Caribbean & Central America - October 2013 (ISSN 1741-4458)

Thumbs up from the IMF: Following a visit by an International Monetary Fund (IMF) mission to Nicaragua on 17-26 September, the IMF described Nicaragua’s recent economic performance as “favourable” and “welcomed the recent prudent management of macroeconomic policy”. According to a 26 September statement by the IMF, “Real growth of Gross Domestic Product (GDP) in the last two years averaged 5.3 percent, while the annual average inflation was 7.3 percent. In 2012, the consolidated public sector deficit was about 0.3 percent of GDP. As a result of this fiscal discipline, public debt declined from 45.7 percent of GDP in 2011 to 42.3 percent in 2012. The deficit on the external current account fell from 13.2 percent of GDP in 2011 to 12.9 percent in 2012, and gross international reserves remain at the equivalent of 3.5 months of imports”. The IMF also remains positive about the short and medium term macroeconomic outlook, stating that “For 2013 it is estimated that GDP will grow at 4.2 percent while inflation would be about 7 percent. The current account deficit will remain around 13 percent of GDP while international reserves coverage will remain stable”. In a further sign of the positive relations between the IMF and the radical left-wing Nicaraguan government, Nicaragua’s central bank president, Alberto Guevara, has since said that the IMF would act as an advisor to the Ortega government through a so-called ‘Plan of Accompaniment for Economic Development and Poverty Reduction’. In late October 2011, the IMF completed the seventh and final review of Nicaragua’s economic performance under its three-year Extended Credit Facility (ECF) arrangement, approved in 2007 and subsequently extended to allow Nicaragua to cope with natural disasters.

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