The operational goal of Nicaragua’s National Human Development Plan (NHDP) is economic growth with increased employment and reduced inequality and poverty. The results for 2007-2010 highlight a significant reduction in inequality among Nicaraguans based on better distribution of income and consumption as reflected in improved living conditions for the population, particularly among the poorest groups. This has been possible due to, among other factors, redistributive government policies with positive results, to economic recovery and positive economic growth in the midst of a world financial and economic crisis, and to a climate of confidence that has led to greater levels of social cohesion and national alliances lending stability to productive development
and increasing investment, which have led to a reduction in poverty.
and increasing investment, which have led to a reduction in poverty.
Nicaragua ranks second in Latin America in terms of the reduction in inequality (Venezuela is the leader), achieving a minus 9.8 percent upon reducing the income GINI coefficient from 0.51 in 2005 to 0.46 in 2009. This improvement is significant considering that between 2005 and 2009 Nicaragua grew at an average annual rate of 1.69 percent, less than the 2.77 percent growth rate for Latin America as a whole and considering that this improvement occurs in a period of profound global economic, social, and environmental crisis.
As a result, in 2009 compared to 2005, Nicaragua has achieved reduction of 5.8 percentage points in general poverty and 2.6 percentage points in extreme poverty, according to the National Household Living Standards Survey (EMNV). The survey shows that general poverty at the national level measured on the basis of consumption fell from 48.3 percent to 42.5 percent between 2005 and 2009, and extreme poverty fell from 17.2 percent to 14.6 percent during the same period. In relative terms, the great challenge continues to be reducing poverty in rural areas. Extreme poverty in the rural area is approximately five times higher than the urban area and general poverty in the rural area is twice that of the urban area. However, while general poverty in rural areas fell by 7.0 percentage points, urban general poverty fell by 4.1 points. While extreme rural poverty fell by 3.9 percentage points, extreme urban poverty fell by 1.1 points. Thus, the greatest reduction is being achieved in rural areas where the most profound and severe poverty exists.
The reduction in poverty measured on the basis of income (according to the International Poverty Line) is also significant. In 2009, 5.5 percent of the Nicaraguan population consumed US$1.25 or less per day (less than half the 11.2 percent in 2005); a reduction of 5.7 percentage points. Twentyone percent survived on consumption of US$2.00 or less, a reduction of 10.6 percentage points compared to 31.6 percent in 2005. The results by area of residence show that the reduction in the percentage of people surviving on less than US$1.25 per day was 2.3 and 9.8 percentage points for urban and rural areas, respectively, while for those living on US$2.00 per day the reduction was 6.1 and 15.7 percentage points, respectively. Again, the reduction is more significant in rural areas, indicating that targeted social programs are yielding positive results.
Poverty Reduction Strategy Papers (PRSPs) are prepared by member countries in broad consultation with stakeholders and development partners, including the staffs of the World Bank and the IMF.Updated every three years with annual progress reports, they describe the country’s macroeconomic, structural, and social policies in support of growth and poverty reduction, as well as associated external financing needs and major sources of financing. This country document for Nicaragua, dated September 2011, is being made available on the IMF website by agreement with the member country as a service to users of the IMF website. The views expressed in this document are those of the staff team and do not necessarily reflect the views of the government of Nicaragua or the Executive Board of the IMF. © 2011 International Monetary Fund November 2011. IMF Country Report No. 11/323, IMF.November 14, 2011. Country Report No. 11/323. Nicaragua
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