Envío Digital
Central American University - UCA  
  Number 197 | Diciembre 1997



The United Nations Hits the Nail on the Head

In October Nicaragua witness strange episode in the history of structural adjustment, an episode that reveals the nature of the present Liberal government. It also revealed the contradictions that are now vexing international institutions as they face the devastating social effects caused by the neoliberal model.

Nitlápan-Envío team

With only a couple of months to go before the end of the liberal government's first year in office, Nicaragua's population is still waiting for things to get better, though it is not clear when or if they will, or for whom.

The important property agreement between the government and the FSLN has not yet become law. Disputes over it gained ground in October and essential changes are foreseeable, though it is not clear which way they will lean and who will benefit from them.

The media speak daily of the lack of transparency and excessive latitude in administration decision-making. They denounce murky acts that are already consummated, reveal others that are underway or have been frustrated, and deliver frequent commentaries on proposals couched in legality but always geared to one illicit goal—the quick enrichment of a select group of public functionaries.

The Comptroller General's office is maintaining its lonely but worthy battle to control and even avoid all this, to guarantee transparent public management—in other words to instill a new cultural ethic and help it take hold. As the Liberals watch Comptroller General Augustín Jarquín's credibility continue to climb, they keep seeking new tactics in their still unsuccessful offensive to weaken its mechanisms and harass and break its chief personally. First they attempted to create a parallel organization under executive control and now are trying to economically strangle this government department in next year's budget.

In this tense setting, and in the framework of increasingly widespread impoverishment and social demoralization, Nicaraguans were jolted by an episode unprecedented in the nearly two decades of structural adjustment imposed on poor countries. This episode—a public dispute between the United Nations Development Program (UNDP) and the International Monetary Fund (IMF)—revealed the wedge that the negative social effects triggered by the globalizing economic model are driving between the international institutions.

The Signing of ESAF II

In December the Liberal government and the IMF will sign a second three-year agreement—known as ESAF (Enhanced Structural Adjustment Facility) II. The Chamorro government fell well short of fulfilling ESAF I by 1995. Talks between the government's economic team and the IMF negotiating team, which came to Nicaragua in October, have had a much lower profile than similar negotiations with the Chamorro government.

To break through this obvious secrecy, the National Assembly's Economic Commission demanded information about what was being decided from both Central Bank President Noel Ramírez and IMF delegation head Eliott Kalter. The commission got information, but opposition legislators remained skeptical. Conservative Party legislator Noel Vidaurre charged that "they're hiding the fine print from us" while his FSLN colleague Bayardo Arce commented that "no one is against reducing the foreign debt or collecting more taxes or making the state more efficient. The problem is how it will be done."

How ESAF Will Do It

Even before the new government took office, it knew what the IMF would require of it in the second agreement. Nonetheless, official rhetoric during the first months of this year was laced with declarations that the government would "sovereignly" resist any IMF conditioning. That message changed in August, when the agreement began to be referred to as a painful but inevitable sacrifice. Now, with the signing of the agreement only weeks away, the government is trying to present it as the only correct way to assure the well-being of the poor. With oft-repeated insistence that "we're in bad shape but going well," the government is promising the population that everything will be fine in two more years, if it will just cinch up its belt a bit more for now.

In essence, the ESAF commits the government to strict financial controls and to a sizable reduction in state spending for the next three years. The goal is to reduce the public deficit, which is 10% of the Gross Domestic Product today, to 4% at the end of the three years. To accomplish this, the government is being required to take several measures to complement increased tax collection. The first and most significant of these will be the "redimensioning" of the National Development Bank (BANADES) and sale of the state telecommunications company, ENITEL, in 1998.

If the government meets these conditions, it could receive up to $400 million a year in concessionary loans. For right now, the IMF has frozen or blocked all loans and donations until the government signs ESAF II.

Another advantage of signing is that, if the government does what it agrees to, Nicaragua will enter the 21st century in a position to benefit from an initiative that the 7 wealthiest countries have designed for the 41 poorest. This unprecedented program consists of the multilateral lending agencies, which have never pardoned debts owed to them, agreeing to cancel 80% of the total amount of the debts these 41 Highly Indebted Poor Countries (referred to as HIPCs) have with them. Almost all of the countries are in Africa, and only four are in Latin America: Nicaragua, Guyana, Honduras and Bolivia.

The Liberal government is not negotiating the essence of ESAF II with the IMF. It is tending to accept the design presented by the IMF, which is paying the salaries of the very government officials who are in the talks with the Fund's delegation.

ESAF: What's Clear and What's Not So Clear

One clear thing is that BANADES, which was driven virtually into bankruptcy, mainly by large producers allied to the Chamorro government, will shrink down to almost nothing. Not yet clear is how BANADES will then be able to attend to the small and medium agricultural producers who are the supposed beneficiaries of this redimensioning. The just will pay for the sins of the unjust.
Another clear thing is that public spending will be cut even more. The cuts will strangle municipal government, reduce public investment and cut back state employment. Not at all clear is whether the salaries of a group of hardly exemplary public servants will be touched. There are still many public employees, even with the continual layoffs over the past decade: 114,000, including army, police, teachers, health personnel and the whole government bureaucracy. The 10% that make up the "cream" of the bureaucracy are the only ones who can be considered well paid. Of that 10%, a few are the cherries on the cream, with salaries of well over $10,000 a month—more than their US counterparts earn—and with ostentatious privileges that are nothing short of criminal in such an impoverished country.

ESAF portends the layoff of thousands more state employees over the next three years, "so that private enterprise will absorb them," according to the official litany. But it makes no mention of imposing austerity on the cream and the cherries of the Liberal bureaucracy.

It is also totally clear that Nicaragua must reduce its foreign debt to become a viable nation. The debt negotiations in the past few years reduced the principal from over $11 billion to its current $5.7 billion total. While that seems impressive, it mainly represents the writing off of most of the principal owed to the former USSR and other Eastern European countries. Since not even interest payments were ever made on those debts anyway, they never really weighed on the economy, so canceling them freed up no resources for other objectives.

What does weigh heavily is the debt service (interest and other payments) on the debt that remains on the books. Nicaragua has already paid $220 million in interest this year, which is over 35% of the country's entire 1997 exports. With the signing of ESAF II, Nicaragua wants to get this debt service reduced from 40% of exports to 20% and assure that interest payments never exceed this percentage. All of that is clear, just as it is that Nicaragua will qualify for the HIPC initiative if it fulfills everything agreed to in ESAF for the next two years. Far less clear is what will happen after 80% of the debt principal is pardoned and debt service is set at 20% of exports. Given the country's conditions of poverty, even the payment that remains will still be onerous and the interest will continue to compound year after year.
Many things that will be signed are clear and many more are not. Least clear of all is the increase in poverty that the new ESAF could predictably bring to the already pauperized and thoroughly discouraged Nicaraguan population.

UNDP's Concerns About ESAF

Structural adjustment programs are always partial because they only adjust finances, not markets, and thus do not serve to democratize the economy. They are also implemented by governments that represent the interests of powerful minorities accustomed to acting with total leeway, which makes the adjustment a golden opportunity for those who should be public servants to become immensely wealthy and/or hook up their private businesses to transnational partners. These programs are thus making the middle classes poorer and the already poor even more impoverished. They concentrate the wealth, reduce opportunities and exclude ever larger parts of the population. This has been happening in all Latin American countries, without exception, for more than a decade. In Nicaragua it happened in the early 1990s with ESAF I. Alemán's government, which will now apply ESAF II, still uses a more socially conscious discourse than the technocratic one of its predecessor, the Chamorro government. Nonetheless, it has had the same practice of social exclusion in its first year; above all it has turned ostentatious squander and the political exclusion of its adversaries into two signals affirming its power.

In this context, Carmelo Angulo, coordinator of the United Nations System in Nicaragua and Resident Representative of the United Nations Development Program (UNDP), became worried about the terrible social consequences that ESAF II could have on the country's already critical situation. Speaking in the name of the UN System in Nicaragua as a whole, he expressed his concerns in a document he sent to his IMF colleagues now in the country, with copies to President Alemán, Alemán's advisers and several of his ministers. (We present it in its entirety below, our translation.)
The document's key idea is to encourage a new ESAF that is "not recessive but reactivating," which "incorporates into its goals not only financial objectives but others that take the social adjustment into account." In this quest he proposes that the Nicaraguan government make a "maximum effort"—jointly with the international community—"to work toward achieving sustainable human development in a framework of the full exercise of Human Rights." This, Angulo suggests, would be accomplished through "the application of an integral economic and social program that promotes a better distribution of national income and generates greater opportunities for all individuals." Among the specific points suggested to achieve these ends, the document strongly advocates incorporating the excluded populations into integral productive programs, eschewing social compensation packages for them.

Nicaragua on the Poverty Scale

With the change of government and end of the war in 1990, Nicaragua began to fall deeper into the hole of poverty. On the UNDP's world poverty scale, it dropped from 89th place in 1990 to 127th today, out of all the 175 countries on the planet. On that same scale, Canada occupies first place and Sierra Leone last.

With the exception of Costa Rica, which occupies 33rd place, El Salvador, Honduras, Guatemala and Nicaragua vie for lowest place within Central America with respect to poverty: 112, 116, 117 and 127, respectively. All four are far below Panama, at 45, and even Belize, at 63. In all of Latin America and the Caribbean, only Haiti is lower than Nicaragua.

The UNDP Human Development Index takes into account various indicators: life expectancy at birth, nutritional state, per-capita income and education level. According to the 1997 Index, 13.6% of Nicaraguans will not live beyond 40 years, 17% have no access to any health service whatever, 34% cannot read or write, 47% have no access to potable water, 51% do not reach fifth grade and five children on average die every day from malnutrition and curable illnesses.

One of the most hard-hitting data is that 44 of every 100 Nicaraguans try to survive on no more than the equivalent of a dollar a day. This figure, naturally, is an average. In reality, which is always worse than statistics, an extremely high percentage of Nicaraguans would be happy if at least they had that dollar—just a fraction under 10 córdobas—every day of the year.

In presenting the Human Development Index this year, Carmelo Angulo cited the efforts made and the progress achieved by Nicaragua in education and health during the 1980s as the reason why some of Nicaragua's indices look better than those of its impoverished neighbors. For example, 60% of El Salvador's population and 43% of Guatemala's have no access to any health service. At 160 per 100,000 births, the maternal mortality rate is high in Nicaragua, but is even higher in El Salvador, Guatemala and Honduras. And even though illiteracy has risen again in Nicaragua after the tremendous progress made in the early 1980s, Guatemala is worse: 44% of Guatemalans cannot read and write.

Nicaragua has other relative advantages as well. Here women have a greater slice of national income and more girls are registered in both primary and secondary school than in the other countries of the region. There is also another index in which Nicaragua does not compete for last place: the gap between the richest and the poorest in Nicaragua is 13 to 1, while in Guatemala, which has the most abysmal gap, it is 30 to 1.

Alemán Calls UNDP "Interfering"

Because the UN document to the IMF requests that the adjustment agreement with the Nicaraguan government put a priority on eradicating this dramatic and steadily worsening poverty in Nicaragua, Alemán should have welcomed it as an excellent negotiating tool. But he did not welcome it at all, partly because there virtually are no negotiations with the IMF and there is no political will to live with the budget consequences of dealing with poverty correctly. Above all he didn't because he has a knee-jerk reaction to criticism coming from any quarter, even the UN.

Even before he had read the document, President Alemán went public with his anger, referring to it as "inappropriate interference." In a press conference, he stormed that "we do not need to be receiving any counsel from them." In his customary agitated style he added that "the gentleman from the UNDP made the decision to do it and I want to tell him that the people of Nicaragua and the government that I represent have their own dignity and sovereignty."
In a meeting with envío, Alejandro Martínez Cuenca, economic planning minister under the Sandinista government and now head of a research institute called the International Foundation for Global Economic Development (FIDEG), reflected on the government's overblown reaction: "The government took on an unnecessary and gratuitous fight, assuming it was being criticized, without stopping to think that the UNDP criticism was aimed at the IMF, here in the country. Why that fight? I think the government doesn't accept that things can go bad for it, and I also believe that some presidential advisers have a commitment which leads them to get muddled."

"The Economy Is Growing Vigorously"

Such undiplomatic declarations were not the end of the muddle. Alemán began to explore ways to get Carmelo Angulo removed from his post in the country, though he quickly had to back off that idea. Mario de Franco, Alemán's agricultural minister, decided to jump into the fray as well. In an open letter in the name of the government he patronizingly questioned the document for not understanding what ESAF is: "It is not necessary for the social part to be contained in some agreement matrix with the International Monetary Fund." And he, too, took up the cudgel of national sovereignty. "Social policy, as well as the spheres of governability, local development and fulfillment of the agreements that have been signed in the various world summits in the fields of women, environment, poverty, food security and basic social spending are prerogatives of the Government, which should be exercised with absolute sovereignty."
This challenge grows out of the current government's villager-mentality arrogance, captured to perfection in De Franco's closing paragraph: "We thank the United Nations for its concerns. A pity that it has not taken notice of what this Government has been doing since January of this year: it has succeeded in making the economy grow vigorously and healthily, generating employment and above all creating a country prepared for the 21st century, in which we expect poverty to have become a theme of national history."

Social Spending During the Revolution

In a public mini-debate between Carmelo Angulo and Mario de Franco after the letter, the government minister, by then in a more diplomatic style, did not waste the chance to criticize what was done in the revolutionary decade. Doing so has become a characteristic stamp of virtually any publicity or declaration emanating from the Liberal government. According to De Franco, a great deal of care must be taken with social spending because its expansion during the first two years of the revolutionary government's administration provoked very serious economic problems for the country.

To set the record straight, envío will add a few details that nobody mentioned on that occasion. First, the expansion of social spending in the first years of the revolution was accompanied by increased tax revenues, which in turn was achieved by more honest administration of public finances. During its first four years, the Sandinista government tripled fiscal income in relation to the level obtained during the Somoza government. As a result, expanded social spending could have been fully covered by that extraordinary fiscal increase.

During its long administration (nearly half a century), the Somoza government kept social spending and tax collection to a minimum; the latter never surpassed 10% of the Gross Domestic Product. To appreciate the contrast, one must recall that the Alemán government has proudly announced that it will collect over 20% of the GDP in taxes in 1998, but the Sandinista government collected over 25% in its first years.

The logical counterpart of the Somoza government's skimpy social spending was dismal social indicators, the worst in all of Central America. Starting in the 1950s, Costa Rica had the highest social spending in the region, which has gone hand in hand with the highest tax collection on the isthmus. The results are there to see: Costa Rica is today the most stable and developed nation in the region.

Second, it must be said that governmental spending in the first years of the Sandinista administration expanded not only due to increases in health and education, but also because all basic products were subsidized for the urban population, the construction of the agricultural ministry's agroindustrial projects was subsidized and increasingly higher military spending had to be financed as the United States intensified the war. That whole spending package was what sent Nicaraguan public finances into a tailspin, not the expansion of social spending.

Finally, the analysis is incomplete without adding that the Sandinista government could have adopted a more realistic and pragmatic policy to try to maintain a balance between public finances and the expansion of social spending. In fact, the policy of subsidies to urban consumption had negative repercussions on agricultural production because, to avoid an uncontrolled increase in its spending, the government adopted a policy of low prices through the state basic grains enterprise, ENABAS, for food produced in the country, which damaged producers and, later, also consumers. The spending on the agroindustrial projects was unjustifiable in the face of Nicaragua's financial restrictions, as were the subsidized credits provided by the state banking system, which decisively contributed to its decapitalization and the rise in inflation. It was unnecessary to subsidize input and machinery imports.
All these arguments demonstrate that reality is significantly more complex than the Liberal government's simplistic analysis when it repeatedly presents itself as the "savior" of a country "destroyed" by the Sandinistas, as if Nicaragua had not had the Somocista government before or the Chamorro one for seven years afterward.

Controversy at the Uppermost Level

The controversy between the government and the United Nations led to side-taking. All official voices lined up behind the government position, which in essence was nothing more than "we know perfectly well what we have to do, are already doing it and doing it well." The opposition voices naturally backed the UNDP analysis.

Carmelo Angulo was very moderate after unleashing the crisis that led to President Alemán's unfortunate declarations. He stressed that going public with the document that had so annoyed the government had been a "moral duty" and that things had been laid out to the IMF "clearly and transparently."
Confrontation between the government of an impoverished country and an international institution that advocates overcoming this poverty was unheard of. But to understand it in its true dimension, it should be pointed out that President Alemán and some of his Cabinet members were not the only angry ones. The International Monetary Fund was even angrier.

Tension had already been growing among the various UN institutions, essentially between those with a financial orientation and those with a social orientation. At times it remains mute and at times becomes open, as occurred in the recent meeting in Hong Kong. All international institutions are talking about poverty and the need to do something about it. The dispute is over what to do, how to do it and when. The IMF and the World Bank, as their financial adjustment programs reveal, believe that poverty should be "compensated" or "alleviated" while the adjustment is being applied. Their functionaries dogmatically insist that once the financial balances that the adjustment seeks have been achieved, poverty will begin to disappear.

But this is not what is happening in the world. And it is certainly not happening in countries that lag as far behind as Nicaragua. After so many years of studying this, the UNDP and some other institutions have a different point of view. They see poverty not only as the absence of income, but also as exclusion from options that could assure a dignified life. They consider that human development should be given priority as the only way to achieve economic development. They think that, instead of adding anti-poverty measures like band-aids or palliatives, eradication of poverty should be made the express objective of economic policy. They also insist that this is not in contradiction with the creation of a controlled macroeconomic atmosphere.

Instead of giving the poor handouts or thinking they can make do on the crumbs that fall from the table, these institutions advocate designing concrete strategies within the adjustment that involve them fully and generate real opportunities for them in the economic development project. They do not believe that cleaning up the macroeconomic indicators or economic growth alone will mechanically guarantee the reduction of poverty. They know that economic measures are not enough without a prior political consensus, a solid political conviction. Their perspective does not consider the poor an obstruction to the progress of the adjustment, but rather as a potential to make that adjustment generate truly sustainable development.

Change the Development Schemes

As the lines were being drawn in this controversy, Mario de Franco became the IMF spokesperson when he stated, "We are convinced that the ESAF is not sufficient to resolve poverty, but it is a condition to begin debating about poverty." The position that the UNDP defends does not establish such "first adjustment and then we talk" stages. It argues that the ESAF should fully incorporate the social aspects. The Human Development Report, whose data on Nicaragua motivated the document that made the government so indignant, states: "Adjustment policies frequently balance the budgets of the countries, but they put people's lives out of balance.... The political leaders presumed that, even if poverty increased in the short run, that was the price that had to be paid for long-term stability and economic growth." Not even that has turned out to be true, and today the UNDP considers that the IMF and the World Bank, which are managing the structural adjustment, "should pay more attention to human beings."
Naturally, a vision like that of the UNDP can only be demonstrated as true when it is employed at the base and not just written about in offices, when it is worked less with computers and vehicles and more with patience, as well as with a very different style than the one the globalized culture is imposing.

This is a central challenge in a country like Nicaragua, which should stop and collectively ask itself, ethically and responsibly, where all the international cooperation aid that has been received over so many years, supposedly to eradicate poverty, has gone.

Martínez Cuenca told envío that he does not think the problem has been too little money. "I believe there's been too much money and not enough strategy.
We haven't known how to or been able to or even wanted to articulate the resources with the territories. More and more money has ended up accumulating somewhere, but not getting to the poor. It could be that functionaries are stealing it, that may be true. But what has happened above all is that a large part of all the aid received has not been articulated with very concrete and practical programs really designed in the territory. Much of the aid ends up in expenses that don't improve people's lives. When a development program is thought up for a zone, the first thing that's done is to hire I don't know how many highly paid advisers. Then they invest in an office so they can function, then in a few vehicles so they can get around.... In the end, for every hundred dollars, only a couple filter down to the people directly. How do we break that vicious circle? When will we change our development schemes once and for all?"

A Sign of Hope

President Alemán's outburst against the UNDP seems to have closed the improvisational stage of relating to his political surroundings. At the recommendation of his new minister of the presidency, banker Eduardo Montealegre, the President will no longer speak to journalists at just any old event, street corner or other informal tribunal. To avoid such incidents and other possible errors, he will give a public press conference once a month.

While the government is trying in this manner to establish formal control over the presidential style, the dispute between the IMF and its UNDP colleagues will follow its silent or open course. One way or another it will go on. Today millions of people impoverished by the universal economic model are resisting it the best they can and accumulating forces to shape some kind of alternative society in which everyone fits, as hard as that task is.
The discontent and indignation at this dehumanizing economic model is not just accumulating at the periphery of the system. It is also rising within the international institutions, and those in disagreement at the highest levels are also accumulating forces. One day both rebellions will unite. It is just a question of time. The contradiction we have witnessed in Nicaragua is nothing if not a sign of hope.

The agencies of the UN system with a presence in Nicaragua recognize the efforts that the government of Nicaragua has been making to correct the major financial imbalances as central elements for the establishment of conditions to have an effect on the economic and productive reactivation of the country.
This effort, supported by bilateral and multilateral cooperation, has shown positive results in some aspects of the country's economic policy, but some elements are giving signs that the economic adjustment has not succeeded in correcting the social imbalances. The repercussion of the financial measures and correction of the fiscal imbalance has been to aggravate the living conditions of a majority of the population. Official and unofficial statistics show a rise in poverty levels and in the rural-urban and gender gaps, as well as a strong impact on such important sectors as children.

Although it is recognized that the social disintegration has structural explanations, the economic and social policies adopted in the last decades are factors that have aggravated that situation.

An important deterioration in working conditions is observed through an increase of informal employment, the incorporation of children into the labor market, low and dropping real income levels, and strong rural-urban migratory currents as well as migration abroad in search of better opportunities, with undesired effects on social integration and an intensification of the already unequal distribution of wealth.

These elements translate into a reduction of the Human Development Index in Nicaragua, a country recognized as the second poorest in the Latin American and Caribbean region.

The Proposal

Based on the commitments emanating from different International Summits, among which the World Summit on Social Development stands out, as well as various International Agreements, and given the situation being faced, the agencies of the UN System in Nicaragua consider that the next signing of an ESAF with the IMF could be an opportunity for the Government of Nicaragua, together with the international community, to make a maximum effort to work toward achieving sustainable human development in a framework of the full exercise of Human Rights, particularly for children, adolescents and women, in accord with the spirit and letter of the international conventions ratified by the country.

A new ESAF that is not recessive but reactivating should incorporate into its goals not only financial objectives but others that take social adjustment into account. The existing inequities and the backward movement observed in human development should be corrected based on the application of an integral economic and social program that promotes a better distribution of national income and generates greater opportunities for all individuals, especially those who traditionally have been on the margin of development.
In this sense, the integral economic and social policy should contain as central elements of work:
- Governability, especially relating to the administration of justice, modernization of legislation and reinsertion of those who have rearmed.

- The consolidation of democracy and of the rule of law, making Human Rights in general and those of children and women in particular fully effective.

- The clear and harmonious definition of the roles that the state, private enterprise and civil society should play.

- Sustainable human development and overcoming of poverty.

- The eradication of child labor, which impedes effective fulfillment of the right to primary education for a significant number of boys and girls.

- Promotion of the capacities of individuals and institutions, emphasizing the latter at a local level.

- Elimination of all manifestations of discrimination against women, and the increasing incorporation of women into all spheres of national affairs.

-The creation of opportunities for the generation of productive work at a local level.

- Promotion of community participation in solving community problems.

The signing of a new ESAF should definitely be constituted as the bridge that will allow Nicaragua to achieve adequate international insertion into an increasingly globalized world, which, if this to occur in advantageous conditions, requires developing existing potentials and the main available resource, the human factor.

Priority Areas in the Next ESAF

The international community recognizes that the heavy weight of the foreign debt is an obstacle hindering the country from reaching productive recovery targets and improved living standards for the population in the short run. For that reason, the design of new schemes can help palliate those negative effects while a definitive solution to the debt problem is being achieved.
Savings that could derive from rationalizing and redefining public spending, additional income resulting from greater tax administration efficiency and from a progressive fiscal policy and contributions from the privatization of public companies with the goal of strengthening local management by focusing on the assignment of resources in areas of extreme poverty could constitute part of such schemes.

The UN System in Nicaragua does not consider it the most appropriate to repeat experiences of compensatory type funds, which have not always produced successful results. In lieu of them, the UN agencies would decidedly support the creation of a more holistic mechanism which, with additional aid from the international community, would be geared toward goals that are purely of productive reactivation and human capital recovery, including, among other programs, those of employment, technical education and health, with quantifiable and measurable targets.

The private sector has an important role to play in this activity and ESAF should include measures that stimulate its greater involvement in productive reactivation and job generation.

Within this framework, some focal points to which greater attention should be paid in a first stage of work are:
- A food security policy that integrates policies on production, employment, access to adequate nutrition and market access, and whose effects translate into greater social integration, better health conditions and higher productivity levels.

- Reform of the state, which should be geared to more rationally assigning human and financial resources, but should also consider strengthening the governmental bodies having to do with short-term commitments such as approving and implementing the Code of Children and Adolescents, and with policy guidelines such as strengthening municipal management with an adequate transfer of resources to assure the sustainability of the process.

- Considering that the character of development, democracy and coexistence of the citizenry is at stake in the educational system, basic and technical education should be made a top priority without losing sight of the importance of articulating the other educational levels to put education at the service of national development. In this sense, the social and economic policies should be geared toward increasing school coverage, reducing child labor, and improving educational quality and the pertinence to learning of plans, programs and methods.

- Guarantee primary health service, with a basic package based on criteria of equity and quality, through integral models that include access to productive health and to the regulation of desired fecundity, basic services that assure hygienic environmental conditions as forms of promoting policies with redistributive effects toward the neediest population, the search for gender equity and dignified living standards.

Achieving macroeconomic balances should be inseparable from poverty reduction and human resource training. This will permit simultaneous progress in improving the economic system's productivity and in rehabilitating and strengthening Nicaragua's social fabric.

An increase in the amount and efficiency of social spending by the Government of Nicaragua is a basic condition for achieving socially sustainable development in the structural reform process.

The agencies of the UN System consider that achieving the above requires explicitness within the ESAF about the establishment of faithful indicators that allow an evaluation of the social policy's results and impact.
To that end the Human Development Observatory, a program of the UN System in Nicaragua, could contribute to monitoring and feedback to the Government and other related entities.


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The United Nations Hits the Nail on the Head

A Still-Present Past

1979: The Frontier

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Some Clues to Possible Scenarios

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