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Sandinistas Slash Social Spending in 2011 Budget

November 9, 2010

MANAGUA – Despite the Sandinista government’s socialist billing, its $1.6 billion budget proposal for 2011 does not reflect its left-wing political posturing, according to line-item analysis by the Institute of Strategic Studies and Public Policy (IEEPP).

In fact, according to economic investigator Adelmo Sandino, the government’s proposed health budget next year is .5 percent less than this year’s health budget, while funding for primary education has been slashed to the point where IEEPP fears Nicaragua could now fall short of its millennium goals of reaching universal primary coverage by 2015.

“What worries us is that the government’s budget proposal designates more spending to bureaucratic institutions and invests less in social sectors,” Sandino told The Nica Times. “It’s not true that the government is investing in education and health in the terms they claim to be.”

Sandino claims the government is trying to “play with the numbers” by claiming a 6.5 percent increase in spending for education and a 4 percent increase in spending for health. Those figures, he said, are based on córdoba amounts. But if the numbers are dollarized to account for devaluation of the córdoba, next year’s health budget actually decreases by .5 percent and the increase for education is only 2 percent – insufficient to meet the demands of students and improve dilapidated school infrastructure.

Even more worrisome, Sandino said, is that government spending on primary education has dropped nearly 50 percent in the past three years. As a result, next year’s elementary school enrollment is expected to be 19,000 students less than this year, in addition to a 10 percent dropout rate, the economist calculates.

But not everyone will be strapped for cash under the new budget, which still needs to be approved by the National Assembly.

The sullied Supreme Electoral Council (CSE), which will attempt to manage another election next year, will be rewarded with a 223 percent increase in budget spending. The ministry of defense will get a 21 percent budget increase, the finance ministry will get a 42 percent increase, the ministry of trade and industry will get a 62 percent increase and the presidency will get an 18.9 percent increase.

Payments on the internal debt, which came from the Sandinista confiscations in the 1980s and the banking system collapse in 2000, will also be a priority under the new budget.

Francisco Aguirre, an opposition lawmaker and member of the legislative budget commission, said the 2011 budget is an “austerity budget” that should make Nicaragua’s financial handler, the International Monetary Fund, happy.

“This should get the IMF’s seal of good housekeeping,” Aguirre told The Nica Times.

However, he added, the budget, which is based on a 3 percent economic growth next year, is a little too bare bones to provide any stimulus to the economy.

“There’s not enough public investment to help create growth,” he said.

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