Recently, the World Bank agreed to partner with Nicaragua to give the country 69 million U.S. dollars in aid. This poses the immediate question of whether or not this aid will be effective in producing its stated goal of decreasing poverty and increasing economic productivity. Should the World Bank continue to give money to the government of Nicaragua, which – especially of late – has been showing a decrease in political stability and democratic processes? History shows that international loans provide little help when countries suffer from decreases in stability and equality within their system.
The World Bank justifies the money that Nicaragua receives: “Nicaragua has achieved a real Gross Domestic Product (GDP) growth of 5 percent in 2012 and 4.6 percent in 2013, returning to pre-crisis growth levels.” GDP, however, does not paint a complete picture of the country’s performance. Most of the wealth within Nicaragua is located among the upper class, making the GDP less accurate for the country as a whole. Gross Domestic Product in purchasing power parity (PPP) in 2012 was estimated at $20.04 billion USD, and GDP per capita in PPP at $3,300 USD, making Nicaragua the second poorest country in the Western Hemisphere.
Instead of looking at the GDP of Nicaragua, the World Bank should be focusing on the Gini coefficient of the country. The Gini coefficient levels of the Nicaragua have been far below average for the world and even below average for the rest of Latin America and the Caribbean. The Gini coefficient is a number that represents the income distribution of a nation. According to data from the UN Development Programme, Nicaragua ranks as the 129th country out of 187 countries based upon Gini. The Gini coefficient is seen by many as a better representation of the inequality and the progress that a country is making, and should be taken into account before the World Bank justifies giving millions to a country ill-equipped to use the money wisely. This statistic, which the World Bank keeps track of, should make the organization realize that while GDP may go up, it is not the sole indicator of a country’s success.
After both a recent election scandal in which the current administration was accused of fixing the election and a constitutional change to eliminate term limits for the president, Nicaragua is moving away from responsible government, towards a more tyrannical rule. President Daniel Ortega, along with the majority Sandinista government, approved the constitutional change that not only eliminated presidential term limits, but also changed the necessary requirements to win the election. Before the change, in order to win the presidency, an individual was required to garner at least 35 percent of the vote; however, now a candidate only needs the most votes to win the election. This could pose multiple problems, specifically if voter turnout is very low, meaning the presidency could potentially be decided by a very slim minority. The lawmakers of the country have begun to make it easier and easier for the current president to serve for life, causing the perception of political corruption within the country, as well as creating distaste for the courts’ decision to not enforce term limits during Ortega’s third tem, which at the time, was unconstitutional.
Simply giving money to a government prone to corruption will not achieve the World Bank’s goal to “face the challenges ahead if [Nicaragua] can further increase productivity, competitiveness, and broaden access to opportunities for all its citizens.” In the end, this would not actually help the country and pull the people out of poverty, but it would keep them within a cycle of dependence. Simply giving money to Nicaragua whenever the government asks for it could easily lead down a similar path traveled by the World Bank and IMF in the 1970s and 80s in Latin America. That time period is historically known as the “lost decade” of the 80s, in which countries that received aid went into severe economic depressions after defaulting on their loans.
As Christians, instead of simply handing people what they want we should be teaching them how to achieve what they need. Jesus teaches that we should go and help others by guiding them, but that does not mean that everything should be given freely to all that ask. Instead we need to allow the Nicaraguan government to invest in its people, allowing them to grow the gifts that God has given them.
