The International Monetary Fund yesterday approved a three-year, $173-million loan to support ongoing reforms in the Nicaraguan economy.
About $29 million will be available immediately, according to the IMF.
The funds will be extended from the IMF's Enhanced Structural Adjustment Facility (ESAF), which provides highly concessional loans to the world's poorest countries undergoing fund-approved reform programs.
ESAF loans carry an interest rate of 0.5 percent and are repayable over ten years, with a 5.5 year grace period.
Structural adjustment programs implemented by the government of President Violeta Chamorro have been strongly assailed by many non-governmental organizations (NGOs) both in Nicaragua and the United States.
They argue that the reforms have actually brought about a deterioration in the country's social conditions, which were already in deep trouble as a result of the eight-year war between the Sandinista government and U.S.-backed contra rebels.
Earlier this month, some 40 U.S. groups, from the Minneapolis-based Institute for Agriculture Trade and Policy, to the Washington-based Justice and Peace Office of the Maryknoll Society, complained that current plan lacks "sufficient emphasis on production or the generation of jobs."
It also pleaded for substantial debt relief. Nicaragua's debt now stands at $12 billion, the equivalent of 50 years of export earnings.
A recent report by the Managua-based Regional Coordinating Council of Economic and Social Investigation (CRIES) noted that the service on the medium and long-term external debt to be paid this year will come to $238 million, of which $150 million will go to multilateral banks.
The new loan will only intensify the problem, according to CRIES, because it will be tied to policies that will open the country to imports and encourage speculation.
And most of the loan will be used to repay debt owed to the World Bank and the Inter-American Development Bank, agencies which are just a few blocks from the IMF itself.
The Fund, however, insisted that new program should help Nicaragua achieve real growth in the country's gross domestic product of two percent in 1994 and three percent in 1995. It says inflation should come down from about 20 percent last year to ten percent in 1994 and eight percent in 1995.IPS-Inter Press Service
