The Inter-American Development Bank today announced the approval of a $9 million soft loan to Nicaragua to support the first phase of a $32.2 million program to provide a social safety net to the country’s poorest population.
The project, to be carried out on a pilot basis in its first phase, promotes integrated poverty reduction activities, focused on the household, that include training, nourishment, incentives for school attendance, health advocacy, and reduction of preventable diseases. The IDB is expected to provide $20 million in concessional financing for the second phase.
The program is part of Nicaragua’s response to the aftermath of the devastation of Hurricane Mitch, which demonstrated the vulnerability of the poorest sectors of the country to natural disasters.
Components of the program include a food subsidy, support for nutritional and health training for families, immunization, and growth monitoring for children under 5 years of age.
An education subsidy will be granted for families with children in grades 1 to 4, providing children with shoes, clothing, basic school supplies, and resources for educational materials.
The program will be executed by the Nicaragua Emergency Social Investment Fund,* which will be strengthened to ensure the success of the program.
The total cost of the first phase of project is $10 million. 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 total $1 million.