 The Country Assistance Strategy (CAS) for Nicaragua is the detailed report on the World Bank's priority areas to assist countries with their own development programs. It describes all of the World Bank's planned operations in Nicaragua: lending, studies and other technical assistance. See below for the main points on the current World Bank Country Assistance Strategy for Nicaragua, 2003-2005. The full documents are available on the top right side of this page, and the print version of the CAS is also available at the Public Information Center. More general information about Country Assistance Strategies.
WASHINGTON, March 13, 2003 – The World Bank's board of executive directors today discussed a new Country Assistance Strategy (CAS) for Nicaragua, with project and investment loans likely to total between $120 and $160 million for 2003 to 2005, including a $15 million Programmatic Structural Adjustment Credit (PSAC) which was approved by the board today.
"Nicaragua has made substantial progress in the past four years towards building a stable society with a resilient market economy," said Jane Armitage, Country Director for Nicaragua at the World Bank. "This CAS provides a new framework for World Bank assistance to support the country's efforts to confront crucial development hurdles and enable more Nicaraguans to escape from extreme poverty."
The new CAS supports the four pillars of Nicaragua's Poverty Reduction Strategy Paper (PRSP) which are: broad-based economic growth, investment in human capital, better protection of vulnerable groups, and strengthening governance and institutions. The PRSP, prepared by the Government of Nicaragua in consultation with civil society, including municipalities, universities, non-governmental groups, and focus groups representing the poor in rural and urban areas across the country, was presented to the World Bank and the International Monetary Fund (IMF) in September 2001.
Nicaragua's progress in implementing its poverty reduction strategy was reviewed by the World Bank's Executive Board in December, 2002, receiving satisfactory remarks. Although the country has made gains on the four pillars of its strategy, poverty still afflicts 45.8 percent of the country's people. Moreover, Nicaragua's vulnerability to disasters such as Hurricane Mitch in 1998, the crisis in international coffee prices, drought and migration have deepened poverty in recent years. To address this situation, the Bank's CAS proposes to focus on the following priorities:
· promoting faster growth by raising productivity and improving competitiveness of the private sector;
· upgrading the country's productive infrastructure, especially in rural areas;
· expanding human capital through investments in basic health and primary education;
· building expertise and efficiency in the public sector, and fighting corruption; and
· developing a social protection program for the poor and most vulnerable.
The CAS calls for two additional PRSCs to support Nicaragua's implementation of its PRSP over the years 2004 to 2006. Alongside ongoing lending programs for roads, financial markets, telecommunications, forestry, land administration, commodity price risk management, agricultural technology and municipal development, among others, the new CAS will center on a competitiveness program. The planned competitiveness project would provide resources to improve the country's investment climate and help its private sector improve its competitiveness in preparation for the Central American Free Trade Agreement (CAFTA) with the United States.
The World Bank's initiatives will be accompanied by investment and non-investment operations by the International Finance Corporation (IFC), the private-sector financing arm of the World Bank Group. IFC recognizes that investment in Nicaragua's private sector is hampered by weaknesses in the financial sector, property rights and corporate and legal governance. IFC assistance will focus on strengthening banking, insurance and capital market, promoting foreign private investment, encouraging private participation in infrastructure, and reactivating growth in agriculture and industry.
To support the new CAS, the Bank's executive board approved a $15 million Programmatic Structural Adjustment Credit (PSAC), the country's first in a series of adjustment credits envisaged to address the four pillars of Nicaragua's Poverty Reduction Strategy. Financing from the PSAC approved today supports the country's measures to attract foreign direct investment, strengthen regulation of the financial system, raise the coverage and quality of primary education, rural health services, water and sanitation, improve budget planning and financial management in the public sector, reform the civil service and coordinate the use of aid from the donor community.
The US$15 million equivalent, interest-free, International Development Association (IDA) credit has a 40-year maturity and a 10-year grace period.
The World Bank's current portfolio in Nicaragua comprises 16 active projects with about $461 million in net commitments, of which $262 million has still to be disbursed. Nicaragua's successful implementation of its Poverty Reduction Strategy is a key condition for the country to continue to receive debt service relief under the IMF and World Bank's Heavily Indebted Poor Countries Initiative (HIPC). In December, 2000, Nicaragua was approved for up to US$4.5 billion in debt relief under the HIPC program, which will likely be completed in December 2003. |
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