As it has been doing for 19 years, Nicaragua is faces into 2027 with a budget focused on measures to combat poverty and a concept of promoting the country's development and modernization, by means of social policies and public investment. The decision to allocate a considerable part of public resources to social priorities is the most significant aspect of the draft budget. In 2027, 64.7% of the planned expenditure, equivalent to about C$108,850 million (US$2,892 million), will be allocated to programs and interventions for this purpose, thereby presenting a planning model in which the social dimension occupies a central place as one one of the main axes of government spending.
The course set by the Sandinista Government responds to an ideological approach that regards as indispensable the use of public resources as an instrument to promote the country's development, strengthen essential services and expand opportunities for the population. Social spending, the strengthening of public services and the development of infrastructure are fundamental for a strategy which combines systemic economic growth with improving people’s living conditions. For this, approximately C$51,526 million (US$1,411 million) will be allocated to finance public works and services in areas such as roads, hospital facilities, education centers and water supply.
As is well known, one incontrovertible fact determines the success or failure of social policies, namely, the volume of public investments, the resources provided for infrastructure, essential services and territorial development. Let's see how those stack up.
Infrastructure fulfills both an economic and a social function: it improves connectivity, facilitates access to services and promotes productive activities. Interventions according to territory help improve the internal organization of the labor market, reduce imbalances between different areas of the country and offer more accessible and homogeneous development opportunities.
For the generation of overall wealth and the creation of value for the country as a whole, the levels of public services intended for the population in fact play a fundamental role. Public investment makes it possible to see the concept of the country’s modernization as a foundational element of the Sandinista project. If we do not limit ourselves to a neutral review of the figures, they constitute the fundamental parameters indicating the direction of expenditure flows and show the chosen policy approach in relation to the link between public spending and the country's wealth.
Among the strategic sectors to benefit from the planned investment are health care and education, fundamental to build up human capital and promote more inclusive development. Access to services, principally to education and health care, but also to transport and fuel subsidies, is an essential component of policies aimed at reducing inequality. This is because the elimination of costs which are high in all liberal economies, fall exclusively on families; relieving those costs allows families to get significant savings on their household budgets. Here lies the link between well managed public accounts and the welfare of the population, which, thanks to the free provision of public services, sees its purchasing power increase indirectly, but automatically. Investment in schools, health centers and public services therefore responds to the immediate needs of families. In short, these matters are about politics, not just statistics.
A healthy economy
Sound public accounts are a precondition for a healthy economy, which in turn constitutes the basis of a healthy country, and yields the fruit of a healthy society. However, the process of wealth accumulation, which allows the Government of Reconciliation and National Unity to invest in growth and redistribution, requires public accounts which are sustainable. The challenge, both for a State and for any family, is to meet its needs by spending less than what it receives. The revenues to finance public spending come from international credits, capital inflows, taxes and remittances which depend on the generation of value by the nation’s businesses, both public and private, such that diversifying sources of income is a decisive issue to maintain healthy public accounts. In its turn, public spending produces higher revenues in the medium and long term.
No other country on the continent can boast of such repeated consistency in this commitment to improving the population ‘s living conditions together with a constant commitment to the country’s planned and rational modernization. This does not mean that the process has no limitations. For example, in the case of wages, the need to keep wage policy linked to low inflation prevents even greater progress, while the political situation of an empire in decline, whose foreign policy deliberately destabilizes other countries and whose economic policy is dictated by markets destabilized by wars and skyrocketing energy prices, makes it essential to keep rigorous control of public accounts.
Economic growth and financial sustainability
The international context is marked by worldwide instability and a deep crisis of the dominant economic system, of which Nicaragua is also a victim. Given its size and its economic and political power in the international sphere, the country obviously lacks the necessary capacity to shape external processes and is therefore inevitably affected by them. However, its capacity for economic planning and its determination in promoting a different development model have been the two pillars on which Sandinismo has made great progress in Nicaragua’s modernization. It highlights and confirms what began to be applied from 2007 omwards: the establishment of a model based on social inclusion and poverty reduction, accompanied by rigorous control of the economy's accounts.
If we analyze the macroeconomic dimension, the budget proposal was developed within a framework forecasting growth in gross domestic product of 3.7% in 2027 and a budget surplus of approximately C$26,898.7 million (US$737 million). The surplus is an extremely important issue, since it represents the difference between public revenues and expenditures, after discounting the cost of public debt. in other words, it measures the difference between State revenue and expenditure, constituting an important indicator of the health of public accounts. This is fundamental for the country's economy, because it acts as a stimulus for national and foreign capital, which finds that investing in Nicaragua creates excellent opportunities to generate profits.
In addition, it has important repercussions in the area of access to credit, because international creditors see confirmation of the desirability of maintaining their financial exposure and are able renew lending in a context of economic stability which guarantees repayment. Every country in the world has public debt, where they differ is in which country is reliable and which is not. Nicaragua is firmly among the former because its debt is readily sustainable.
The marriage between micro and macro
These are not abstract concepts. The positive indicators of Nciaragua’s macroeconomic framework allow the development of inclusive social policies and, conversely, these policies, by reducing poverty and inequality, promote the generation of wealth; this, in turn, allows sustained economic growth preserving positive indicators reflected in wider circulation of that wealth. It is a virtuous mutually reinforcing interaction between macroeconomics and microeconomics which, in essence, constitutes the existential axis of Sandinismo’s socio-economic policies in this millennium.
Nicaragua's future challenges are being met by transforming financial objectives into social progress and maintaining a sustainable equilibrium between economic development, social protection and the healthy public accounts.
In the fruitful relationship between growth and development, between macroeconomics and microeconomics, between poverty reduction and decisive wealth creation constitute the existential axis by means of which these two decades of Sandinista Renaissance have marked a before and after for Nicaragua. It is the concept of a future based on the growth of equal opportunities and inclusion, which aspires to eliminate the inequality between enormous wealth on the one hand and appalling poverty on the other.
If there is a political synthesis of the current model, it is that it proves that it possible for a country to accumulate wealth accepting the rules of capitalism but distributing that wealth according to the principles of socialism. This is what Sandinismo represents. This is what needs to be defended in every way possible.
