A recent International Monetary Fund (IMF) mission to Nicaragua concluded with a statement highlighting the country's economic performance and outlook. The IMF team, led by Ms. Alina Carare, visited Managua from November 11-22 as part of the 2024 Article IV Consultation. During their visit, they met with Central Bank President Ovidio Reyes, Deputy Finance Minister Adrian Chavarria, other senior officials, and representatives from banks and the international community.
The IMF staff noted that Nicaragua is experiencing strong economic growth due to prudent macroeconomic policies and significant remittance flows. "Real GDP grew by 4½ percent in 2023 and the first half of 2024," they stated. Despite these positive indicators, the poverty rate remains above the regional average.
Looking forward, public investment is expected to drive growth in 2025; however, real GDP growth may moderate to around 3.5 percent over the medium term due to factors like reduced labor contributions from emigration and cautious private investment decisions. Risks include lower global growth and potential changes in U.S. immigration policies.
The mission praised Nicaragua's efforts towards fiscal sustainability while supporting medium-term growth initiatives such as improving tax administration and increasing public investment. They also emphasized enhancing fiscal transparency to minimize risks associated with public enterprises.
On monetary policy, the IMF acknowledged that "the current policy mix is appropriate" but recommended improved communication to strengthen monetary transmission mechanisms. Financial stability remains crucial, with recommendations for continued monitoring of distressed assets and aligning crisis preparedness frameworks with international standards.
In terms of governance reforms, progress has been made in anti-corruption measures; however, further steps are needed to align practices with international best standards. Additionally, improvements in judicial independence are necessary for boosting investor confidence.
Efforts are ongoing to enhance statistical data quality supported by technical assistance from the IMF. This includes improving national accounts' accuracy and timely publication of key statistics.
The findings will be compiled into a report for discussion by the IMF Executive Board early next year.