Announcement of Recommendation for a Five-Year Program for Nicaragua on September 16, 1952

nrrERNATIONAJ;. BANK FOR RECONSTRUCTION Am> DEVELOPMENT FOR THE PRESS FOR ~ RELFASE Press Release No. 3o6 September 16, 1952 Recommendations £or a Five Year Program for the economic development of Nicaragua were made public today in the report of a mission sent to Nicaragua under the joint sponsorship of the Government of Nicaragua and the International Bank for Reconstruction and Development. ·The-~aeton.!s -rl!epori was presented ~1ast .wee\[ in Managua to His Excellency Anastasio Somoza, President of the Republic of Nicaragua, by Robert L. Garner, Vice President of the International Bank. L~ organizing this mission, the Bank departed from its usual procedure of sending a group of experts for two or three months, and instead stationed two • members of its staff in Nicaragua from July 1951 to May 1952. The mission was headed by E. Harrison Clark a.s Special Representative, with Walter J. Armstrong as Engineering Adviser. Specialists in various fields went to Nicaragua to assist in the work. These specialists were dravm from the Bank, the Corporacion de Fomento of Chile, the Federal Reserve Bank of New York, and the Food and Agriculture Organization. In addition, the International Monetary Fund sent a mission on banking and credit. The mission had three objectives: (1) to assist the government in the preparation of an over-all long-range development program; (2) to advise the government on current economic policies as well as L~provement in the existing administrative and financial structure to prepare the way for such a development program; (3) to coordinate the work of experts from the Bank and other agencies and to assist the government in carrying out their recommendations~ •  .2 • • Frem its extensive travel 1n the country, the Bank's mi$sion concluded that "few underdeveloped countries have so great a physical potentia~ for growth and economic developm.ent as does Nicaragua. By making effective use of its resources,. the country can became, in the future, an important exporter of meat and dairy. ·products and of a diversified list of other agricultural products. It should continuE: as a producer ot timbei- and minerals. It should develop a sound and well-balanced relationship between industry and agriculture." The mission found that the Government or Nicaragua was fully a1-1are ot the needs of the country and desired to push ahead with economic development. In line with recommendations 0£ the mission, the Government already has (a) brought into operation a National Economic Council to coordinate the development ef'fort; (b) canpleted plans £or a National Development Institute to plan and finance the • long.-range agricultural and industrial program; (c) undertaken a sharp increase in development, expenditures., to go into effect in l9S2-5); (d) taken steps for a major f'isca.l reform, including the proposed introduction of an income tax, more etf'ective enforcement ct existing direct taxes., and a revJsion ot the tariff system. Other measures, undertaken before the mission's arr:tval, have resulted in increased internal financial stability•. The p:rogram formulated by the Jftission is designed to help the country move forward silllultaneouely in health, education, transportation, agriculture, industry and powei-. The program aime within the next five years to increase i-eal per capita incane by 15%, and to increaJe the physical volume of agricultural and industrial production by 2S%. The population is tmall in relation to t,he area of' the country; and as development l)roceeds, labor shortages may occur in some sectors of the econany. • The Jnission believes, however, that modern industrial and Jgricultura:i techniques can Qffset thie hand1cap,.  ' .. .3 .. • The mission list~ the following specific objectives: 11 (a) completion of a ma-.jor highway network (now being constructed under a Bank loan) linking Managua with Granada.., Leon, Chinandega., Jinotega, San Juan del Sur, the Tuma Valley and ·wi.th the east coast; (b) establi,shment of a complete network of farm to market roads; (c) modernization of the railway; (d) rehabilitation of the major ocean ports and improvement of lake transportation; (e) establishment of. pure water and sanitation facilities in the main towns and many of the smaller communities; (f) expansion of the present power capacity of Managua to triple its present size and .formation of a network to connect with other important cities; (g) increasing the number of coffee trees by 25% and expansion or cattle production to the status of a major industryj (h) establishment of several new industries, a.s,well as a number of grain storage plants; {i) reduction in the rate of illiteracy and a rise in vocational and technical education ?lld training; (j) creation of an adequate • medium and long.. term credit system· and technical assistance for industry and agriculture." The mission recommends a minimum program ot investment of $59 million and an optmum program of $76 million during the period 1952•57. Under either program about half the expenditures would be in foreign .exchange. The mission believes that these investment goals are within the capacity of the country. The mission found that in every sec·~or of' the economy high disease rates, low standards of nutrition and low educational and training standards are the major factors inhibiting the growth of productivity~ Farm mechanization, improved transportation, and niodern industrial machin~y will increas.e totai production, but this increase will be limited unless there is basic improvement in ths health and living conditions of the countey• s limited working population. Comre.uni ":,y actitil'\; in cooperation with goverllJilent agencies is suggested to meet the twin problems Qf : • . . health and education. ,• Ir ~()  -4- In the agricultural sect.or~ the mission• s first recommendation is that coffee production be increased1 in View of the quality or the crop and the favorable ,conditions for cultivation. The mission believes that production should be raised both by new plantings· and by improved managemtqt or existing, planti.~gs. The program for agriculture would also provide tor improvement and expansion of the cattle industry, increased production of vegetable oils, organization of a soil conser- vation program, construction of additional cror,-storkge capacity, development ot irrigation, initiation of land.use studies, and establishment o! a forestry service. New industries recommended include milk concentration and pasteurizatio~ plants, modern slaughterhouses, vegetable oil processing plarits, and a small tied mixing plant. Further study may show that such industries as hardboard mills and wire productR manufacture are possible. The pressing need for textile proce~sing • facilities ls now being filled through private inVestment.· The report points out that althe.ugh hydroelectric power devel,opment is possible, the basic technical data are lacking. The present urgent, p0t4er neede should be filled through the installation o! steam generating facilities until such time ae it is possible to develop hydroelectric resources. Whe!J'ever it went, the mission, found impressive evidence ot development stimulated by the building of roads. Whole areas once isolated. from the capital now trade with it daily, and a considerable &.111ount of internati1onal freight is nc,w being hauled on the Inter-An,.erican Highway. i;]any regions,· however, are still dependent upon slow and expensive methods 0£ transporting crops to market. Since rapid econ01nic gains may be expected from the opening of these regions," the mission puts major emphasis on the completion or the primary highway system as well as a network of f'arm-to.marke·~ roade • • C! ) J • C, ------·- The Mission C:;3~ HAJ:'.rison Clark Special Representative International Bank for Reconstruction ~nd J)evelopment Waltei,J~ Armstrong Engineering Adviser Internatic>na.l Bank for Reconstruction and Developmerit George Garvy Adviser on Public Finance Federal Reserve Bank of New York 41varo Marfa:n Advis~ on Development and Corporacion de Fomento de Chtle Planning John F. v. Phillips Advisel.. on Agriculture and Food and Agriculture Organization Forestry ,rthur Wtabnig Adviser on Transportation International Banlc for Rec.onstruction and Communications and Development Suzanne Lessard Secretary J.