Nicaragua's current constitution dates from 1987. It regulates the 'separation of powers' between the executive, the legislature (the National Assembly) and the judiciary. There are 131 municipal councils and two autonomous regional councils for the Atlantic Coast regions. In 1995, a number of reforms were introduced. The army came under civilian rule. The power of the President (especially the possibility of re-election) is limited.
\The National Assembly is elected by proportional representation for a period of 5 years and consists of 92 members (70 provincial and 20 national plus the candidates defeated in the elections for the presidency and vice-presidency).
The Supreme Court is independent of the executive and consists of 12 members elected by the National Assembly for a seven-year term. The country has an independent National Audit Office. In practice, the independence of institutions such as the judiciary, the Court of Audit and the Electoral Council leaves much to be desired.
President Bolaños initially launched an anti-corruption programme, which was diluted after 2003, partly due to the fact that the legal system was contaminated under the "pacto". The country has remained governable, thanks in part to substantial donor support and the constitutional position of the army and police (who support the elected president without any political affiliation within the ranks).
The Bolaños government has had to pay a heavy price for the conviction of Alemán. On the political front, things have not been made easier by the fact that the Liberal Party (PLC) has officially declared that it no longer considers itself to be the governing party. The party is divided internally between supporters of the current president and supporters of Alemán (Arnoldistas). The latter have 42 seats in the 92-seat parliament; the supporters of Bolaños (Blanco y Azul) 9 and the Sandinistas (FLNS) 38. Nevertheless, in 2003, Bolaños was able to maintain and strengthen his reform course thanks to ad hoc alliances. Further macro-economic stabilisation and the achievement of the HPIC completion point can be credited to him, as well as the ratification of the free trade agreement with the US (CAFTA).
The Consultative Group at the end of 2003 supported the policy pursued so far in general and the anti-corruption policy in particular. The National Development Plan (PND) was accepted as the basis for further dialogue between government, civil society and donors on long-term policy.
In 2004, the tide seems to be turning against Bolaños. Parliament blocked major policy innovations and in early 2005 passed constitutional amendments limiting executive power and giving parliament powers over appointments to independent state institutions. Higher government spending mandated by parliament has called into question the extension of the Poverty Reduction and Growth Facility agreement with the IMF. These developments endangered the combined budget support of nine bilateral donors worth a quarter of the total aid flow.
In October 2005, the political situation stabilised when Bolaños and the parliament reached a compromise. It was agreed to postpone the reforms until after the 2006 general elections.
The current political situation is described in the history section.
The Nicaraguan economy grew by 4.9% in 2017. This increase was due in part to the recovery in the agricultural sector, particularly with regard to coffee and sugar. Agriculture is important for Nicaragua, accounting for 15.5% of GDP and about 31% of total employment (2017). An increase in investment - especially in the export zones (maquilas) - and growth in construction also contribute to the favourable outlook. Inflation is 3.9% in 2017
The free trade agreement with the US and the Central American Customs Union (CAFTA), ratified in October 2005, aims to attract foreign investment, create jobs and strengthen economic stability.
Nicaragua exports mainly coffee and meat. However, emerging sectors are the textile industry (maquilas), mining, fishing and trade and to a lesser extent (eco-) tourism. The total value of exports was $3.8 billion in 2017. The main export partners are the United States, Canada, Venezuela and Costa Rica. The main products imported are consumer goods, machinery and tools, and oil products. The total value of imports was $6.6 billion in 2017. The main import partners are the United States, Mexico and China.
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