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Nicaragua
>> Regional Overview >> Nicaragua Overview
Previous Years' Activities
2002, 2001, 2000, 1999, 1998, 1997
Last updated: 35
THE DEVELOPMENT CHALLENGE: Despite positive growth rates over the last eight years, poverty in Nicaragua remains pervasive and acute. More Nicaraguans are poor today than in 1993; about half the population lives in poverty (as defined by the World Bank) and an estimated 17% live in extreme poverty, making Nicaragua one of the poorest countries in Latin America. Most of the poor, whether urban or rural, depend heavily on agricultural employment for their livelihood. In addition, Nicaragua is saddled with an enormous foreign debt. The most recent data indicates that Nicaragua has a total foreign debt of $4.8 billion, well over 200% of GDP. Economic momentum has been vanishing as growth declined from 7.3% in 1999, to 5.5% in 2000, to 3.0% in 2001. Poverty rates will not drop unless growth rates above 6% can be achieved and maintained for at least a decade. The Government of Nicaragua (GON) has developed a poverty reduction strategy as part of its participation in the Heavily Indebted Poor Countries debt relief initiative. Along with poverty reduction, creation of an effective democratic system of government is a basic requirement if Nicaragua is to achieve equitable growth and prosperity for its citizens.
As trade barriers among countries in the hemisphere fall and the date for establishing the Free Trade Area of the Americas (FTAA) approaches, it is in the U.S. interest that Nicaragua becomes a more competitive trading partner. Further, Nicaragua must become more resilient in the face of floods, droughts, and other natural disasters. Still recovering from the devastation of Hurricane Mitch that struck in October 1998, Nicaragua has also been hit hard by a severe drought affecting the northwest area of the country, sharply depressed prices in the international coffee market, and a $500 million GON bailout of private banks. Nonetheless, a serious crisis was averted when the United States provided emergency assistance in the form of food, seeds and tools.
In November 2001, Nicaragua conducted national elections that were notable for their high voter turnout, and fair, peaceful election-day operations. Although the new GON administration recently took office in January 2002, early indications are that it is committed to programs to create jobs, increase productivity in the rural areas, reduce social and environmental vulnerabilities, eliminate corruption, and reform the justice sector. The challenges of reducing poverty, increasing economic growth, and strengthening democracy will require a major commitment from Nicaragua and the international donor community.
THE USAID PROGRAM:
FY 2002 Estimate:$ 33.861 million FY 2003 Request: $37.621 million After the 30-month Hurricane Mitch Reconstruction and Recovery Program and an election support program in 2001, USAID is returning to its core sustainable development program and preparing a new strategy to be implemented beginning FY 2003. USAID requests funds for its three ongoing objectives that will complement Nicaragua's poverty reduction strategy, strengthen democratic participation, increase broad-based growth to benefit from membership in the FTAA, and enable Nicaragua to be an effective opponent of international terrorism and narcotrafficking. FY 2002 funds will be used to implement the program as described in the FY 2002 Congressional Budget Justification with small modifications to respond to new priorities. In FY 2003, USAID will continue to work toward a favorable investment climate framed by effective economic policies and resolution of long-standing property issues. A modern, fair and open judicial system and a solid base of human capital are related goals. Specific activities to be funded by the FY 2003 request are described in detail in the following Program Data Sheets.
Most immediately, USAID will help small producers become more competitive by encouraging rational crop diversification, increased agricultural productivity, the sustainable use of natural resources, and the development of systems to mobilize savings and credit, particularly in rural areas. An internationally competitive agricultural sector also leads to cheaper food locally -- and hence greater access to food. In addition, by promoting development in Nicaragua through the Agency's new agriculture, trade and disaster mitigation-based Partnership for Prosperity for Central America and Mexico, the U.S. will be able to stem the flow of economic migrants and reduce the country's vulnerability to narcotics abuse and trafficking.
Establishing a credible, equitable, and efficient judicial system based on rule of law is necessary to encourage productive investment in Nicaragua. USAID will therefore continue its efforts in criminal and administrative code reform, including assistance in drafting modern codes, in getting codes enacted and implemented, and in strengthening judicial sector institutions. USAID will also provide technical assistance and training to ensure the new codes are widely understood and fairly applied.
Laying the foundation for a healthy, well-educated workforce is also necessary to increase productivity. USAID continues to support programs promoting healthy children, family planning, and primary education. Fifty percent of the population is under 15 and 45.6% of 19 year old women were pregnant or mothers according to a survey undertaken in 2001. Helping families space births is essential to keep population growth from swamping economic growth. In addition, keeping HIV/AIDS from becoming an epidemic is essential to preserving a healthy workforce.
ONGOING PROGRAMS FOR WHICH NO NEW FY 2002 OR FY 2003 FUNDING IS REQUESTED:
Number: Title: Last Notified: Planned Completion: 524-005 Hurricane Mitch Reconstruction and Recovery FY 2002 CBJ p.439 FY 2002 OTHER PROGRAM ELEMENTS: In addition to its bilateral program, USAID implements activities in Nicaragua through the Latin American and Caribbean Bureau (LAC) regional projects including local government strengthening, Parks in Peril, the dairy directive, and education reform. Nicaragua's Human Rights Ombudsman has been assisted through LAC's grant to the Inter-American Institute for Human Rights.
LAC Central American regional programs are managed by the USAID/Guatemala-Central America Program. These activities provide assistance in the areas of child labor rights, HIV/AIDS prevention, and natural resources management in Nicaragua. Three programs in USAID's Bureau for Economic Growth, Agriculture and Trade support USAID/Nicaragua's micro-enterprise activities, including the Program for Innovation in Microenterprise Fund, and the Microenterprise Implementation Grant Program. USAID's centrally-managed matching grant programs also fund child survival and micro-credit activities. The Central American Mitigation Initiative of USAID's Office of Foreign Disaster Assistance funds activities in Nicaragua that reduce the impact of natural disasters.
OTHER DONORS: Major donors include the World Bank, Inter-American Development Bank (IDB), the European Union (EU), Japan, Sweden, Denmark, Germany, Spain, and the United Nations Development Program (UNDP). Total donor support to Nicaragua in grants and loans is estimated at $492 million in 2000, 20% of the GDP. The U.S. was the lead bilateral donor, providing about 13% of bilateral assistance, closely followed by Japan with 12%. USAID works collaboratively with World Bank and IDB on projects that promote transparency in government procurement, financial management reform, municipal strengthening, agricultural technology, health modernization and primary education. The EU supports both primary and secondary education. USAID, the World Food Program, and other donors worked together on emergency programs following both droughts and flooding in 2001. The Swedish International Development Agency and other Nordic donors are implementing a program to improve decentralized delivery of primary health care, a program that complements USAID's Prosalud project. The Danish and German governments support environmental conservation. Japan focuses on infrastructure. USAID has partnered with the EU, Spain and the Konrad Adenauer Foundation on justice sector activities.
Program Data Sheets
- 524-001 More Political Participation, Transparency and Compromise
- 524-002 Sustainable Growth in Small Producer Employment and Income
- 524-003 Better Educated, Healthier, Smaller Families
Country Background Information Resources
CIA Factbook
Library of CongressNational Geographic Country Maps
State Dept. Country Information
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Last Updated on: May 29, 2002 |
