Poverty Reduction Support Credits : Nicaragua Country Study

Hinds, Manuel

Poverty Reduction Support Credits : Nicaragua Country Study

2010

Hinds, Manuel

Nicaragua's state domination of productive capacity from the late 1970s to 1990, coupled with the civil war of the 1980s, left the economy with hyperinflation, large fiscal and current account deficits, and an external debt that was six times gross domestic product. As a result, economic activity declined at a sharp rate. By 1993, per capita income had fallen by a full 60 percent from the 1977 level. By the early 1990s the country was receiving aid equivalent to more than 70 percent of Gross Domestic Product (GDP). Subsequent administrations tried to address the country's economic problems through fiscal and monetary discipline and market-oriented reforms to redefine the role of the state. There were some successes, for example, decisive government action reduced inflation to around 10 percent by 1995, but many reforms failed due to their slow pace and to continued political volatility. The Bank supported the reform agenda with two economic recovery credit operations in the early 1990s. The results were less positive than expected, as the government's capacity to privatize state-owned enterprises and otherwise reform the public sector wavered in the face of political instability. The lack of political consensus prompted the Bank to withdraw from structural adjustment lending for several years. An opening for re-engagement was provided in 2002 when, after several failed attempts, Nicaragua successfully implemented the International Monetary Fund's (IMF) Poverty Reduction and Growth Facility (PRGF). This allowed the Bank to respond to the government's request for assistance to close a financing gap through fast disbursing budget support in the form of a programmatic structural adjustment credit. While technically a structural adjustment loan, the credit supported objectives based on budget-based goals already attained in implementing a Poverty Reduction Strategy Paper (PRSP), which had been prepared by the government in 2001. In this sense, the credit was the last structural adjustment loan and the precursor to the Poverty Reduction Support Credits (PRSCs).

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AGROVOC Keywords

access to information accountability accounting agricultural services allocation auditing balance of payments capacity building central government civil service debt drinking water due diligence economic growth economic recovery external debt extreme poverty foreign investment gross domestic product health care health services human capital inflation national income performance assessment personnel management poverty alleviation poverty reduction private investment private sector public debt public finance public goods public institutions public investment rural development sanitation social policies social protection social security social services structural adjustment uncertainty war

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Publisher

Washington, DC: World Bank

Other Subjects

National development; Government policy; Poverty assessments; Resource flows; Debt relief; Rural; Country procurement; Central bank; Total expenditures; Diagnostic work; Public investment program; Public financial management systems; Public entities; Financial structure; Financial sector; Budget preparation; Financial management system; Macroeconomic policy; School administration; Poverty situation; Public expenditures; Poor households; Total public sector; Stabilization policies; Budget execution; Public sector budget; Medium term expenditure; Poverty reduction objectives; Ministry of finance; Structural reforms; Civil service law; Reform efforts; Conditionalities; Poverty rates; External audit; Program design; Debt service; Pension reform; Public financial management system; Poor; Poverty programs; Yearly budget; Service delivery; Public financial management; Budget support operations; Structural adjustment loans; Macroeconomic conditions; Division of labor; Donor coordination; Social service; Budget preparation cycle; Government expenditures; Net present value; Health sector; Medium term expenditure framework; Price stability; Monetary discipline; Reform agenda; Capital investment; Inequality; Financial administration; Conditionality; Public resources; Rural family; Adjustment lending; Private funds; External aid; Macroeconomic management; Public expenditure review; Fiscal stability; Fiscal deficit; Rural families; Municipalities; Civil service reforms; Budget support; Poverty reduction strategy paper; Sustainable reduction of poverty; Financial system; Health problems; Government priorities; Commodity prices; Public investments; National development plan; Public expenditure tracking; Total public expenditure; Debt burden; Macroeconomic framework; Financial information; Financial crisis; Economic reform; Institutional capacity; Fiscal implications; Public employees; Budget credibility; Financial accountability; Budgetary process; Fiscal impact; Poverty reduction support; Rural water; Civil service system; Aid effectiveness; Financial operations; Public finances; Programs; Reform program; National authorities; Public agencies; External financing; Budget management; Macroeconomic situation; Policy formulation; Financial management report; Fiscal deficits; Finance ministry; Poor people; Sector expenditure; Poverty reducing; Country procurement assessment; Income growth; Local currency; Chronic malnutrition; General budget support; Budget formulation; Structural reform; Technical assistance; Annual rate; Poverty reduction strategies; Budgetary resources; Fiscal adjustment; Transparency; Program objectives; Rural electrification; Private pension; Budget planning; Expenditures; Macroeconomic stability; Fiscal discipline; Government bonds; Poverty assessment; Poverty reduction strategy papers; Social expenditures; Poverty reduction programs; Civil servants; Poverty reduction strategy; Poor countries; Elimination of poverty

License

CC BY 3.0 IGO. http://creativecommons.org/licenses/by/3.0/igo. World Bank

Type

Working Paper; Working Paper; Text

Source

IEG Working Paper;2010/8

In AGRIS since: 2022-09-15

Format: AGRIS AP

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http://hdl.handle.net/10986/27915 http://documents.worldbank.org/curated/en/253421468053328120/Poverty-reduction-support-credits-Nicaragua-country-study

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Poverty Reduction Support Credits : Nicaragua Country Study

2010

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