Press Release No. 07/282

Press Release: IMF Deputy Managing Director Murilo Portugal's Statement at the Conclusion of his Visit to Nicaragua

December 10, 2007

Mr. Murilo Portugal, Deputy Managing Director of the International Monetary Fund (IMF), issued the following statement today in Managua:

"It is a great pleasure for me to visit Nicaragua. I was privileged to meet President Daniel Ortega, Presidential Advisor Bayardo Arce, Central Bank President Antenor Rosales, Finance Minister Alberto Guevara, members of the National Assembly, and representatives of the private sector and civil society.

"Our discussions focused on Nicaragua's challenges to raise medium-term growth, create employment, and alleviate poverty. We also discussed the impact of the recent hurricane and floods, and efforts underway to provide disaster relief and reconstruct badly damaged infrastructure. I was glad to deliver a small contribution from Fund staff to families displaced by hurricane Felix and the heavy rains that followed.

"Nicaragua has made much progress over the last years in consolidating macroeconomic stability, improving balance sheets and reducing vulnerabilities. With support from the Fund and the international community, including debt relief, growth has been sustained and social indicators have improved, although poverty remains too high.

"The government's current economic program provides an important opportunity to consolidate past gains and moving decisively towards reducing poverty and increasing investment in key sectors such as energy, water, education, and health. The Fund approved last October a loan to support this program. In our discussions, we agreed on the importance of maintaining macroeconomic stability and strengthening the investment climate to boost growth and social outcomes.

"Sustaining growth over the medium term depends on further reforms in the energy, fiscal and financial sectors. It will be important to advance early in the design of these measures to build consensus and develop the needed implementation capacity. I was encouraged to see that work has advanced on the energy front, and that measures will be implemented in the coming months to decisively address the endemic problem of electricity theft. Steps are also underway to reform public financial management practices with the aim of improving the productivity and targeting of spending.

"I look forward to a continued productive engagement with the Nicaraguan authorities as they work to implement their program with the support from the Poverty Reduction and Growth Facility (PRGF)."