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International Monetary Fund. Western Hemisphere Dept.
This 2019 Article IV Consultation discusses that structural reforms, strengthened policy frameworks and the ongoing smooth political transition have laid the foundations for sustained growth in El Salvador. The discussions focused on policies that build on these achievements and address fiscal vulnerabilities, boost long-term growth, and strengthen the governance, anticorruption and Anti-Money Laundering and Combating the Financing of Terrorism frameworks. Continued US dollar appreciation led to a significant decline in inflation and widening of the current account deficit. The authorities agreed that debt would continue to drift upward in the absence of measures, and that weaker-than-expected global growth could have a negative impact on the domestic economy. The authorities emphasized their commitment to guarantee a smooth political transition by sharing information with the new administration and by inviting the Audit Office to oversee the handover process. It is recommended to improve the governance and anticorruption frameworks by increasing the fiscal transparency of the 2020 budget laws, strengthening audit and spending controls, and promptly implementing electronic invoicing.
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper analyzes Nicaragua’s social security system, which is projected to run out of liquid reserves by 2019, several years earlier than anticipated. To avoid burdening the budget, reforms to the system are urgently needed. A deep actuarial, economic, and operational analysis is needed to design a comprehensive reform program. Such a program must ensure that the defined-benefit, pay-as-you-go system can sustain itself for another generation of workers and that improved health care benefits can be maintained. A politically acceptable, pragmatic solution appears within reach. However, the authorities should act quickly to avoid a costly bailout of the system.
International Monetary Fund. Western Hemisphere Dept.
This 2017 Article IV Consultation highlights Nicaragua’s robust macroeconomic performance in 2016. Real GDP grew by 4.7 percent in 2016, supported by strong domestic demand, while inflation remained subdued at 3.1 percent as of the end of 2016, owing largely to the contribution of food prices. The current account deficit for 2016 is estimated to have narrowed to 8.6 percent of GDP, compared with 9 percent in 2015. This consolidation is largely explained by maquila exports, which have been better captured owing to improvements in statistical compilation. The current account deficit remained financed by foreign direct investment and other long-term inflows.
International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper examines opportunities and challenges for growth in Haiti. Achieving a sustained increase in living standards in Haiti will require deep-seated reforms across a range of areas. Diversifying the export base is needed to cushion the impact of severe shocks that have reduced per capita income and prevented a sustained increase in the capital stock. Integration into global-value chains would also allow Haiti to take advantage of its proximity to the U.S. market and favorable trade preferences to generate employment, spur the creation of human capital, and allow Haiti to begin climbing the value added chain.
International Monetary Fund. Western Hemisphere Dept.
This 2013 Article IV Consultation highlights that during the past two years, macroeconomic developments in Nicaragua have been generally favorable. Real GDP grew by an average of 5¼ percent during 2011–2012, and the annual average inflation was 7¼ percent during the same period. Looking ahead, the macroeconomic outlook also remains broadly positive. Real GDP is expected to grow by 4¼ percent in 2013 and then stabilize at its potential level of 4 percent over the medium-term. Inflation is projected to remain at about 7 percent supported by the crawling-peg exchange rate system that has helped anchor inflation expectations.
International Monetary Fund
The paper is an elaborated report on Nicaragua’s potential economic growth. The challenges and idiosyncratic shocks were immense but the policies of better education, labor contracts, and accomplishments in public investments paved the way for movement of the economy. The external competitiveness and exchange rate assessment also have an important hand. The achievements in the electricity sector and the improvement in reforming the pension system are the prominent aspects. On the whole, the Board considers this growth as a positive trial of development in the global panorama.
International Monetary Fund
This paper is a report of Nicaragua’s performance under the 2007–11 program. The period was marked by a stern financial crisis, price shocks, and disasters, but the program maintained the macroeconomic stability. Although the program had several hurdles, its achievements were remarkable—approval of tax reforms, improvements in banks' framework, power and electricity framework, dwindled poverty rate, and strong foreign relations. Overall, the Board is in high spirits in the triumph of the program in a critical situation though it had some flaws.
International Monetary Fund
This paper reports on progress made on Nicaragua’s National Human Development Plan as of 2010. The operational goal for Nicaragua’s National Human Development Plan is economic growth with increased employment and reduced inequality and poverty. The results for 2007–10 highlight a significant reduction in inequality among Nicaraguans based on better distribution of income and consumption. This has been possible owing to redistributive government policies with positive results, economic recovery, and positive economic growth in the midst of a world financial and economic crisis.