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The Inter-American Development Bank’s (IADB) board of executive directors has approved full debt relief benefits for Nicaragua under the enhanced initiative for heavily indebted poor countries (HIPC).

As Nicaragua’s leading source of multilateral financing, the IADB will provide irrevocable debt relief of US$727mn (US$391.2mn in net present values) for 2001-19, one of the largest contributions among international financial institutions.

The IADB’s support adds to relief granted by the IMF and the World Bank, whose boards determined in January that Nicaragua had reached HIPC’s “completion point”. The Central American Bank for Economic Integration (Cabei) is also taking part in the debt relief initiative.

As a member of the international community, the IADB 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 focalising public spending on the neediest groups of its population.

The IADB 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, modernising 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 IADB has approved more than US$450mn 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.