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This is an archived USAID document retained on this web site as a matter of public record.
Mr. Chairman: On behalf of the U.S. delegation, I want to express our great appreciation for the opportunity to comment on the progress to date and remaining challenges to Nicaragua's Reconstruction and Transformation program. We recognize the important achievements of the Government of Nicaragua, and more so, we stand in admiration of all those Nicaraguans who have shown such resolute spirit in rebuilding new lives after the staggering destruction brought by Hurricane Mitch. I want to commend President Iglesias and Chairman Miguel Martinez for their excellent coordination of the consultative process during the past year.
I want to underscore the statement of the Group of Five. The G-5 statement emphasized the elements that we believe are essential to meaningful reconstruction and transformation: good governance; commitment to addressing ecological and social vulnerability; greater transparency and accountability; and respect for human rights.
Today the United States reconfirms its commitment to the long-term recovery of Nicaragua. Through our direct bilateral assistance program; our support for debt relief and, in particular, the Heavily Indebted Poor Countries (HIPC) initiative; and our continuing efforts to facilitate expanded trade, we will continue to assist Nicaragua as it endeavors to consolidate democracy and achieve higher levels of economic growth.
The U.S. Assistance Program
At the May 1999 Consultative Group in Stockholm, the Government of Nicaragua clearly stated its goals not only to reconstruct after Hurricane Mitch, but to transform its economy and its institutions. Along with other donors, the United States responded by pledging $94.1 million in bilateral assistance aimed at both rapid reconstruction in the areas most affected by Mitch as well as at sustained, nationwide recovery and transformation over the long-term. In the northern and northwestern areas of the country and along the Rio Coco where Mitch caused widespread flooding and landslides, we expect our projects to directly assist approximately 260,000 people. We are channeling an estimated $52 million through local and international NGOs to help restore economic livelihood to 124,000 farmers, micro-entrepreneurs and rural laborers in Mitch-affected areas.
U.S. funding has already enabled the relocation of more than 350 families, survivors of the Posoltega mudslide, to farm a 70-hectare parcel of land further away from the Casita Volcano. We are helping farmers to use environmentally sustainable agricultural practices, and to rehabilitate agricultural land and farm-to-market roads. Over 20,000 people are receiving wages in cash-for-work programs rehabilitating some 1,000 kilometers of rural roads. We are introducing new technologies and crop varieties for high-value products to reduce farmers' vulnerabilities to both natural disasters and downturns in prices of basic grains. We also are channeling credit to Mitch-affected micro-entrepreneurs and farmers through local NGOs and credit unions.
Meanwhile, we have taken up the Nicaraguan Government's challenge to assist in effecting transformation throughout the society. More than a dozen U.S. federal government departments and agencies are working in close collaboration with the Government of Nicaragua, with non-governmental organizations, and with communities and local governments. In keeping with the Stockholm principles, civil society and municipal and local authorities have taken an active role in determining priorities. As a result, our U.S. agencies, the Nicaraguan Government and our local and civil society partners are hard at work in the health and education sectors where we are providing $34.5 million as part of the overall effort to reduce social vulnerability in Nicaragua. PROFAMILIA is working on a private non-profit family health clinic in Tipitapa where the high waters of Lake Managua still threaten that community. Grants have been made to a half dozen local NGOs for community water systems projects. 43 health units are being renovated in Matagalpa, Jinotega and Boaco. The U.S. also financed rigs to drill at least 100 deep wells supplying clean water to rural families. In the education sector, we are refurnishing 570 school classrooms with tables and chairs, school supplies and instructional materials. Meanwhile, we are addressing Nicaragua's goal of reducing ecological vulnerabilities by directing nearly $7 million through local governments and community organizations to improve their capacity to prepare for and cope with natural disasters. We remain committed to helping improve ecological management practices and protection of critical watersheds through use of sustainable agricultural practices and construction of small conservation structures. Finally, we provided $1 million to support a transparency mechanism developed by the IDB.
The U.S. strongly supports the Stockholm principle and Nicaragua's twin goals of decentralization and the strengthening of local governments. This has involved not only direct support to repair municipal infrastructure, but also providing resources to municipal and regional government so that they may engage in the participatory and democratic process of selecting reconstruction sites and establishing their own priorities.
Support for HIPC and Expanded Trade
The U.S. believes that reducing Nicaragua's debt burden is a crucial step toward ensuring transformation and sustainable reconstruction. The U.S. has supported proposals to expand and deepen debt relief under the HIPC initiative for countries with a sustained record of economic reforms, a commitment to poverty reduction, and good governance. Sustained economic development in support of growth and poverty reduction for Nicaragua in the medium term cannot be achieved without enhanced HIPC debt relief and considerable donor assistance. The current levels of transfers from the rest of the world to Nicaragua are not sustainable. Economic reforms and improved governance are important for Nicaragua in their own right but will also serve to reinforce the benefits derived from debt relief and the increased flow of donor funds for reconstruction. Last August, we informally agreed that Nicaragua should qualify for enhanced HIPC debt relief but noted that first Nicaragua needed to make progress in the areas of financial sector reform, public sector procurement, governance and a poverty reduction strategy. A poverty reduction strategy paper (PSRP) will provide a roadmap to show how debt relief will be used to reduce poverty. The importance of the PRSP extends well beyond the HIPC program itself.
It is also critical that Nicaragua follow a development strategy that allows sustained economic growth, increased exports, and reduced dependency on donor support. The United States believes that transformation in Nicaragua requires strengthening the economy to compete in the global markets. We are committed to increasing access to U.S. markets for Nicaragua and the rest of the Caribbean basin countries. As you know, on May 18 President Clinton signed CBI enhancement legislation, which has the potential to generate tens or even hundreds of thousands of new jobs in the region, thereby fulfilling another of our commitments to sustainable recovery. We would urge Nicaragua to follow through on several of its own initiatives to increase and broaden regional trade; in particular, we would welcome positive and genuine steps toward re-animating the regional integration process.
Remaining Challenges
We recognize and admire the ambitious set of challenges Nicaragua set for itself in Stockholm when President Aleman outlined his vision of "a new, prosperous Nicaragua, with social justice". In order to realize that vision, we urge the Government of Nicaragua to strive towards absolute transparency, good governance, and broad participation of civil society in the implementation of the reconstruction plans. Recognizing that the reconstruction process must be accompanied by a poverty reduction strategy, we encourage the Government to further increase expenditures in the health and education sectors.
The United States underscores its view that the extension of the Integrated Financial Management System (SIGFA) is one of the most important steps the Government of Nicaragua can take to improve both efficiency and transparency. We urge the government to move rapidly ahead to use SIGFA in all the government ministries.
The U.S. is particularly interested in strengthening government procurement systems including the proposed Inspectoria de Proyectos under design with the IDB. We hope that the Controller General's Office will have full and unimpeded access to all parts of government falling under its jurisdiction and that it will fully investigate all credible allegations of corruption. The U.S. is especially pleased that Nicaragua is considering the Administrative Litigation Law that is essential to enhance full transparency and accountability in the Executive branch. Strengthening the civil service should be another aim of the Government of Nicaragua in the near term. We want to reiterate the importance of quickly making the Property Tribunals operate to facilitate the resolution of outstanding property claims.
The United States places great value on adherence to the Stockholm principle of decentralization and and on the active participation of civil society in determining the future of Nicaragua. We recommend that the Government of Nicaragua take the necessary steps to approve legislation that would strengthen local governments by granting them greater control over municipal transfers, budgets and taxes.
So that all Nicaraguans benefit from the shared goal of transformation, donors have expressed concerns about Nicaragua's democratic institutions. Public confidence in these institutions depends on their transparency, independence and impartiality. Transformation also relies on freedom of the press and expression as well as fair and open elections. We look to the Government of Nicaragua and to the Supreme Electoral Council to ensure that the electoral process is accessible to all citizens and that decisions are free of personal or political partisanship or manipulation.
Finally, I am pleased to note that the consensus achieved in Stockholm on the basic principles that must guide our shared task have again been reinforced here in Washington. The United States joins the international community in renewing its commitment to ensure that the assistance provided results in a new and prosperous Nicaragua.
This is an archived USAID document retained on this web site as a matter of public record.
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