outflows.
  - The imposition of additional sanctions by trading partners could also heighten economic stress.

### Policy recommendations
- Maintain a conservative fiscal stance in 2020 as the key to maintain macroeconomic stability.
- Curb expenditures on goods and services to allow increased spending on:
  - Social programs,
  - Social safety nets,
  - Public investment.
- These reallocations are intended to lead to more equitable and sustainable growth.

### Subjects and keywords (as listed)
- Subject: Banking, Currencies, Economic sectors, Expenditure, External debt, Money, Public debt, Public sector
- Keywords: Central America, central bank of Nicaragua, consumer price inflation, CR, crawling peg exchange regime, Currencies, headline inflation, IMF staff calculation, inflation development, ISCR, Public sector, staff appraisal, U.S. dollar

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_Source: https://www.imf.org/en/publications/cr/issues/2020/02/27/nicaragua-2019-article-iv-consultation-press-release-staff-report-and-statement-by-the-49129_