The Inter-American Development Bank today announced the approval of a $20 million soft loan to Nicaragua to support the second phase of a program to provide a social safety net to the country’s poorest population.
The project, which was launched on a pilot basis in 2000 with a $9 million IDB loan, focuses on households and promotes integrated poverty reduction and human capital accumulation activities.
The program is part of Nicaragua’s Strengthened Growth and Poverty Reduction Strategy, which has allowed the country to obtain benefits under the debt-relief initiative for Heavily Indebted Poor Countries (HIPC) supported by the IDB and other multilateral financial institutions.
During the second phase of this program, carried out by Nicaragua’s Family Ministry*, the social safety net will be expanded to benefit some 22,500 households. During the initial phase it reached 10,000 families.
“The social safety net’s targeting mechanisms, comprehensive actions and sound assessment and monitoring system all contributed to the success of the initial phase and the impact of the program,” said IDB project team leader Ferdinando Regalia.
The program’s services include nutrition and health training for families, expanded immunization coverage and childhood development and growth promotion. Families with children attending grades 1 to 4 receive scholarships and a subsidy to buy shoes, clothing and basic school supplies. The program also supports the improvement of educational materials in schools.
According to an evaluation of the first phase’s results, the program accomplished and, in some cases, surpassed many of its goals, including school enrollment, attendance and retention rates; childhood growth and development; nutrition; and immunization of children from indigent families.
The IDB loan from the Fund for Special Operations is for a 40-year term, with a 10-year grace period, at an annual interest rate of 1 percent during the grace period and 2 percent thereafter. Local counterpart funds will total $2.2 million in this phase.