When Nicaragua’s Sandinista government took office again in 2007, they focused on the goal of poverty reduction and decided on a blend of social responsibility and economic principles to achieve this.

Firstly, the government began restoring rights to its people – the right to free health care, free public education and land tenure to name a few. But they also worked to find ways to ensure that Nicaragua’s poor majority became active participants in the economy as a way for people to have income and to improve the country’s struggling economy.

“We realized that we needed to lower the cost of doing business to be competitive; in order to achieve that, we needed to increase public spending,” said Nicaragua’s Finance Minister Ivan Acosta.

To that end, Nicaragua set about building state-of-the-art roads – now the best in the region –  ensuring that products could get to market cheaply and easily.

They improved access to basic services: 99.41% of families now have electrical compared to only 54% in 2006. And most importantly they increased clean energy from about 20% in 2007 to about 70% today; and with a commitment to increase to 90% by 2030. They have trained teachers, most now have a college degree; and they’ve built new schools. They’ve built 25 new state of the art hospitals since 2007 all around the country.  Over just seventeen years, Minister Acosta explains, social spending went from being 10% of overall spending to making up 58% of the country’s budget. But have these policies been effective?

“We have these pro-poor policies, but in many countries only lip service is paid to political policy and it isn’t followed by action,” explains Minister Acosta. “So we do the math – all the various quotients and formulae recommended by international experts – to ensure that our policies are being translated into results: real improvements in the lives of the poor.”

The numbers show that not only has Nicaragua’s economy turned around – sustained GDP growth of 5-10%, historic international investment, and 90% food sovereignty have all been achieved – but also the lives of the country’s poor majority have improved. In 2006, GDP per capita was at $990, but by 2023 it had risen to $2,500.

“We don’t have a significant middle class yet, but progress is being made.“

Poverty Reduction

In 2005, nearly half the country was living in poverty; by 2017 that had been reduced to less than one quarter, representing a 23.4% reduction over 12 years. In 2005, 17.2% of Nicaraguans were living in extreme poverty, in 2023 that number was  6.3%.

Minimum wage has increased two times per year since 2007, and today the minimum wage is more than six times what it was in 2007.

Subsidies

Since 2007, the Sandinista government has provided subsidies to Nicaraguans for basic services, in order to make them accessible to low-income households. Over 17 years the government has invested 273 million in water and electricity subsidies for retired people. Nearly half of all Nicaraguan households consuming minimal electricity receive a subsidy that covers 45% of their electrical bill. Public transport receives a subsidy that has resulted in a freeze on public transport costs since 2007 – it still only costs $0.67 to ride the bus in Managua. There has been a special subsidy since March 2022: The government covers all increases in gasoline, diesel and cooking gas. The government invests about US$82 million a year to do this.

Food support

For those families struggling with food insecurity, 500,000 pounds of food is distributed monthly for free through senior citizens centers and centers for people with special needs. Additionally  60,000 food packages are distributed monthly for mothers of both Sandinista and Contra soldiers killed in the Contra war and to families with emergency or ongoing needs.

At public schools, 1.17 billion pounds of food has been distributed to schools since 2007 for one hot meal per day served to 1.2 million students, representing 72 million pounds of food annually.

Housing

Sixteen years of neoliberal governments built an average of just 2,037 homes per year, the Sandinista government inherited a housing deficit of 350,000 homes and a total lack of investment in low-income housing.

Since 2006, four times the number of houses have been built per year, for a total of 135,583 new or improved homes, an average of 7,975 homes per year. The government also offers $13,200 in subsidies to families to purchase low-income houses.

Potable Water and Sanitation

In 2006, just 65% of the population had access to potable water, by 2023 that was 94.5%. Currently, 838,000 families receive potable water daily, compared to 384,000 in 2006.

From 30% of families with access to sanitation in 2006, now 55% of families have homes hooked up to sanitation.

Electricity

In 2006 there were on average 14-hour per day blackouts to ration electricity. These were eliminated almost immediately when the Sandinista government came back into power in 2007. The government installed diesel generators to meet he immediate tneed and then over time  worked to transition Nicaragua to renewable energy. Today, Nicaragua is #8 in renewable energy with 70% of its energy generated from renewable sources.

In 2006, only 54% of homes were connected to the electrical grid, compared to 99.41% in 2023. Additionally, by the end of 2023, 88% of the country has fiber optic cable installed which provides free Wi-Fi in public parks, hospitals and schools.

Roads

In 2007 Nicaragua’s Sandinista government inherited just 2,044 kilometers of paved roads from the neoliberal governments, 70% of which were in bad condition. Today, Nicaragua has 5,289 km of paved roads in good condition with 4,676 Km of roads built new, widened or modernized since 2007.

Neoliberal governments had only connected 44% of the country to major highways. In 17 years, the Sandinista government has connected 78 new municipalities to the road network, for a total of 95% of the municipalities connected. This allows farmers and businesses from all over the country to get their products to market more easily and cheaply, and opens up new areas of the country for travel and tourism.

Additionally, quality of life improves greatly with the paving of streets – improving health by limiting dust and mud, and allowing greater ease of access and even recreation such as walking, using baby strollers and cycling. Since 2007, the Sandinista government has paved 10 times the amount of streets paved each year during the neoliberal period – paving a total of

46,000 streets in 17 years. The government also has improved and maintained 52,000 km of rural roads.

Macroeconomic stability & fiscal responsibility

Nicaragua is enjoying the fastest economic growth in Central America since the pandemic – 15.9% over three years compared with the regional average of 12.1%. Over 17 years Nicaragua has managed to more than three-fold and has diversified its export markets.

The Nicaraguan government is collecting more than four times the amount of tax revenues than neoliberal governments collected. Although 58% of Nicaragua’s national budget goes to social programs, 99.5% of the budget is financed by national resources, as opposed to only 76% under previous neoliberal governments.

Transparency and Project Execution

According to international lending agencies such as the World Bank, Interamerican Development Bank, International Monetary Fund and the Central American Bank for Economic Integration, Nicaragua has the best record of project execution, the best repayment record and the most transparent reporting record; not just at a regional level, but also worldwide. Since 2007, Nicaragua has received nearly US$ 9.5 billion, an annual average of US $558.5 million. This average is 90% more than neoliberal governments received in 2006.

During the neoliberal years, consulting fees and mega salaries made up 50% of the Public Investment Program (PIP), since 2009 that has been 0%. In 2006, the percentage of PIP projects that carried out feasibility studies was just 30%, by 2023 that was 90%.

Unfortunately, due to the unilateral coercive measures (sanctions) against Nicaragua, Finance Minister Ivan Acosta estimates that the country has been denied funding worth between US$2.5 and US$3 billion in total since 2018, all of which would have been earmarked for social programs. How much more could Nicaragua have advanced in poverty reduction if Washington hadn’t stopped the World Bank and other international institutions from financing Nicaraguan projects?

[Source: GRUN 2024 unless otherwise noted]