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Progress Report on National Human Development Plan As of 2010 © 2011 International Monetary Fund November 2011 IMF Country Report No. 11/323 Nicaragua: Poverty Reduction Strategy Paper— Progress Report on National Human Development Plan as of 2010 Poverty Reduction Strategy Papers (PRSPs) are prepared by member countries in broad consultation with stakeholders and development partners, including the staffs of the World Bank and the IMF. Updated every three years with annual progress reports, they describe the country’s macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major sources of financing. This country document for Nicaragua, dated September 2011, is being made available on the IMF website by agreement with the member country as a service to users of the IMF website. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Nicaragua or the Executive Board of the IMF. Copies of this report are available to the public from International Monetary Fund ● Publication Services 700 19th Street, N.W. ● Washington, D.C. 20431 Telephone: (202) 623-7430 ● Telefax: (202) 623-7201 E-mail: [email protected] ● Internet: http://www.imf.org International Monetary Fund Washington, D.C. GOVERNMENT OF RECONCILIATION AND NATIONAL UNITY……………………………………September 12, 2011 NICARAGUA: PROGRESS REPORT ON NATIONAL HUMAN DEVELOPMENT PLAN AS OF 2010 September 2011 TECHNICAL PROGRESS REPORT ON NATIONAL HUMAN DEVELOPMENT PLAN AS OF 2010……………… 1 GOVERNMENT OF RECONCILIATION AND NATIONAL UNITY……………………………………September 12, 2011 NICARAGUA: TECHNICAL PROGRESS REPORT ON NATIONAL HUMAN DEVELOPMENT PLAN AS OF 2010 TECHNICAL PROGRESS REPORT ON NATIONAL HUMAN DEVELOPMENT PLAN AS OF 2010……………… 2 GOVERNMENT OF RECONCILIATION AND NATIONAL UNITY……………………………………September 12, 2011 TABLE OF CONTENTS EXECUTIVE SUMMARY 7 REDUCING INEQUALITY AND POVERTY 7 GROWTH: MACROECONOMIC POLICY 10 BUDGETARY EFFORT FOR COMBATING POVERTY 15 GROWTH: AGRICULTURE AND FORESTRY STRATEGY 15 GROWTH: FISHING AND AQUACULTURE POLICY 16 GROWTH: INDUSTRIAL POLICY 16 GROWTH: ENERGY POLICY 17 GROWTH: TOURISM DEVELOPMENT 17 FOREIGN TRADE POLICY 17 FOREIGN DIRECT INVESTMENT STIMULUS POLICY 18 DEVELOPING SOCIAL WELFARE AND EQUITY 18 FOOD STRATEGY, NUTRITIONAL SECURITY, AND SOVEREIGNTY POLICY 18 EDUCATION SECTOR: STRATEGY AND POLICIES 19 HEALTH SECTOR: STRATEGY AND POLICIES 20 SOCIAL SECURITY 20 STRATEGIES AND POLICIES FOR RESTORING THE RIGHTS OF CHILDREN, ADOLESCENTS, YOUTHS, AND THE ELDERLY 21 DRINKING WATER: SANITATION STRATEGY AND POLICIES 21 RESIDENTIAL AND SOCIAL HOUSING POLICY 22 LABOR POLICY 22 CITIZEN SECURITY 22 DEFENSE AND CARE OF MOTHER EARTH …. ENVIRONMENTAL SUSTAINABILITY AND FOREST DEVELOPMENT 23 CARIBBEAN COAST DEVELOPMENT STRATEGY 24 ANNEX 2: STRATEGIC MATRIX OF THE PLAN AND GOALS ACHIEVED 26 INTRODUCTION 29 REDUCING POVERTY AND INEQUALITY 31 THE CITIZEN PARTICIPATION MODEL 41 STRATEGIC POLICIES AND PROGRAMS OF THE NHDP 42 MACROECONOMICS 42 TECHNICAL PROGRESS REPORT ON NATIONAL HUMAN DEVELOPMENT PLAN AS OF 2010……………… 3 GOVERNMENT OF RECONCILIATION AND NATIONAL UNITY……………………………………September 12, 2011 MACROECONOMIC STABILITY POLICY 43 FISCAL POLICY 45 MONETARY AND EXCHANGE POLICY 48 SUPPLEMENTAL AGENDA, TRANSPARENCY, AND ACCOUNTABILITY 50 PUBLIC INVESTMENT POLICY 51 ACHIEVEMENTS OF THE 2007-2010 PUBLIC INVESTMENTS PROGRAM 52 [TR.: TRANSPORT; COMMUNITY WORKS AND SERVICES; WATER, SEWERAGE, AND SANITATION; EDUCATION; ENERGY; LIVESTOCK, FORESTRY, AND FISHERIES; HEALTH; STATE ADMINISTRATION; MULTISECTOR; HOUSING; SOCIAL PROTECTION, ASSISTANCE, AND SECURITY; MINING, INDUSTRY, COMMERCE, AND TOURISM; ENVIRONMENT; CULTURE, SPORT, AND RECREATION; COMMUNICATIONS. 54 BUDGETARY EFFORT TO COMBAT POVERTY 54 THE CITIZEN POWER APPROACH TO REDUCING POVERTY 54 THE BUDGETARY EFFORT AND ITS IMPACT LEVELS 55 FOREIGN TRADE POLICY AND BALANCE OF PAYMENTS 63 FOREIGN TRADE POLICY 63 BALANCE OF PAYMENTS 67 EXTERNAL FINANCING FOR THE PUBLIC SECTOR 68 PRODUCTION AND TRADE STRATEGY 71 AGRICULTURAL AND FORESTRY STRATEGY 71 CAPITALIZATION OF SMALL PRODUCERS 73 CREDIT FOR SMALL PRODUCERS 73 PROVISION OF SERVICES: SEEDS, TRAINING, TECHNICAL ASSISTANCE, AND PARTNERSHIP 74 AGRO-INDUSTRIALIZATION: VALUE ADDED 75 NATIONAL FOOD SAFETY SYSTEM 77 ACCESS TO MARKETS AT FAIR PRICES 78 CHANGE IN AGRICULTURAL PRODUCTION 78 FISHING AND AQUACULTURE POLICY 80 INDUSTRIAL POLICY 81 ADDED VALUE OF MANUFACTURING INDUSTRY 82 ENERGY POLICY 83 INCREASED GENERATION OF ELECTRICAL ENERGY FOR THE PEOPLE AND THE ECONOMY 83 FURTHER EXPANSION OF THE ELECTRICAL POWER TRANSMISSION NETWORK 83 RURAL ELECTRIFICATION 84 NATIONAL SUSTAINABLE ELECTRIFICATION AND RENEWABLE ENERGY PROGRAM (PNESER) 85 ENERGY SAVINGS AND EFFICIENCY 85 TOURISM DEVELOPMENT 85 TELECOMMUNICATIONS AND POSTAL SERVICES 89 TELECOMMUNICATIONS 89 POSTAL SERVICES 91 DOMESTIC TRADE POLICY 92 FOREIGN DIRECT INVESTMENT STIMULUS POLICY 93 FOOD STRATEGY AND FOOD AND NUTRITIONAL SECURITY AND SOVEREIGNTY POLICY 96 HEALTH SECTOR STRATEGY AND POLICIES 104 SOCIAL SECURITY 108 STRATEGIES AND POLICIES FOR RESTORING THE RIGHTS OF CHILDREN, ADOLESCENTS, YOUTHS, AND THE ELDERLY 110 TECHNICAL PROGRESS REPORT ON NATIONAL HUMAN DEVELOPMENT PLAN AS OF 2010……………… 4 GOVERNMENT OF RECONCILIATION AND NATIONAL UNITY……………………………………September 12, 2011 DRINKING WATER AND SANITATION STRATEGY AND POLICIES 112 RESIDENTIAL AND SOCIAL HOUSING POLICY 114 LABOR POLICY 115 MEASURES FOR SOUND PUBLIC MANAGEMENT 121 TRANSPARENCY AND INTEGRITY 121 TRANSPARENCY 121 INTEGRITY 122 CITIZEN SECURITY 122 POPULATION’S LEVEL OF SATISFACTION 124 ACCESS AND QUALITY IN THE PROVISION OF JUSTICE 125 STRENGTHENING OF THE STATE AND THE CAPACITY FOR RESPONSIBLE PUBLIC ADMINISTRATION 125 CIVIL SERVANTS ACCREDITED FOR ADMINISTRATIVE CAREER 125 HARMONIZATION AMONG THE BRANCHES OF GOVERNMENT 126 DECENTRALIZATION AND MUNICIPAL STRENGTHENING 127 STRENGTHENING THE MUNICIPALITIES WITH CITIZEN PARTICIPATION 128 DECENTRALIZATION 129 LOCAL DEVELOPMENT 129 DIRECT DEMOCRACY IN MUNICIPALIZATION 130 SECURITY OF PROPERTY RIGHTS 130 DEFENSE AND PROTECTION OF MOTHER EARTH …. ENVIRONMENTAL SUSTAINABILITY AND FOREST DEVELOPMENT 131 BUILDING AND REBUILDING HUMAN VALUES IDENTIFYING WITH MOTHER EARTH 131 THE FOREST … LIFE 132 WOMEN AND THE ENVIRONMENT 133 SUSTAINABLE LAND MANAGEMENT (SLM) 133 PROTECTED AREAS 133 WATER CONSERVATION, COASTAL MANAGEMENT AND POLLUTION CONTROL 134 ENVIRONMENT-FRIENDLY PRODUCTION 137 ENVIRONMENTAL MANAGEMENT 137 GOVERNMENTAL POLICY FOR DEALING WITH DISASTERS 139 EARLY WARNING SYSTEMS (EWS) 139 TERRITORIAL ORGANIZATION AND PREPARATION (REGIONAL, DEPARTMENTAL, MUNICIPAL, AND LOCAL) 140 PERCENTAGE OF FAMILIES AFFECTED BY NATURAL DISASTERS THAT RECEIVED RELIEF 140 CARIBBEAN COAST DEVELOPMENT STRATEGY 142 IMPLEMENTATION, MONITORING AND EVALUATION 145 THE NATIONAL PLANNING, INVESTMENT, BUDGET, AND COOPERATION SYSTEM 145 MONITORING AND EVALUATION 146 STRENGTHENING THE NATIONAL STATISTICS SYSTEM 146 TECHNICAL PROGRESS REPORT ON NATIONAL HUMAN DEVELOPMENT PLAN AS OF 2010……………… 5 GOVERNMENT OF RECONCILIATION AND NATIONAL UNITY……………………………………September 12, 2011 ANNEX 1: MACROECONOMIC STATISTICS 148 ANNEX 2: THE NHDP STRATEGY MATRIX AND GOALS ACHIEVED 162 ANNEX 3: ABBREVIATIONS AND ACRONYMS 167 TECHNICAL PROGRESS REPORT ON NATIONAL HUMAN DEVELOPMENT PLAN AS OF 2010……………… 6 GOVERNMENT OF RECONCILIATION AND NATIONAL UNITY……………………………………September 12, 2011 EXECUTIVE SUMMARY REDUCING INEQUALITY AND POVERTY The operational goal of Nicaragua’s National Human Development Plan (NHDP) is economic growth with increased employment and reduced inequality and poverty. The results for 2007-2010 highlight a significant reduction in inequality among Nicaraguans based on better distribution of income and consumption as reflected in improved living conditions for the population, particularly among the poorest groups. This has been possible due to, among other factors, redistributive government policies with positive results, to economic recovery and positive economic growth in the midst of a world financial and economic crisis, and to a climate of confidence that has led to greater levels of social cohesion and national alliances lending stability to productive development and increasing investment, which have led to a reduction in poverty. Nicaragua ranks second in Latin America in terms of the reduction in inequality (Venezuela is the leader), achieving a minus 9.8 percent upon reducing the income GINI coefficient from 0.51 in 2005 to 0.46 in 2009. This improvement is significant considering that between 2005 and 2009 Nicaragua grew at an average annual rate of 1.69 percent, less than the 2.77 percent growth rate for Latin America as a whole and considering that this improvement occurs in a period of profound global economic, social, and environmental crisis. As a result, in 2009 compared to 2005, Nicaragua has achieved reduction of 5.8 percentage points in general poverty and 2.6 percentage points in extreme poverty, according to the National Household Living Standards Survey (EMNV). The survey shows that general poverty at the national level measured on the basis of consumption fell from 48.3 percent to 42.5 percent between 2005 and 2009, and extreme poverty fell from 17.2 percent to 14.6 percent during the same period. In relative terms, the great challenge continues to be reducing poverty in rural areas. Extreme poverty in the rural area is approximately five times higher than the urban area and general poverty in the rural area is twice that of the urban area. However,
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