Overview

Despite global economic turbulence, Nicaragua has stood out for maintaining growth levels above the average for Latin America and the Caribbean. Disciplined macroeconomic policies, combined with a steady expansion of exports and foreign direct investment, helped Nicaragua to weather the global economic crisis of 2008-09 and rising food and oil prices.

By 2011, growth had accelerated to reach a record 6.2 percent, later declining to 3.9 percent in 2015, the lowest rate in the last five years. GDP growth for 2016 is expected to reach 4.4 percent, among the highest rates in Central America. Foreign direct investment and trade also show an improved outlook.

Nicaragua’s macroeconomic stability has allowed the country’s decision makers to shift from crisis control mode to longer-term, pioneering strategies to fight poverty, particularly in remote rural communities. Massive debt relief by the International Development Association (IDA), the World Bank’s fund for the poorest countries, has helped make this shift possible.

According to the 2014 Standard of Living Survey by the National Development Information Institute, between 2009 and 2014 general poverty in Nicaragua dropped from 42.5 percent to 29.6 percent; while in the same period extreme poverty fell from 14.6 to 8.3 percent.

Despite this progress, poverty remains high. What’s more, Nicaragua is still one of Latin America’s least developed countries, where access to basic services is a daily challenge.

To better reach the country’s vulnerable families, IDA projects leverage local initiatives that stretch limited resources further and deliver sustainable results.

To this end, Nicaragua’s National Plan for Human Development (PNDH) has been updated through 2016. Its overall objective is to reduce inequality by increasing the fight against poverty, reducing spending, and increasing investment in social sectors and rural infrastructure.

Last Updated: Sep 19, 2016

Nicaragua’s government officials and World Bank teams worked on the Country Partnership Strategy (CPS) for 2013-2017 to further address poverty reduction while promoting prosperity for more Nicaraguans.

The Nicaragua CPS is based on two vital objectives:

  • Increase social welfare by improving access to quality basic services, in particular for poor rural households.
  • Raising incomes by improving productivity, competitiveness and diversification.

The CPS is focused on programs to expand coverage and quality of preschool, primary and secondary education; improve maternal and child health; expand access to water and sanitation services; and promote efficiency and transparency in social investment. It also seeks infrastructure improvement, increased productivity, exports diversification, trade facilitation, and access to financial services.

The work program for 2013-2017 comprises interest-free credits and donations from the International Development Association (IDA) for investment projects, South-South exchanges, technical assistance, and analytical work.

Additionally, the International Finance Corporation (IFC), the World Bank Group private-sector arm, plays a lead financing role in the energy and financial sectors, while the Multilateral Investment Guarantee Agency (MIGA) is open to opportunities to support foreign direct investment in the renewable power generation, agribusiness and financial sectors through the provision of risk guarantees.

The current World Bank portfolio in Nicaragua includes 11 projects totaling US$406 million in net commitments, of which US$190 million remained undisbursed as of September 16, 2016. 

Last Updated: Sep 19, 2016

To Increase Social Welfare:

The Education Sector Strategy Support Project, with the support of the European Union (EU) and the Global Partnership for Education (GPE), increased education quality in preschool and secondary education nationwide. In preschool education, all children in public preschools (247,076 students) benefited from the implementation of a new unified curriculum, and all public preschools (8138 preschools) received learning materials during 2014 and 2015. In secondary education, all lower secondary students in public schools (350,000) and all secondary teachers in public schools (10,600) received more than 1.5 million textbooks.  

With the Second Educational Sector Support Project (PASEN II), an International Development Association (IDA) project, around 225,000 primary students of the poorest regions of the country, representing 25 percent of the national enrollment in primary education, received 1.4 million textbooks. Also all afro-descendant and indigenous primary students in the Caribbean Coast received textbooks in their native languages for the first time ever. About 1,200 primary rural schools in the poorest regions of the country, representing 13 per cent of the state schools nationwide, received new desks, white boards and cabinets.

The Second Land Administration Project (PRODEP II) covers six of the 15 Departments in the country, and has helped develop better property rights regulations benefitting more than 430,000 people, more than half of which are women. Cadastral information for about 85,000 parcels has been updated, and more than 67,000 families have received legal documents for their properties, of which more than 43,000 are new land titles. Three of the five protected areas within the project area have been demarcated, labeled and geo-referenced, and the remaining two are in process. There are also advances in the transfer of cadastral information to municipalities, as well as the redesign of the Integrated Registry-Cadastre Information System (SIICAR).

Through “casas maternas, a component of the Improving Community and Family Health Care Services Project, maternal health in rural communities has improved. With the help of a network of volunteers, the program provides key services to pregnant women in remote areas, such as pre-natal checkups, birth plans, and a post-natal follow up. The IDA support has helped increase the percentage of pregnant women receiving four prenatal controls from 50 percent in 2012 to 73 percent in 2015.

In terms of water and sanitation, over 168,000 beneficiaries of the Greater Managua Water and Sanitation (PRASMA) gained access to a reliable water supply (16 hours per day) in urban areas, and more than 62,000 beneficiaries gained access to sanitation services. In rural areas, more than 68,000 beneficiaries from the Sustainable Rural Water Supply and Sanitation (WSS) Sector Project  gained access to water supplies, and more than 44,000 people gained access to sanitation services. Both projects financed not just civil works, they also helped Nicaragua pilot social programs to teach the benefits of hand washing or water conservation, using a range of social learning techniques, including Community Theater.

Pro-Productivity, Competitiveness and Diversification:

Through the Public Financial Management Modernization Project, IDA support has shown early results in strengthening the country’s financial management capacities. Between 2010 and 2016, it has increased the use of multi-year and results-based budgeting methodologies in Central Government agencies from 75 to 100 percent. It has also significantly raised the percentage of Central Government’s payments to vendors and public entities, as well as payroll to personnel that is processed electronically according to the Single Treasury Account Procedures. In addition, statistics management capacity has been enhanced: 50 percent of the municipalities’ cartographic frameworks have been updated and redesigned for statistical operations. A series of South-South Knowledge Exchanges also contributed to obtaining valuable insights into regional best practices in census design and implementation in the preparation of the upcoming Population and Dwelling Census 2018.

IDA is supporting the development of “módulos comunitarios de adoquines” or community participation associations focused on road construction by means of cheaper, locally-made “adoquines” or blocks that allow faster, more labor-intensive, and more sustainable road works. Under the Rural Roads Infrastructure Improvement Project, over 200 km have been constructed, which has benefitted around 460,000 people and generated over 65,000 temporary jobs. IDA also supported development of 40 microenterprises focused on routine maintenance of 2400 km (88 percent) of the road network.

Through the Rural Telecommunications Project, IDA improved Nicaragua’s rural telecommunications services. The initiative provided internet connections and public phones to some 500,000 people in 365 small communities. In addition, the project has financed 37 communications towers, which benefit more than 60,000 people with high-speed coverage mainly in the Caribbean regions.

Last Updated: Sep 19, 2016


LENDING

Nicaragua: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments