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, rising food and oil prices. By 2011, growth had accelerated to reach a record 6.2 percent, later declining to 5.1 and 4.6 percent for 2012 and 2013, respectively.

While country’s Gross Domestic Product (GDP) shrank to a 3.9 percent in 2015, the lowest rate in the last five years, GDP forecast for 2016 is 4.2 percent. 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 13 percent, from 42.5 percent to 29.6 percent; while in the same period extreme poverty dropped 6 percent, from 14.6 to 8.3 percent.

Despite this progress, Nicaragua is still one of Latin America’s least developed countries, where access to basic services is still a daily challenge. Poverty, although declining steadily in recent years, remains high.

To better reach the country’s vulnerable families, IDA projects leverage local initiatives that stretch limited resources further and deliver sustainable results. Examples of these include the improvement of “casas maternas”, health facilities which are supported by local NGOs and volunteers to provide pre- and post-natal health care to expecting mothers; and the coordination of  community participation associations known as “módulos comunitarios de adoquines” to build rural roads using local labor.

To this end, Nicaragua’s National Plan for Human Development (PNDH) has being 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: Mar 29, 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 by 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, increase in productivity, exports diversification, facilitation of trade, 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$418 million in net commitments, of which US$224 million remained undisbursed as of March 22, 2016. 

Last Updated: Mar 29, 2016

To Increase Social Welfare:

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 the area of water and sanitation over 168,000 beneficiaries of the Greater Managua Water and Sanitation (PRASMA) gained access to 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 supply, and more than 44,000 people gained access to sanitation services. Both projects not just financed civil works, they also helped Nicaragua to pilot social programs to teach the benefits of hand washing or water conservation, using a range of social learning techniques, including Community Theater.

Support has also been provided to a land rights program, benefitting 15 of Nicaragua’s 21 indigenous territories in the historically marginalized Atlantic regions. Since 2005, through the Land Administration Project (PRODEP), over 104.000 people from 214 communities in five major ethnic groups have benefited. An area that represents 18 percent of the national territory was registered and has been titled.

Pro-Productivity, Competitiveness and Diversification:

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 routinely maintenance of 2400 km or 88 percent of the road network.

Under the Offgrid Rural Electrification Project (PERZA), almost 8000 families in remote areas, for a total of 42,000 people, were equipped with solar energy systems, marketed and installed by local companies with the participation of micro-financial institutions. The process was facilitated by the implementation of public-private partnerships for the delivery of electricity.

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: Mar 29, 2016


LENDING

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

*Amounts include IBRD and IDA commitments