The Inter-American Development Bank’s Board of Executive Directors has approved full debt relief benefits for Nicaragua under the enhanced initiative for Heavily Indebted Poor Countries (HIPC), the IDB announced today.
As Nicaragua’s leading source of multilateral financing, the IDB will provide irrevocable debt relief of $727 million ($391.2 million in net present values) for 2001-2019, one of the largest contributions among international financial institutions.
The IDB’s support adds to relief granted by the International Monetary Fund and the World Bank, whose boards determined in January that Nicaragua had reached HIPC’s “completion point”. The Central American Bank for Economic Integration is also taking part in the debt relief initiative.
As a member of the international community, the IDB expects this relief of Nicaragua’s financial burden will help the country strengthen the economic stability achieved in recent years, encourage sustainable and inclusive growth and reduce poverty by focalizing public spending on the neediest groups of its population.
The IDB had been providing Nicaragua interim debt relief since 2001, supporting the country’s efforts to reach various HIPC goals, particularly in developing a social safety net for vulnerable social groups, modernizing its comptroller’s office and justice administration system, increasing transparency in public sector procurement and carrying out reforms in its pensions system and electricity sector.
The IDB has approved more than $450 million in soft loans to Nicaragua since the country reached HIPC’s “decision point” in December 2000, supporting various social programs in its poverty reduction strategy.