Via IMF (Den Internationale Valutafond)

IMF Executive Board Approves US$185.32 million in Emergency Support to Nicaragua to Address the COVID-19 Pandemic







November 20, 2020











  • The IMF Executive Board approved today Nicaragua’s request for emergency financial assistance of US$185.32 million to help the country meet urgent balance of payments needs stemming from the COVID-19 pandemic.
  • Emergency financing will be used to accommodate urgently needed health related and social spending.
  • The authorities will transfer one half of the emergency funds to the United Nations Office for Project Services (UNOPS) and the World Food Programme (WFP) that will assist with the transparent execution of targeted expenditure.

Washington, DC:
The Executive Board of the International Monetary Fund (IMF) today approved
Nicaragua’s request for emergency financial assistance for a total amount
of about US$185.32 million to help the country meet urgent balance of
payment needs stemming from the COVID-19 pandemic. This assistance is
provided under two instruments: the Rapid Credit Facility (RCF) equivalent
to SDR 43.33 million (about US$61.77 million, or 16.7 percent of quota),
and the Rapid Financing Instrument (RFI) equivalent to SDR 86.67 million
(about US$123.55 million or 33.3 percent of quota).

The pandemic comes on top of a two-year recession in Nicaragua. Faced with
sharply lower revenues and a severe tightening in available financing, the
COVID-19 crisis has added severe strains to an already weak macroeconomic
outlook. To alleviate the impact on the most vulnerable, the authorities
are scaling up public health expenditure and social assistance.

The RCF/RFI financing would help to address urgent balance of payments
needs, provide resources to strengthen the health system and support the
population most affected by the pandemic, preserve fiscal space and
catalyze other concessional financing. Once the crisis abates, the
authorities intend to implement fiscal measures to ensure debt
sustainability and structural reforms to promote inclusive growth.

The authorities have taken important actions to enhance fiscal
transparency, especially related to COVID-19 spending. The Ministry of
Finance has begun to publish the details of all COVID-19 related spending
and of all public procurement contracts on its website. All COVID-19
related spending will be subject to an independent external audit within a
year. The government has also sought the assistance of the United Nations
Office for Project Services (UNOPS) and the World Food Programme (WFP) for
the execution of emergency spending. The authorities have committed to
transfer one half of the emergency funds received from the IMF to both
agencies. The UNOPS will assist with the execution of health care spending,
while the WFP will implement an emergency agricultural-support program to
ensure adequate food supply.

Following the Executive Board’s discussion on Nicaragua, Mitsuhiro
Furusawa, Deputy Managing Director and Acting Chair, issued the following
statement:

“The COVID-19 pandemic is exacerbating existing economic challenges,
creating additional urgent fiscal and balance of payments needs. The IMF’s emergency financing under the Rapid
Credit Facility and Rapid Financing Instrument will help address the
balance of payments need while financing increased health and social
spending. It will also catalyze further assistance from other multilateral
institutions, critical to close the remaining financing gap and ease the
adjustment burden.

“A widening of the budget deficit this year to preserve public health and
contain the economic impact of the pandemic is appropriate. Continued
commitment to enhance transparency in public spending and ensure the good
use of emergency financing remains important. The authorities are committed
to safeguard medium-term debt sustainability and rebuild buffers once the
pandemic abates.

“To facilitate the recovery and counter future shocks, the authorities
intend to maintain the accommodative monetary policy stance and safeguard
the stability of the financial system. They are committed to making
continued efforts to undertake structural reforms over the medium term,
including strengthening governance and transparency, and tackling
corruption.”


IMF Communications Department
MEDIA RELATIONS

PRESS OFFICER: Maria Candia

Phone: +1 202 623-7100Email: MEDIA@IMF.org

@IMFSpokesperson








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