Nicaragua Progress Report National Development Plan 2006
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NICARAGUA PROGRESS REPORT NATIONAL DEVELOPMENT PLAN 2006 August 2007 CONTENTS I. Introduction...................................................................................................................1 II. Governance and Citizen Security...........................................................................3 1. General Aspects......................................................................................................3 2. The Fight Against Corruption............................................................................3 3. Strengthening the Justice System...................................................................5 4. Citizen Security ......................................................................................................6 5. Structural Reforms in Governance..................................................................7 III. Evolution of Poverty....................................................................................................8 1. General Aspects......................................................................................................8 2. Evolution of Poverty..............................................................................................9 IV. Development of Human Capital and Social Protection.................................12 1. General Aspects....................................................................................................12 2. Social Policy and Structural Reforms ...........................................................13 Education................................................................................................................13 Health ...................................................................... Error! Bookmark not defined. Social protection....................................................................................................17 Social security .......................................................................................................19 Labor sector ...........................................................................................................21 Water and sanitation ..........................................................................................23 Policy of subsidies for the poorest population..............................................23 V. Evolution of Targets and Indicators ....................................................................26 1. General Aspects....................................................................................................26 2. Intermediate Targets and Indicators.............................................................27 Reduction of extreme poverty ...........................................................................27 Education................................................................................................................27 Health ...................................................................... Error! Bookmark not defined. Drinking water ......................................................................................................31 Social protection....................................................................................................33 3. Matrix of NDP Targets and Indicators ..........................................................34 VI. Economic Program and Poverty Reduction Strategy .....................................39 1. General Aspects....................................................................................................39 2. National and International Setting ................................................................41 3. Macroeconomic Policies and Structural Reforms .....................................42 Fiscal policy ...........................................................................................................42 Public investment policy .....................................................................................44 Monetary policy.....................................................................................................45 Exchange rate policy ...........................................................................................46 Trade policy ...........................................................................................................47 Structural reforms ................................................................................................48 4. Production Policy .................................................................................................51 Overall aspects .....................................................................................................51 Policy actions in support of production ..........................................................52 Progress in the development of the clusters.................................................54 5. Performance of the Economy 2002-2006 ....................................................57 Economic growth and inflation.........................................................................57 Employment and salaries..................................................................................61 Balance of payments...........................................................................................62 Foreign trade .........................................................................................................64 Evolution of Foreign Cooperation.....................................................................65 Performance of the non-financial public sector............................................67 Monetary program and financial development............................................72 6. Tendency of Poverty Spending ........................................................................77 General aspects ....................................................................................................77 Poverty spending, priorities, and funding.....................................................78 Current and capital poverty spending ...........................................................80 Funding ...................................................................................................................81 Foreign debt relief ................................................................................................82 Factors for change in poverty spending.........................................................84 VII. Medium-Term Perspectives 2007-2012 .............................................................87 1. General Aspects....................................................................................................87 2. Tendency of International Markets................................................................88 3. Perspectives for the Nicaraguan Economy..................................................88 4. International Cooperation.................................................................................95 VIII. Mechanisms for Evaluation and Follow-up ......................................................96 Figures 1. Evolution of general poverty and extreme poverty …….…………….. 9 2. Evolution of general urban and rural poverty ……..…………………. 10 3. Evolution of extreme urban and rural poverty………………………… 10 4. Economic growth 1997-2006 ………………………..……………………. 58 5. Average annual inflation …………………………………………………… 60 6. Growth rates ……………………………………………….…………………. 61 7. Main taxes …………………………………………………………………….. 69 8. Poverty spending adjusted for municipal transfers and subsidies .. 80 9. Increase in poverty spending ………………………………………………. 81 Tables 1. Evolution of poverty ………………………………….……………………… 10 2. Distribution of consumption ……………………………………………… 11 3. Subsidies for services and transfers to municipalities …………….. 26 4. Millennium development goals ………………………………..………….. 33 5. Matrix of NDP intermediate targets and indicators …….…………….. 34 6. Real growth of the economy ……………………………..………………… 59 7. Incidence of inflation ……………………………………..…………………. 60 8. Balance of payments……………………………………….………………… 63 9. International trade 2002-2006 ………………………..………………….. 65 10. Evolution of foreign cooperation …………………..……………………… 67 11. Fulfillment of fiscal program ……………………….……………………… 68 12. Non-financial public sector revenues …………………………………….. 70 13. Non-financial public sector spending ……………………………………. 72 14. Monetary program ……………………………………………………………. 74 15. Indicators of monetary consistency ………..…………………………….. 75 16. Indicators for the financial system ……………………………………….. 76 17. Priorities and funding of poverty spending ……………………………… 82 18. Sources of HIPC relief …………………………….………………………… 84 19. Changes in poverty spending ……………………………………………… 86 20. Perspectives of international markets ……………………………………. 90 21. Medium-term projections …………………………….……………………. 95 22. International cooperation for the NFPS …………………………………. 96 Annexes 1. Social indicators …………………………………………………..………….. 101 2. Economic indicators ………………………………………………………….. 102 3. Taxation reforms 2002-2006 ……………………………………………….. 103 4. Poverty spending non-financial public sector (US$) ………….………. 104 5. Poverty spending non-financial public sector (% GDP) ……..……….. 105 6. Poverty spending non-financial public sector by project……………… 106 7. Balance and poverty spending of the NFPS …….………………………. 120 8. Sources of HIPC relief ………………………………………………………… 121 9. Allocation of HIPC relief by program ……………..………………………. 122 10. Allocation of HIPC relief by programs and projects ………..…………. 123 11. New projects