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Overview

  • For nearly two decades prior to the start of the recession in 2018, growth in Nicaragua averaged 4.6 % a year, benefitting from sound macroeconomic management and a series of reforms aimed at transforming the country into a market economy. The sociopolitical unrest experienced since April 2018 derailed the economic expansion in Nicaragua and resulted in a contraction to -4.0 and -3.9 % in 2018 and 2019, respectively.

    The onset of the COVID-19 (Coronavirus) pandemic coupled with still heightened political uncertainty and the impact of Hurricanes Eta and Iota prolonged the recession in 2020 with growth estimated to be -2.5 %. Growth is expected to recover slowly to 0.9 % by 2021, according to the latest forecasts.

    The pandemic has adversely affected growth through rising uncertainty over the evolution of the health crisis, domestic spread of the virus, voluntary private sector shutdowns, capital outflows, job losses, and plummeting tourism. As a result, progress achieved in poverty reduction since 2005 has been halted.

    Poverty – defined as living with an income below $3.2 per person per day (in 2011 Purchasing Power Parity (PPP)) – is estimated to have increased from 13.5 % in 2019 to 14.7 % in 2020, pushing approximately 90,000 people into poverty.

    Remittances, which increased 12.1 % in 2019, have supported household consumption and mitigated larger poverty increases. The pandemic had a negative impact on remittances at the start of the crisis, prompting an average decline of 3.0 % between March and April 2020, however, inflows quickly recovered, ending in an annual growth rate of 10 % for 2020.

    Nicaragua is still one of Latin America’s least developed countries, where access to basic services is a daily challenge.

    The World Bank has supported poverty reduction measures in Nicaragua through the International Development Association (IDA), the World Bank’s fund for the poorest countries.

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

    Last Updated: Apr 06, 2021

  • Nicaragua’s Country Partnership Strategy (CPF) for 2018-2022 was built based on a Systematic Country Diagnosis and aims to further address poverty reduction while promoting prosperity for more Nicaraguans.

    The Nicaragua CPF is based on three vital objectives:

    1. Investing in human capital, in particular for disadvantaged groups.
    2. Enabling private investment for job creation.
    3. Strengthening public institutions to improve disaster and external economic crises risk management.

    The CPF prioritizes programs to expand coverage and quality of preschool, primary and secondary education; improve maternal and child health; and expand access to water and sanitation services. It also seeks landholding, renewable energy and infrastructure improvement, increased productivity, exports diversification, and trade facilitation.

     

    This plan focuses on investing both in the human capital of Nicaraguans-- health, education, and skills-- and in the private sector to create better paying jobs. It highlights working with young people, women, Indigenous populations, people of African descent, and in territories such as the dry corridor and the Caribbean regions.

    The work program for 2018-2022 comprises credits on concessional terms 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 agribusiness 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.

    As of March 29th 2021, the World Bank portfolio in Nicaragua includes 9 projects, totaling $442.85 million in net commitments, in the areas of (1) roads, telecommunications and land administration; (2) education and health; (3) catastrophic insurance; and 4) response to the emergencies of the Coronavirus-19 and the Eta and Iota hurricanes.

    Hurricanes Iota and Eta struck Nicaragua in November 2020, with catastrophic force, causing widespread damage, loss of life and aggravating the risks of the COVID-19 transmission. In response to the two emergencies faced by the country, COVID-19 and the two hurricanes, the World Bank approved two credits to Nicaragua from the International Development Association (IDA) the World Bank’s fund for the poorest countries. The first, a $20 million credit approved December 8th, 2020, is to support Nicaragua's ability to respond to the COVID-19 pandemic. The second, a $80 million credit approved January 22, 2021, is to help Nicaragua meet the most pressing needs of its people, especially the poorest and most vulnerable, who have been disproportionately impacted by the natural disasters. Both projects will be carried out in collaboration with the United Nations Office for Project Services (UNOPS), and strict fiduciary requirements are in place to guarantee that all resources are used to benefit the people of Nicaragua. 

    Last Updated: Apr 06, 2021

  • Between 2012 and 2018, with the Second Educational Sector Support Project (PASEN II), an International Development Association (IDA) financed project, around 230,000 primary students in the poorest regions of the country, representing 25 % of the national enrollment in primary education, received math, language, and literature textbooks, and almost 2,400 schools were equipped with new furniture.  Students from the autonomous regions in the Caribbean received 81,500 bilingual and monolingual textbooks in local languages. Also, more than 427,000 students received backpacks stocked with school supplies and shoes, which was recognized by parents as an incentive to keep their children in school.

    Since 2017 and as a follow up to PASEN II, the Project “Alliance for the Quality of Education” (ACE) has been improving pedagogical practices of teachers and educators nationwide at preschool, primary and secondary levels. It has also been improving the conditions of school environments for learning in selected schools; and strengthening the capacity of the Ministry of Education for project management, monitoring and evaluation. There have been important achievements, such as the implementation of a Teacher Mentoring Program for primary and secondary school teachers, including the training of more than 500 school directors and deputy-directors, and the effective mentoring of more than 1250 teachers; in-service training for primary and preschool teachers with more than 9000 preschool teachers participating. The project also provided materials and equipment for teachers and students. In addition, it is planned to build more than 40 schools in prioritized municipalities of Nicaragua, of which more than half have been already finished and the rest is under construction. As a response to mitigate the impact of the COVID-19 pandemic in the education sector, the ACE project was restructured to better respond to the challenges of the context, particularly by improving the conditions of water, sanitation and hygiene in some schools. Furthermore, additional funds from the Global Partnership for Education (GPE) where used to scale up some ACE activities at preschool level.

    The Bank is also administrating a GPE “accelerated financing window” trust fund to support the Ministry of Education coping with the COVID-19 situation, particularly in terms of bringing technology to schools and developing socioemotional support tools. All activities are carried out respecting and strengthening the multicultural nature of Nicaragua: Relevant activity documents and school material have been translated into indigenous languages and participatory decision-making mechanisms have been put in place.

    The Nicaragua Catastrophe Risk Insurance Project provides access to efficient insurance for sovereign risk associated with natural events, such as tropical cyclones, earthquakes and excess rainfall. The Nicaraguan government renewed its policies for the 2020/21 cycle for earthquakes, tropical cyclones and excess rainfall. This was Nicaragua's sixth renewal of the Caribbean Catastrophe Risk Insurance Facility (CCRIF) policies. The sovereign insurance offered by CCRIF Segregated Portfolio Company (SPC) is currently one of Nicaragua’s main disaster risk financing instruments to provide short-term liquidity in the event of a disaster, allowing for immediate disaster response while other financing can be mobilized. The Ministry of Finance prepared for the 2020 hurricane season, predicted to be more active than average, by increasing its tropical cyclone insurance coverage through the CCRIF SPC based on technical recommendations from the Nicaraguan Institute of Territorial Studies (INETER). Given the two hurricanes’ s impacts, Nicaragua received $30.6 million in excess rainfall and tropical cyclone policies following Eta and Iota. This money provided short-term liquidity, allowing the government to respond to the emergency while securing other financing. Financial protection is a critical part of the disaster risk financing strategy and operational plan developed with technical assistance from the World Bank.

    In terms of water and sanitation, the Sustainable Rural Water Supply and Sanitation (WSS) Sector Project (PROSASR) provided water and sanitation systems to some 70 rural communities. From 2014 to 2019, 29,907 beneficiaries gained access to improved water supply and 13,980 people to safe sanitation services. The project not only financed civil works but also helped Nicaragua strengthen municipal and community capacities for the administration, operation and sustainable maintenance of water and sanitation systems in rural areas. The Project also supported the implementation of social programs to spread the benefits of proper hygiene and practices for water conservation, through a range of social learning techniques, including community theaters.

     

    The Second Land Administration Project (PRODEP II) covered six of the 15 Departments in the country, and helped develop better property rights regulations benefitting more than 805,946 people, more than half of which are women. From 2013 to June 2020, cadastral information for about 168,005 parcels was updated, and more than 110,000 families received legal documents for their properties, of which more than 82,000 are new land titles. All five protected areas within the project were demarcated, labeled and geo-referenced.

    From 2015 to 2019, the Nicaragua Caribbean Coast Food Security Project (PAIPSAN for its acronym in Spanish), financed by a grant of the Global Agriculture and Food Security Program (GAFSP), helped 14,826 beneficiaries and their families (85,812 people) in more than 500 rural communities of 15 municipalities to improve their availability and access to more nutritious food.  Forty-seven % of beneficiaries are women, 33 % are youth.  Ethnic diversity is reflected among beneficiaries with 28 % of these being indigenous and another five % afro descendants .Implementing a Nutrition-Sensitive Agriculture approach, PAIPSAN brought in agricultural and artisanal fishery innovations, nutrition training, good socio-environmental practices,  as well as investments to increase value-added of products and commercialization to improve family agriculture practices by indigenous, afro descendent and mestizo communities. On average, the project achieved 78 % increase in agricultural yields, while more than 8,000 beneficiaries adopted one or more agricultural and fishery technologies. Ninety-one % of women and children in beneficiary families improved their Dietary Diversity Index by consuming 7 or more groups of food with high nutritional value.

    From 2017 to date, the Caribbean Regional Communications Infrastructure Program - Nicaragua (CARCIP) has promoted access to 3G cellular mobile phone services, including broadband Internet access at speeds above 2Mbps in 16 communities of the Caribbean Coast and Río San Juan, benefiting 39,518 inhabitants. A total of 450 inhabitants of these communities benefited from the digital literacy campaign which was carried out in Spanish, Mayangna and Miskito. In addition, with the aim of strengthening digital human talent and digital innovation, the project awarded 1,747 English-language scholarships, 910 scholarships in soft skills and 52 scholarships in technical skills related to the information technology industry. Finally, the project supported the creation of two open-innovation centers in the Caribbean Coast (Puerto Cabezas and Bluefields) where young university students, with the help of mentors and following an open innovation methodology, have developed 9 applications. Progress can also be seen in digital innovation centers for the cities of Bonanza, Siuna, León, and Granada.

    From 2010 to August 2020, through the Public Financial Management Modernization Project, IDA showed results in strengthening the country’s financial management capacities: 100 % of Central Government agencies adopted the multi-year and results-based budgeting methodologies. The Administrative and Financial Management Information System –SIGAF– was implemented in all Central Government agencies. In addition, statistics management capacity in preparation for the Population and Housing Census improved: Nicaragua now has an updated and redesigned digital cartography for statistical operations in all municipalities. The Building Census was carried out in 2017 and progress was made in the development of a technological platform for the collection and processing of Census data. The technology of using Mobile Capture Devices in the Census was tested in pilot exercises.

    Since 2015 and 2018, respectively, through the projects Strengthening the Public Health Care System  and Integrated Public Provision of Health Care Services, the World Bank supports the institutionalization of plans to improve the quality of health care in Nicaragua and the prevention of chronic diseases in the first level of care. The dynamic is participatory and encourages municipalities to prepare health improvement plans. This is reflected, for example, in the training of 2,518 health workers, the creation and equipping of entomology rooms for the prevention of diseases transmitted by mosquito bites; in the establishment of hospital waste management plans in 34 of the 64 hospitals; in the creation of a wastewater evaluation system; in an increase in the %ages of women receiving prenatal care (to over 80 %), in the scope of coverage of childhood vaccination (more than 85 %), and institutional delivery (over 88 %). Ninety-five % of the municipalities report compliance with these plans, a coverage rate 50 % higher than the original goal.

    The country has benefitted from key innovative procedures, technologies and has obtained behavioral change among institutional actors in the provision of health care. Project accomplishments comprised the introduction of municipal ‘quality of health care’ plans in 66 municipalities involving a comprehensive results-based payment mechanism. In addition, the first output-based financing for the National Health workers training program was introduced. The combination of both innovations allowed the improvement of the quality provision of the services with accountability. A third, and transcendental innovation was the design, implementation, and monitoring of hospital waste management plans for the public network of hospitals. This has reduced the impact of waste, the contamination of health workers and of the environment. Finally, the National Institute of Natural Medicine benefitted from the promotion of the integration of the western with traditional medicine.

    The Project for the Adaptation of Nicaragua's Water Supplies to Climate Change (PACCAS, 2012-2018) promoted guaranteed access to water, protection of water resources, and the mitigation of climate impacts in several rural communities vulnerable to the effects of climate change. For example, in the Corn Islands, off the Caribbean coast of Nicaragua, the project resulted in the delimitation of 26 wetlands, which cover an area of protection of 150 hectares and represent water reservoirs for 8,000 people living on the island; 26.6 hectares of wetlands were reforested; two environmental and climate monitoring stations are up and running, which have strengthened the monitoring of climate and sea level behavior on the islands; and an environmental education and awareness plan was implemented to keep the wetlands clean, protected and preserved as sources of life. Participation of 6,702 beneficiaries was achieved, of which 64 % are women.

    Supporting social inclusion and participatory processes for resilient recovery,  the World Bank approved on January 2021 an $80 million credit to finance the Nicaragua Hurricanes Eta and Iota Emergency Response Project. The Project supports the country’s restoration of services and economic activities in critical sectors after Hurricanes Eta and Iota. The focus is on targeting the different needs of a diverse population and facilitating the full and effective participation of stakeholders to ensure that recovery activities benefit the most vulnerable communities. The Project also includes mechanisms to promote equal access by, and feedback from, diverse groups and improve data collection and awareness of gender-specific needs. 

    Last Updated: Apr 06, 2021

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LENDING

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

*Amounts include IBRD and IDA commitments


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Country Office Contacts

NICARAGUA +505 2270 0000
5to. piso Edificio Cobirsa, Km 6,5 carretera a Masaya, Managua
cfloresmora@worldbank.org
USA +1 202 473-1000
1818 H Street NW, Washington, DC 20433
adavis@worldbankgroup.org