Nicaragua - Poverty Assessment : Volume 3. Background Paper

Abstract

Nicaragua is a small, open economy that
 is vulnerable to external and natural shocks. With an
 estimated Gross National Income (GNI) per capita of US$1000
 in 2006, and a total population of 5.2 million, it is one of
 the poorest countries in Latin America. Forty six percent of
 the population lived below the poverty line in 2005 (while
 15 percent lived in extreme poverty), and the incidence of
 poverty is more than twice as high in rural areas (68
 percent) than in urban areas (29 percent). Nicaragua's
 social indicators also rank among the lowest in the region,
 commensurate with its relatively low per capita income
 level. Nicaragua's long-term development vision is set
 out in its National Development Plan (NDP), 2005-2009, which
 gives greater importance to economic growth than the
 strategy document that preceded it. This also serves as its
 second Poverty Reduction Strategy (PRS). The goals of the
 PRS incorporate the MDGs, and establish medium (2006-2010)
 to long term targets (2015). By 2005, the country had made
 satisfactory progress on meeting the PRS/MDG targets for
 reducing extreme poverty, increasing net primary enrollment,
 and reducing infant and child mortality. This National
 Development Plan is being revised by the new government that
 took office on January 2007, which has expressed interest in
 maintaining policy continuity in those areas that have shown
 progress and tackling pending development challenges. These
 include efforts to improve the country's growth
 performance while reducing poverty, macroeconomic stability
 as a necessary, although not sufficient, condition to
 stimulate growth, and reduce poverty, a special focus on
 social issues that impact the poorest, including the MDGs,
 and environmental sustainability. Programmatic priorities
 for the new administration include a renewed focus on
 poverty reduction using a multi-sector approach,
 implementing pragmatic solutions to the energy crisis for
 the short to medium term; expanding water and sanitation
 services with environmentally sustainable solutions; sharing
 economic growth more broadly to tackle hunger, malnutrition
 and poverty; placing greater emphasis on preventive health
 and continuing social protection programs; extending
 illiteracy programs and improving education services, and
 pursuing municipal decentralization, state modernization,
 and good governance.