Nicaragua: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Nicaragua

International Monetary Fund

No 2025/040, IMF Staff Country Reports from International Monetary Fund

Abstract: The 2024 Article IV Consultation discusses that Nicaragua’s economic performance remains robust, underpinned by prudent macroeconomic policies and very strong remittance flows. The economy remains open and resilient, after confronting multiple large shocks, and on a backdrop of transfers of private property to the state, international sanctions, and reorientation of official financing. Going forward, domestic and international political developments may impact economic performance, by potentially increasing the cost of doing business and impacting other cross-border flows. Fiscal and current account surpluses are expected to narrow, due to authorities’ plans to increase public investment, and the increase in imports supporting the private consumption-led growth. Risks to the outlook are broadly balanced in the short-term and on the downside in the medium term. Continued prudent fiscal, monetary, and financial policies will help maintain macroeconomic and financial stability, preserve fiscal sustainability, strengthen policy buffers, and support medium-term inclusive growth. Policy coordination remains crucial, alongside key reforms, including reforming the pension system, strengthening the monetary policy transmission mechanism, enhancing financial deepening, and supporting human and physical capital accumulation.

Keywords: update safeguard assessment; transmission mechanism; Policy coordination; safeguards recommendation; tax audit procedure; exports threshold; authority of the BCN; headline inflation; Public sector; Financial sector stability; Global; Central America; Caribbean (search for similar items in EconPapers)
Pages: 129
Date: 2025-02-07
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