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Nicaragua Deficits
Nicaragua's budget deficits were low in the decades of
economic growth following World War II. This situation
changed
dramatically in the late 1970s when the Somoza government
had to
borrow large amounts of capital to finance military
expenditures
in the civil war. Deficits also increased during the
Sandinista
years because large sums of money were diverted to social
programs even as income from traditional export crops
decreased.
The deficit in the final years of the Sandinista
administration
showed an eerie parallel to the final Somoza years because
the
government had to increase finances for the military in
order to
prevent the government's overthrow.
In 1990, despite a new administration, all sources of
government revenue declined. Even without the drain of
war, the
Central Bank of Nicaragua projected in early 1990 that the
fiscal
deficit for 1990 would average US$13 million per month.
Shortly
after the inauguration of President Chamorro in 1990, the
government monthly deficit fell from more than US$30
million to
about US$8 million. The improvement in finances was
temporary,
however, as the government was forced to abandon tight
budgetary
restraints later in 1990 when it paid large sums in
severance pay
to reduce the number of military and public-sector
employees.
Former members of the military, Contras, and public-sector
workers were offered "golden parachutes" in return for
retirement. Altogether, the Chamorro government spent
approximately US$5 million to disarm 17,000 former
combatants.
The average payoff was US$200 per person and US$1,000 for
each
weapon that was turned over to the government. A few
former
military leaders from both sides of the conflict may have
received as much as US$150,000 each, according to stories
reported in the international press. These former leaders
also
received promises of land, credit, houses, and vehicles.
Data as of December 1993
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