IMF Mission in Nicaragua

Nicaragua Network Hotline, 18 March 2002

Last week Nicaragua was host to officials of the International Monetary Fund (IMF), the World Bank and the Inter-American Development Bank (IDB), on a trip set up to evaluate Nicaragua's compliance with structural adjustment programs (known as ESAFs). Nicaragua has been under IMF-imposed structural adjustment programs for the last decade. The programs, which have come under increasing criticism even in mainstream economic circles because, as one economist said, They don't work, have led to increased unemployment, hunger, illiteracy and ill health for Nicaragua's poor majorities. Officials of the international financial institutions will spend several days in the country to define with Nicaraguan government officials the country's program for poverty reduction and growth, which is the new euphemism for structural adjustment. Mario Alonso, president of the Central Bank, said that the representatives of the IMF, which is the organization that works most closely with Nicaragua, will stay in the country until March 27th and during the coming days will work with the Bank and other government officials to lay out the country's economic plan for the next few years.

Alonso said that on December 31, 2001, the IMF Temporary Monitoring Program that the country was under came to an end. Nicaragua, he said, now enters into another period of negotiations for a new agreement. He noted that the Aleman administration took 15 months to work out the terms of the last ESAF, but the Bolaqos government expects to complete discussions in much less time.

In related news, Roger Solorzano, president of the government-owned water company ENACAL, declared that the 3.5% rise in water prices should have taken place in January, according to agreements signed with the international financial institutions. He added that the price hike has not been put into effect because the regulatory agency, the Institute for Water and Sewage (INAA) has not approved it. Solorzano said that the IMF mission that arrived in the country on March 11, will ask about that, I am sure. He added that it is possible that there might be negotiations about dispensing with the IMF requirement that water prices must go up.

Meanwhile, Alejandro Fiallos, secretary of communications for ENACAL, when asked about the expected hike in water prices, stated, From the beginning, the president said that he didn't want any type of increase in charges for any of the public services, and the government is doing all that it can to prevent this from happening. When asked about the rise in electricity prices on the part of the Spanish-owned electric company Union Fenosa, Fiallos said that talks with the company were on-going and that there has not yet been a final decision on the subject.

Solorzano was asked about the unpaid debt that ENACAL had with Union Fenosa to power water-pumping stations that resulted in a water cut-off for several cities. He said that C$9.4 million cordobas had been paid and the service had been reconnected.