Published on November 26, 2010
The Executive Board of the International Monetary Fund (IMF) completed the fourth and fifth reviews of Nicaragua's economic performance under the three-year Extended Credit Facility (ECF). The Executive Board also approved an extension of the arrangement through December 4, 2011.
According to IMF, the extension involves a re-phasing of disbursements already scheduled in the arrangement. About US$19.97 million will be available immediately upon completion of the reviews, while the rest will be disbursed in two equal tranches of US$8.66 million, during 2011. So far, total disbursements have been about US$84.41 million.
All quantitative performance criteria from December 2009 to June 2010 were met with margins and good progress has been made in moving forward the structural agenda.
The Executive Board approved the three-year ECF (formerly PGRF) arrangement for US$111.6 million in October 2007. In September 2008, the Board increased financial support under the program by US$10.14 million to help Nicaragua cope with the natural disasters of 2007.
Following the Executive Board discussion on Nicaragua, Mr. Murilo Portugal, Deputy Managing Director and Acting Board Chair, issued the following statement:
"The Nicaraguan economy is recovering gradually from the effects of the global financial crisis. The pickup in activity in 2010 has been broad based and balanced, exports are growing faster than anticipated, and the financial system remains stable and liquid. Real GDP growth is expected to reach 3 percent this year and the balance-of-payments position has improved." The Nicaraguan authorities strengthened their economic program for the remainder of this year and for 2011 to mitigate risks, protect the external position, and pave the way for further fiscal consolidation.
"Recent progress in the implementation of key structural reforms is encouraging. The approval of a new central bank charter, the strengthening of the electricity law, the publication of a study on pension reform options, and the adoption of a new procurement law are important advances. In addition, improvements in reporting and monitoring of foreign aid flows will help foster confidence and mobilize donor support. Maintaining the momentum of structural reforms will be critical to boost Nicaragua's growth potential, improve living standards, and reduce poverty," expressed Mr. Murilo.
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