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Nicaragua - Joint World Bank-IMF Debt Sustainability Analysis (English)

Risks of external debt distress and overall risk of debt distress are both assessed as moderate with limited space to absorb shocks, which is unchanged relative to the previous DSA of February 2020 for Nicaragua . The baseline scenario assumes that the government adopts a multi-year fiscal consolidation plan with permanent measures of at least three percent of gross domestic product (GDP) and unwinds the temporary programs implemented in response to Coronavirus (COVID-19). The reduction in the fiscal deficit over 2021–2023 equals 3.6 percent of GDP that allows to lower the debt level over those years. Under the baseline scenario, external debt burden indicators, remain below the threshold. However, the present value (PV) of public and publicly guaranteed (PPG) external debt-to GDP ratio breaches over an extended period under the most extreme shock scenario and contingent liability tailored shock which is related to the external cooperation with Venezuela. The overall risk of public debt distress is also assessed as moderate. The PV of public debt-to-GDP ratio is projected to be below the threshold under the baseline scenario, but it is projected to surpass the threshold under the most extreme shock scenario, notably lower GDP growth, and realization of contingent liability shock. Were external financing envisaged under the baseline not to materialize in the near and/or medium term, the authorities would be prepared to implement contingency measures to ensure debt sustainability.

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Nicaragua - Joint World Bank-IMF Debt Sustainability Analysis (English). Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/626171607563476386/Nicaragua-Joint-World-Bank-IMF-Debt-Sustainability-Analysis