Nicaragua: Debt relief will spur investment, jobs

IMF, World Bank wipe away most of nation's $6.5 billion debt

Monday, January 26, 2004 Posted: 6:03 PM EST (2303 GMT)

MANAGUA, Nicaragua (AP) -- Debt relief granted this week by the International Monetary Fund and World Bank will total about $5.1 billion in U.S. funds, Nicaraguan officials said Saturday.

Jubilant officials announced Friday that the International Monetary Fund joined the World Bank in forgiving most of Nicaragua's debts, slashing the country's overall payments.

Nicaraguan officials revealed new debt figures and their hopes the debt reduction would trigger new investment at a news conference attended by representatives of the World Bank and International Monetary Fund.

Nicaraguan Central Bank President Mario Alonso said the country finds itself instantly in a better financial position.

"The country risk decreases and this attracts more investment, which means more employment," Alonso said.

The new agreements forgive the bulk of a US$6.5 billion debt for one of the hemisphere's poorest nations.

Nicaragua's debt had hit US$12 billion at the end of the 1980s, when the left-wing Sandinista government was fighting U.S.-backed rebels.