President Aleman announced that after more than ten months of negotiating with the International Monetary Fund (IMF) the second Enhanced Structural Adjustment Facility (ESAF II) was signed last month. Under the new agreement, Nicaragua is required to privatize the telecommunications and electric companies, implement the new Tax Code, and achieve greater fiscal austerity by slashing spending for social services and laying-off public sector workers.
The government is touting the structural adjustment plan as the solution to Nicaragua's economic crisis, focusing, as usual, on macroeconomic indicators such as inflation, with virtually no regard for the negative impact that these policies will have on the daily lives of the people. Nicaraguan economists agree that even though the ESAF II is a "bitter drink that is hard to swallow" it is the only alternative to maintain economic stability. Many have warned, however, that these policies may further threaten social stability. At the completion of this ESAF II Nicaraguan hopes to be included in a program for highly-indebted countries that would allow for the reductions of 80% of the balance of the foreign debt. Although debt reduction is desperately needed, this plan may not be the panacea that it is painted as being, since it would lock Nicaragua into another six years of structural adjustment.
Reprinted from: Nicaragua Network Education Fund, Nicaragua Monitor,
February 1998. This publication may be reproduced in whole or in part to
educate US citizens about Nicaragua and US policy.