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Nicaragua has an extant agreement with the IMF since October 2007, and at a moment when the Congress is debating the national budget 2008, the institution is making its opinion felt in questions of distribution of the public expenditure. The situation has evolved into a political problem between the government and the opposition that could put at risk the disbursement international institutions and donors expect.

In December the executive branch sent the national budget 2008 for its congressional approval. However the parliament is seriously limited by IMF conditions and the economic programme proposed by the government. The budget will have to be voted by 29 February 2008, on which date the IMF technical mission arrives in the country.

Both the President of the National Assembly Committee for Production, Economy and Budget, Francisco Aguirre Sacasa, and the president of the Central Bank of Nicaragua, Antenor Rosales, have declared to the press on numerous occasions that the country will continue to receive funds from the IMF depending on the approval of the budget. According to Rosales, "if the representatives make 'big changes' (?) to the budgetary project presented by the government, this will put at risk the arrival of USD 600 million in international aid.

For the president of the Central Bank, 'it is a fact that if we do not count with the approval of the IMF, we will not only stop receiving the resources that the Fund has offered in the context of the programme, but other donors will immediately reconsider their fast disbursement aid.'

One of the points in the debate between the IMF and the country's representatives is the percentage of salary increases for health and education workers (the government has agreed to 15%, while the representatives demand 20%). For the IMF delegate in Nicaragua, Humberto Arbulú, the possibility of raising salaries in general beyond the percentage negotiated with the government has not been brought up by the government.

For Civil Coordination (an instance which brings together different organized sectors in Nicaraguan civil society), salary increases should be the outcome of a restructuring of the budget implying a renegotiation of the international debt represented by the bank bonds (Cenis) including funds provided by foreign aid, in particular from Venezuela. This way social sectors would receive the resources anticipated for the foreign debt.

According to president Daniel Ortega, the IMF and the donor community would not have to disburse a single penny if the budget is not approved by Congress before the mission arrives. 'We have a gun pointed at our chest,' president Ortega commented to Venezuelan president Hugo Chávez, who promised that Nicaragua would not 'collapse, since there will always be a friendly hand to help you.' Ortega repeated that the parliamentary sector that opposes him has him 'on the ropes'

In this case, a political problem between the government and the opposition also demonstrates that the IMF is an important political actor, who sets terms and conditions and has become guarantor of the international cash flow.

Source: El Nuevo Diario and La Prensa (Nicaragua)

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