Nicaragua - Development Policy Review : Sustaining Broad-Based Growth
This document reviews Nicaragua's development agenda from a growth perspective. That focus emerges from the country's Poverty Reduction Strategy Paper (PRSP), which traces the widespread poverty observed in Nicaragua, to the collapse of the 1980s, and considers a continued, broadly-based economic recovery as the best way to eliminate it. The focus on growth guides the review of policy developments in various economic, social, and infrastructure sectors. The Development Policy Review (DPR) has the objective of providing analytical underpinnings, both for the Government in developing and refining its growth strategy, and the Bank and other donors, in designing their assistance programs for Nicaragua. The macroeconomic program agreed with the International Monetary Fund (IMF) seeks to promote sustained growth, and poverty reduction in a stable manner, by connecting the country's large fiscal, and external imbalances, addressing key vulnerabilities, and removing long-standing barriers to growth. Key focal points of the program are measures to improve governance, and accountability in the public, private sectors, rein in sustainable government spending, raise the tax effort, and strengthen the banking sector. On the structural front, significant advances were made in 2002 in education and health, including strengthening of the public sector management, through an integrated financial management system, and other important reforms. However, key macroeconomic challenges outline the country's continuing dependence on a few primary commodity exports and aid, both of which have contributed significantly to the high level of economic volatility. A second issue concerns the sustainability of Nicaragua's macroeconomic framework, a weak spot in policymaking, deserving careful attention. To address shortcomings, the report suggests accompanying the Fiscal Transfers Law with additional measures, or legislation that 1) defines the spending responsibilities; 2) strengthens project planning and executing capacities of the weaker municipalities; and, 3) establishes appropriate accountability, and financial management mechanisms. In addition, the pension reform initiated in the mid-1990s, seeks to replace the current defined-benefit, pay-as-you-go system, by a defined-contribution system. The status of the pension reform is being reviewed, reassessing its fiscal costs with assistance form the Bank.
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| Language: | English en_US |
| Published: |
Washington, DC
2004-12-03
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| Subjects: | MACROECONOMIC PLANNING, DEVELOPMENT POLICY & PLANNING, GROWTH POLICY, REFORM POLICY, FISCAL CONSTRAINTS, LEGAL REFORMS, SOCIAL SECTOR REFORM, EDUCATION SECTOR, HEALTH CARE POLICY, PENSION REFORM, PUBLIC SPENDING, CAPACITY BUILDING, FINANCIAL MANAGEMENT, COMMODITIES, |
| Online Access: | http://documents.worldbank.org/curated/en/2004/12/5597923/nicaragua-development-policy-review-sustaining-broad-based-growth https://hdl.handle.net/10986/14567 |
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| Summary: | This document reviews Nicaragua's
development agenda from a growth perspective. That focus
emerges from the country's Poverty Reduction Strategy
Paper (PRSP), which traces the widespread poverty observed
in Nicaragua, to the collapse of the 1980s, and considers a
continued, broadly-based economic recovery as the best way
to eliminate it. The focus on growth guides the review of
policy developments in various economic, social, and
infrastructure sectors. The Development Policy Review (DPR)
has the objective of providing analytical underpinnings,
both for the Government in developing and refining its
growth strategy, and the Bank and other donors, in designing
their assistance programs for Nicaragua. The macroeconomic
program agreed with the International Monetary Fund (IMF)
seeks to promote sustained growth, and poverty reduction in
a stable manner, by connecting the country's large
fiscal, and external imbalances, addressing key
vulnerabilities, and removing long-standing barriers to
growth. Key focal points of the program are measures to
improve governance, and accountability in the public,
private sectors, rein in sustainable government spending,
raise the tax effort, and strengthen the banking sector. On
the structural front, significant advances were made in 2002
in education and health, including strengthening of the
public sector management, through an integrated financial
management system, and other important reforms. However, key
macroeconomic challenges outline the country's
continuing dependence on a few primary commodity exports and
aid, both of which have contributed significantly to the
high level of economic volatility. A second issue concerns
the sustainability of Nicaragua's macroeconomic
framework, a weak spot in policymaking, deserving careful
attention. To address shortcomings, the report suggests
accompanying the Fiscal Transfers Law with additional
measures, or legislation that 1) defines the spending
responsibilities; 2) strengthens project planning and
executing capacities of the weaker municipalities; and, 3)
establishes appropriate accountability, and financial
management mechanisms. In addition, the pension reform
initiated in the mid-1990s, seeks to replace the current
defined-benefit, pay-as-you-go system, by a
defined-contribution system. The status of the pension
reform is being reviewed, reassessing its fiscal costs with
assistance form the Bank. |
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