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IDB will help Nicaragua improve public sector financial management

Nicaragua’s public sector will improve the efficiency and transparency of its public expenditure management and will modernize its processes and systems of financial administration with the help of a $10 million loan from the Inter-American Development Bank.

The resources will help to mobilize an additional $10 million from the World Bank and $2.4 million from the European Union to help implement a new model for public sector financial management.

Adoption of the Integrated Administrative and Financial Management System (SIGAF, after its Spanish initials) will halve the time required for preparing and publishing central government financial statements; reduce the cost of government purchases; expand public access to key fiscal information; and produce multiyear fiscal projections linked to budget and expenditure policies.

Through this system, all state organizations will be connected to the central communications network. This will make it possible to publish monthly data on budget execution on the Ministry of Finance website; this data is currently issued quarterly.

Likewise, the percentage of government disbursements processed electronically will increase from the current 2 percent of payments to suppliers and 29 percent of payroll tax payments to 80 percent of payments to suppliers and 40 percent of payroll tax payments.

In addition, the percentage of the country’s external public debt registered automatically in electronic form will increase from the present 5 percent to 100 percent.

The IDB financing consists of a $5 million concessional loan from the Fund for Special Operations for a 40-year term, with a 40-year grace period, and 0.25 percent interest; and a second $5 million loan from the Bank’s ordinary capital for a 30-year term with a 5½-year grace period.