Gov’t Turns to IMF to Help Close ‘09 Budget Deficit

May 29, 2009

MANAGUA – Scrambling to close its budget deficit after the European Budget Support group suspended financing due to concerns about the allegedly fraudulent municipal elections last November, the Sandinista government is turning to the International Monetary Fund (IMF) for help. Despite President Daniel Ortega’s earlier promised to rid Nicaragua of the IMF within five years, the Sandinista administration now appears increasingly dependent on the international lending institution, which sent a high-ranking mission to Managua last week to meet with administration officials as part of its long-delayed second and third revisions of government compliance.

Upon completion of the revisions, Nicaragua could be eligible in July for $35 million in loans. The government, however, insists it now needs “at least $60 million” in financing for 2009 – almost the same amount suspended by the European budget support group last year.

“Nicaragua is complying with all of its obligations,” said Central Bank President Antenor Rosales. “We need to increase the amount that Nicaragua receives in the context of the fight against poverty.”

The Nicaraguan administration is also going to discuss with the IMF its plan to emit $100 in treasury bonds to help close its widening budget gap.

The IMF, which had been waiting for several months for the Nicaraguan government to invite it for the second and third revisions, has not made any financial disbursements to Nicaragua since last year. (NT, April 17). IMF country director Humberto Arbulú told reporters in April that the IMF program is not suspended but cannot make additional financing available to Nicaragua because of its condition as a Heavily Indebted Poor Country (HIPC).

Meanwhile, the government also met this week with the countries of the Budget Support group to try to thaw aid.

–Tim Rogers

 

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