Publication: Poverty Reduction Support Credits: Nicaragua Country Study
Loading...
Published
2010-09
ISSN
Date
2017-08-17
Author(s)
Editor(s)
Abstract
Nicaragua's state domination of productive capacity from the late 1970s to 1990, coupled with the civil war of the 1980s, left the economy with hyperinflation, large fiscal and current account deficits, and an external debt that was six times gross domestic product. As a result, economic activity declined at a sharp rate. By 1993, per capita income had fallen by a full 60 percent from the 1977 level. By the early 1990s the country was receiving aid equivalent to more than 70 percent of Gross Domestic Product (GDP). Subsequent administrations tried to address the country's economic problems through fiscal and monetary discipline and market-oriented reforms to redefine the role of the state. There were some successes, for example, decisive government action reduced inflation to around 10 percent by 1995, but many reforms failed due to their slow pace and to continued political volatility. The Bank supported the reform agenda with two economic recovery credit operations in the early 1990s. The results were less positive than expected, as the government's capacity to privatize state-owned enterprises and otherwise reform the public sector wavered in the face of political instability. The lack of political consensus prompted the Bank to withdraw from structural adjustment lending for several years. An opening for re-engagement was provided in 2002 when, after several failed attempts, Nicaragua successfully implemented the International Monetary Fund's (IMF) Poverty Reduction and Growth Facility (PRGF). This allowed the Bank to respond to the government's request for assistance to close a financing gap through fast disbursing budget support in the form of a programmatic structural adjustment credit. While technically a structural adjustment loan, the credit supported objectives based on budget-based goals already attained in implementing a Poverty Reduction Strategy Paper (PRSP), which had been prepared by the government in 2001. In this sense, the credit was the last structural adjustment loan and the precursor to the Poverty Reduction Support Credits (PRSCs).
Link to Data Set
Citation
“Hinds, Manuel. 2010. Poverty Reduction Support Credits: Nicaragua Country Study. IEG Working Paper;2010/8. © World Bank. http://hdl.handle.net/10986/27915 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication Republic of Tajikistan : Evaluation of the Poverty Reduction Strategy Paper Process and Arrangements Under the Poverty Reduction and Growth Facility(Washington, DC, 2004-07-06)The International Monetary Fund (IMF) and the World Bank introduced the Poverty Reduction Strategy Paper (PRSP) process in 1999 to strengthen the poverty alleviation focus of their assistance to low-income countries. This report reviews Tajikistan s experience with the PRSP process, focusing on the effectiveness of IMF and World Bank support to the process and the extent to which the two institutions lending and non-lending activities in the country are aligned to the objectives of the PRSP approach. The rest of the report is organized as follows. Part two provides brief background accounts of political and economic developments since independence in 1991, including poverty incidence in the late 1990s. The relevance of the PRSP approach, application of the underlying principles, and preliminary evidence on results, are examined in part three. Part four considers the effectiveness of World Bank support, including alignment of that support to the objectives of the PRSP approach. The effectiveness of IMF support, including alignment of programs supported under the Poverty Reduction and Growth Facility (PRGF) and its predecessor, the Enhanced Structural Adjustment Facility (ESAF), to PRSP objectives, is assessed in part five. Part six reviews IMF-World Bank collaboration, include the Joint Staff Assessments (JSA) of the PRSP and of collaboration on country operations. Part seven presents main conclusions and lessons.Publication Republic of Mozambique : Evaluation of the Poverty Reduction Strategy Paper Process and Arrangements Under the Poverty Reduction and Growth Facility(Washington, DC, 2004-07-06)The International Monetary Fund (IMF) and the World Bank introduced the Poverty Reduction Strategy Paper (PRSP) process in 1999 to strengthen the poverty alleviation focus of their assistance to low-income countries. At the IMF, the introduction of the PRSP was accompanied by the transformation of the Enhanced Structural Adjustment Facility (ESAF), the concessional lending window, into the Poverty Reduction and Growth Facility (PRGF), with a view to giving a more central role to poverty reduction and pro-poor growth considerations in the design of IMF-supported programs in low-income countries. The rest of the report is organized as follows. Part two provides background information on poverty incidence in Mozambique, as well as on political and economic developments since the early 1990s. The relevance of the PRSP approach to Mozambique s situation, application of the underlying principles, and preliminary evidence on results, are examined in part three. The effectiveness of IMF assistance, including alignment of the PRGF and technical assistance to PRSP objectives is assessed in part four. Part five considers the effectiveness of World Bank support, also including alignment of that support to the objectives of the PRSP approach. Part six reviews IMF-World Bank collaboration in relation to the PRSP process, and part seven presents the main conclusions and lessons.Publication Poverty Reduction Support Credits(Washington, DC: World Bank, 2010-09)Vietnam, a one-party socialist state dominated by the Communist Party of Vietnam, has in recent years moved towards a pragmatic growth-oriented approach to economic policy. Early reform measures in 1986 with the doi moi, or new way, introduced a series of market-oriented reforms in industry and trade, as well as agriculture. The collapse of the Soviet Union in 1989 hastened the pace of reform, as the authorities intensified monetary, banking, and structural reforms and set the stage for substantial trade and investment liberalization, and as Vietnam's arrears with the International Monetary Fund (IMF) were settled in 1993. Key lessons that emerge from the Vietnam study include: a) the Poverty Reduction Support Credit (PRSC) process is strengthened through rigorous analytic underpinnings (for example, Vietnam development reports, public expenditure reviews, and other analytical and advisory services) that provide a shared vision of the development agenda and a menu of policy actions linked to the thematic pillars of the poverty reduction strategy; b) even in a context of high government commitment, fostering a connection to an external anchor (such as world trade organization accession) can help maintain momentum in the PRSC process and reform generally; c) PRSCs can function as an effective complement to, and catalyst for, sector operations including the development of sector-wide approaches and sector budget support; and d) with large numbers of international and government participants, it becomes increasingly important for both Government and the Bank that responsibilities for coordinating inputs and consultation and maintaining a policy overview be closely linked, defined, and adequately funded.Publication How Research Can Assist Policy : The Case of Economic Reforms in Uganda(World Bank, 2002-09-01)Research has had a powerful impact on policy in Uganda, affecting the climate of opinion, improving the quality of the policy debate, and helping focus public policy and intervention on poverty reduction. Uganda s successful use of knowledge and research to help set public policy priorities demonstrates that even a poor post conflict country can, in a relatively short period of time, create an effective information base and feedback mechanisms for decision making.Publication Poverty Reduction Support Credits(Washington, DC: World Bank, 2010)Armenia gained its independence from the Soviet Union in 1991 and inherited a traditional Soviet- style command economy. After a period of hyperinflation and economic contractions, progress on basic reforms led to greater macroeconomic stability. The reform effort strengthened after 2000, aided by return flows of investment from the diaspora. Recognized for its prudent fiscal management and improved business environment, Armenia received a Rehabilitation Credit (RC) from the World Bank in 1995 and a series of five Structural Adjustment Credits(SACs) from 1996-2003 to maintain stability, accelerate growth, and sustain reform. The PRSC program in Armenia centered on four main themes that supported Armenia's poverty- reduction objectives: i) consolidating macroeconomic discipline and strengthening governance;ii) sharpening competition and entrenching property rights; iii) mitigating social and environmental risks; and iv) modernizing the rural economy. The PRSC also identified good governance and reduction of corruption as essential to achieving pro-poor growth. Furthermore, reforms implemented under the PRSC were intended to make the social sectors more efficient, raise the quality of services, and increase access for the poor.
Users also downloaded
Showing related downloaded files
Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication Morocco Economic Update, Winter 2025(Washington, DC: World Bank, 2025-04-03)Despite the drought causing a modest deceleration of overall GDP growth to 3.2 percent, the Moroccan economy has exhibited some encouraging trends in 2024. Non-agricultural growth has accelerated to an estimated 3.8 percent, driven by a revitalized industrial sector and a rebound in gross capital formation. Inflation has dropped below 1 percent, allowing Bank al-Maghrib to begin easing its monetary policy. While rural labor markets remain depressed, the economy has added close to 162,000 jobs in urban areas. Morocco’s external position remains strong overall, with a moderate current account deficit largely financed by growing foreign direct investment inflows, underpinned by solid investor confidence indicators. Despite significant spending pressures, the debt-to-GDP ratio is slowly declining.Publication Digital Africa(Washington, DC: World Bank, 2023-03-13)All African countries need better and more jobs for their growing populations. "Digital Africa: Technological Transformation for Jobs" shows that broader use of productivity-enhancing, digital technologies by enterprises and households is imperative to generate such jobs, including for lower-skilled people. At the same time, it can support not only countries’ short-term objective of postpandemic economic recovery but also their vision of economic transformation with more inclusive growth. These outcomes are not automatic, however. Mobile internet availability has increased throughout the continent in recent years, but Africa’s uptake gap is the highest in the world. Areas with at least 3G mobile internet service now cover 84 percent of Africa’s population, but only 22 percent uses such services. And the average African business lags in the use of smartphones and computers as well as more sophisticated digital technologies that catalyze further productivity gains. Two issues explain the usage gap: affordability of these new technologies and willingness to use them. For the 40 percent of Africans below the extreme poverty line, mobile data plans alone would cost one-third of their incomes—in addition to the price of access devices, apps, and electricity. Data plans for small- and medium-size businesses are also more expensive than in other regions. Moreover, shortcomings in the quality of internet services—and in the supply of attractive, skills-appropriate apps that promote entrepreneurship and raise earnings—dampen people’s willingness to use them. For those countries already using these technologies, the development payoffs are significant. New empirical studies for this report add to the rapidly growing evidence that mobile internet availability directly raises enterprise productivity, increases jobs, and reduces poverty throughout Africa. To realize these and other benefits more widely, Africa’s countries must implement complementary and mutually reinforcing policies to strengthen both consumers’ ability to pay and willingness to use digital technologies. These interventions must prioritize productive use to generate large numbers of inclusive jobs in a region poised to benefit from a massive, youthful workforce—one projected to become the world’s largest by the end of this century.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Europe and Central Asia Economic Update, Spring 2025: Accelerating Growth through Entrepreneurship, Technology Adoption, and Innovation(Washington, DC: World Bank, 2025-04-23)Business dynamism and economic growth in Europe and Central Asia have weakened since the late 2000s, with productivity growth driven largely by resource reallocation between firms and sectors rather than innovation. To move up the value chain, countries need to facilitate technology adoption, stronger domestic competition, and firm-level innovation to build a more dynamic private sector. Governments should move beyond broad support for small- and medium-sized enterprises and focus on enabling the most productive firms to expand and compete globally. Strengthening competition policies, reducing the presence of state-owned enterprises, and ensuring fair market access are crucial. Limited availability of long-term financing and risk capital hinders firm growth and innovation. Economic disruptions are a shock in the short term, but they provide an opportunity for implementing enterprise and structural reforms, all of which are essential for creating better-paying jobs and helping countries in the region to achieve high-income status.