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Hotel Intercontinental Metrocentro
Managua, Nicaragua
October 16, 2002
Good morning,
I am delighted to be here in Nicaragua and to have this opportunity to meet with you today. This is an exciting time in Nicaragua's history with many challenges and opportunities.
At his inauguration last January, President Bolaņos declared a "New Era" for the country that would be known for transparency in government, reliance on private initiative, and the assurance that all Nicaraguans would be able to lead their lives with dignity. President Bush supports fully this initiative on behalf of the Nicaraguan government and has expressed this support personally to President Bolaņos. USAID, under the leadership of Administrator Andrew Natsios, is committed to helping turn President Bolaņos's vision into reality.
Within weeks of his inauguration, the eyes of the world turned to Nicaragua as President Bolaņos boldly confronted corruption head on. On August 7, the President explained to the Nicaraguan people the ill effects of corruption. He made it clear to all of us that corruption has robbed the people of schools, of hospitals and clinics, of salaries and pensions. We in the United States Government applaud his leadership.
President Bolaņos made equally strong commitments to generate employment and revive a stagnant economy. In an attempt to keep his pledge to improve health and education, I understand he has now directed a higher proportion of Nicaragua's budget than that of any other country in the region toward improvements in the social sector. President Bolaņos's efforts hold great promise for achieving real economic progress and a transparent government that serves the public interest.
Still, the challenges that President Bolaņos faces are daunting, and he cannot face them alone. We all know the statistics. Nicaragua ranks as one of the poorest countries in our hemisphere. Half the population lives in poverty, and 17 percent live in extreme poverty. The foreign debt is $6.7 billion, or three times Nicaragua's gross national product, and the domestic debt is $1.8 billion. The country was still recovering from Hurricane Mitch when a severe drought hit the northwest area of the country and destroyed crops last year. The fall in coffee prices has caused banks to fail, farms to go bankrupt; thousands have lost their livelihoods. The majority of children in Nicaragua still receive less than five years of schooling, and many children don't go to school because their families cannot afford to buy things as basic as notebooks or shoes.
Despite all this, the situation is not hopeless. It is time for the National Assembly, the private sector and the Nicaraguan people to unite with President Bolaņos. It is time for all of us to "roll up our sleeves and get to work."
The U.S. government and the donor community are ready to give our support. I am pleased to tell you that we are working with your government, the IDB and other donors, to finance public works including road construction and other infrastructure projects to create jobs for thousands of Nicaraguans. I am pleased to announce today that my government has just approved $3 million in food aid that will be used to create food-for-work projects in the geographic areas hit hard by the coffee crisis. This is in addition to our annual $12 million in food assistance programs.
We estimate that 500,000 Nicaraguans are unemployed. Public works are only part of the solution and serve at best as only a temporary solution. To the extent you can, I urge each of you in the business community to help us create employment for hundreds of thousands of people. Each of you needs to expand your businesses and hire more people. There is no reason why together we can not put 500,000 Nicaraguans to work. What we need to do is to expand the GDP and create wealth for all Nicaraguans. The private sector needs to take a look at its businesses and farms and see how they can be more productive. Nicaragua is the envy of its neighbors for its rich soil and excellent climatic conditions. Yet, I have seen expanses of idle land in this country with nothing planted. Put that land to use. Invest in your businesses, in your land, and in your homes. To encourage that investment, we are happy to announce that USAID and Bancentro have signed an agreement creating a $5 million loan fund to stimulate production and exports.
I know there are many reasons why people feel reluctant to invest in Nicaragua. Legal reforms are necessary. Increased transparency and accountability are necessary at all levels to promote private investment-both foreign and local. And private investment is what will bring economic growth and permanent jobs. That is why I urge you to give President Bolaņos support for his anti-corruption campaign. The millions of dollars allegedly siphoned off from government institutions in the recent past could have been spent improving the economy and providing employment. Corruption robs the country of the chance to improve the economy and well-being of the population. This is why President Bolaņos's fight against corruption is so important. But it has to be everyone's fight. It means setting up transparent, accountable government institutions, but it also means honest business dealings, paying back loans and honoring contracts on the part of everyone.
The private sector and the Nicaraguan government need to work together to revise policies and government rules and regulations to improve the investment climate and prepare the country to compete under Central American Free Trade Agreement and the Free Trade Area of the Americas. President Bush has placed trade capacity building and preparation for these trade agreements at the top of the U.S. Administration's agenda for the region. Participation in a free trade agreements will allow Nicaragua's farms and businesses to take advantage of trade opportunities elsewhere in Central America as well as in the U.S. As domestic and foreign investors gain confidence and invest in Nicaragua, private sector jobs will replace public works employment and lead to sustainable growth for the country.
Economic growth and job creation also require a healthy, educated population. President Bolaņos has made a commitment to improve health and provide education for all children. I understand there are 900,000 children in Nicaragua today who should be in school but are not. Government spending and donor projects are only part of the solution. We want to help Nicaragua rethink how best to finance education and health services.
This week, I am pleased to announce that the U.S. government has entered into a $2.2 million partnership with the American Chamber of Commerce in Nicaragua, the American-Nicaraguan Foundation, Eduquemos and the Academy for Educational Development to help President Bolaņos meet his commitment to improve education. This is in addition to the $3 million we spend annually to support education in Nicaragua. Working together, we will help the Nicaraguan Government meet its goal of making more than 6,000 primary schools nationwide model schools with well-trained teachers, active parent involvement, and the materials children need for learning.
President George W. Bush recently outlined the course that countries need to follow to escape the quagmire of poverty. He said, "Countries that live by these three broad standards -- ruling justly, investing in their people, and encouraging economic freedom -- will receive more aid from America. And, more importantly, over time, they will really no longer need it, because nations with sound laws and policies will attract more foreign investment. They will earn more trade revenues. And they will find that all these sources of capital will be invested more effectively and productively to create more jobs for their people." We at USAID under the leadership of Administrator Natsios share the President's vision, and we believe that President Bolaņos has put Nicaragua on this course. It is up to all of us to help him succeed.
Thank you.
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