CAPITAL: Managua.

MONETARY UNIT: The gold córdoba (c$) is a paper currency of 100 centavos. There are coins of 5, 10, 25, and 50 centavos and 1 and 5 córdobas, and notes of 1, 2, 5, 10, 20, 50, 100, 500, 1,000, 5,000, 10,000, 20,000, 50,000, 100,000, 200,000, 500,000, 1,000,000, 5,000,000, and 10,000,000 córdobas. c$1 = us$0.07994 (or us$1 = c$12.510) as of 31 March 2000.

FLAG: The national flag consists of a white horizontal stripe between two stripes of cobalt blue, with the national coat of arms centered in the white band.

LEGAL HOLIDAYS: New Year's Day, 1 January; Labor Day, 1 May; Liberation Day (Revolution of 1979), 19 July; Battle of San Jacinto, 14 September; Independence Day, 15 September; All Saints' Day, 1 November; Christmas, 25 December. Movable religious holidays include Holy Thursday and Good Friday.

ANTHEM: Salve a ti, Nicaragua (Hail to You, Nicaragua).

TIME: 6 am = noon GMT.

WEIGHTS AND MEASURES: The metric system is the legal standard, but some local units are also used.

Source Database: Worldmark Encyclopedia of the Nations

Table of Contents
AGRICULTURE | ANIMAL HUSBANDRY | ARMED FORCES | BALANCE OF PAYMENTS | BANKING AND SECURITIES | CLIMATE | CUSTOMS AND DUTIES | DEPENDENCIES | DOMESTIC TRADE | ECONOMIC DEVELOPMENT | ECONOMY | EDUCATION | ENERGY AND POWER | ENVIRONMENT | ETHNIC GROUPS | FAMOUS NICARAGUANS | FISHING | FLORA AND FAUNA | FOREIGN INVESTMENT | FOREIGN TRADE | FORESTRY | FURTHER READINGS | GOVERNMENT | HEALTH | HISTORY | HOUSING | INCOME | INDUSTRY | INSURANCE | INTERNATIONAL COOPERATION | JUDICIAL SYSTEM | LABOR | LANGUAGES | LIBRARIES AND MUSEUMS | LOCAL GOVERNMENT | LOCATION, SIZE, AND EXTENT | MEDIA | MIGRATION | MINING | ORGANIZATIONS | POLITICAL PARTIES | POPULATION | PUBLIC FINANCE | RELIGIONS | SCIENCE AND TECHNOLOGY | SOCIAL DEVELOPMENT | SOURCE CITATION | TAXATION | TOPOGRAPHY | TOURISM, TRAVEL, AND RECREATION | TRANSPORTATION | VIEW MULTIMEDIA FILE(S)

LOCATION, SIZE, AND EXTENT

Nicaragua, the largest of the Central American countries, has an area of 129,494 sq km (49,998 sq mi), which includes the area covered by the waters of Lake Nicaragua (about 8,000 sq km/3,100 sq mi) and Lake Managua (about 1,000 sq km/390 sq mi). Comparatively, the area occupied by Nicaragua is slightly larger than the state of New York. The country has a length of 580 km (360 mi) NE-SW and a width of 494 km (307 mi) NW-SE. Bounded on the N by Honduras, on the E by the Caribbean Sea, on the S by Costa Rica, and on the W by the Pacific Ocean, Nicaragua has a total boundary length of 2,141 km (1,330 mi).

In 1980, Nicaragua unilaterally abrogated its 1928 treaty with Colombia, confirming that nation's sovereignty over the Caribbean archipelago of San Andrés and Providencia, about 190 km (120 mi) off the Nicaraguan coast. Nicaragua also disputes the Treaty of Quita Sueño, ratified by the US Senate in July 1981, according to which Colombia received the uninhabited islands of Quita Sueño Bank, Roncador Cay, and Serrana Bank.

Nicaragua's capital city, Managua, is located in the southwestern part of the country.

TOPOGRAPHY

The Caribbean coast, known as the Mosquito (or Miskito) Coast or Mosquitia, consists of low, flat, wet, tropical jungle, extending into pine savannas 80-160 km (50-100 mi) inland. The coastal lowland rises to a plateau covering about one-third of the total area. This plateau is broken by mountain ranges extending eastward from the main cordillera to within 64-80 km (40-50 mi) of the Caribbean coast. The mountainous central area forms a triangular wedge pointed southeast, rising at its highest to some 2,000 m (6,600 ft). The plains and lake region, in a long, narrow structural depression running northwest to southeast along the isthmus, contains a belt of volcanoes rising to 1,500 m (5,000 ft) and extending from the Gulf of Fonseca to Lake Nicaragua. In this region is located Lake Managua, at 41 m (136 ft) above sea level, which drains through the Tipitapa Channel into Lake Nicaragua, at 32 m (106 ft) above sea level, which, in turn, drains through the San Juan River eastward into the Caribbean. Lake Nicaragua is about 160 km (100 mi) long and 72 km (45 mi) wide at the widest point, while Lake Managua is 56 km (35 mi) long by 24 km (15 mi) wide.

The principal waterways are the Coco (or Segovia) River, navigable up to 240 km (150 mi) inland from the eastern Mosquito Coast, and the San Juan, navigable to within a few miles of the Caribbean, where a series of rapids halts transportation.

Nicaragua lies in an earthquake zone. The last major earthquake, which occurred on 23 December 1972, claimed an estimated 10,000 lives and demolished a 70-square-block section of central Managua. A major volcanic eruption was that of Cerro Negro (977 m/3,205 ft), northwest of Managua, in 1968.

CLIMATE

Except in the central highlands, the climate is warm and humid. Average humidity in Managua in June, the most humid month, is 84%; in April, the driest month, 62%. The mean temperature, varying according to altitude, is between 20° and 30°C (68° and 86°F). In Managua, monthly average temperatures range from a minimum of 23°C (73°F) and a maximum of 30°C (86°F) in January to a minimum of 26°C (79°F) and a maximum of 31°C (88°F) in July. There are two seasons: a wet season, from May to December, and a dry season, from January through April. Rainfall, however, varies according to region, and the rainy season in the eastern area may extend 9 or even 12 months. Average annual rainfall along the Mosquito Coast reaches 254-635 cm (100-250 in) as a result of the easterly trade winds blowing in from the Caribbean; the highlands also have heavy rainfall. Managua receives 114 cm (45 in), while the Pacific coast averages over 200 cm (80 in) a year.

FLORA AND FAUNA

The central highlands region has extensive forests of oak and pine on the slopes, but lower valley elevations show damage from fire and agricultural activities. The largest pine savanna in the rainy tropics stands on the lowlands behind the Mosquito Coast. The wet and humid Caribbean coastal plain has an abundance of tropical forest, with wild rubber, cedar, ebony, mahogany, and rosewood attracting some exploitation.

Wildlife includes the puma, deer, monkey, armadillo, alligator, parrot, macaw, peccary, and several species of snakes (some poisonous). Lake Nicaragua contains the only freshwater sharks in the world, owing to a prehistoric geological movement that separated the lake from the Pacific Ocean, gradually changing the ocean water into fresh water.

ENVIRONMENT

Nicaragua's major environmental problems are soil erosion, caused in part by cultivation of annual crops on steep slopes, and depletion of upland pine forests for lumber, fuel, and human settlement. The nation lost 24% of its forest and woodland between 1983 and 1993. One contributing factor is the use of wood for fuel. Excessive or ineffective use of pesticides to control malaria, along with widespread agricultural use, has resulted in some environmental contamination. Nicaragua's cities produce 0.5 million tons of solid waste per year. Industrial pollutants have contaminated the lakes and rivers. The nation has 42.0 cu mi of water. Fifty-four percent is used for farming and 21% in industrial activity. As of 1995, 19% of Nicaragua's city dwellers and 67% of its rural population did not have access to safe drinking water. Dumping of sewage and chemical wastes has made Lake Managua unsuitable for swimming, fishing, or drinking. Primary responsibility for resource conservation is vested in the Nicaraguan Institute of Natural Resources and Environment (Instituto Nicaragüense de Recursos Naturales y del Ambiente--IRENA), established in October 1979.

In the mid-1990s, eight of the nation's mammal species were endangered. Seven bird species and 68 plant species were threatened with extinction. Endangered or extinct species in Nicaragua include the tundra peregrine falcon, four species of turtle (green sea, hawksbill, leatherback, and olive ridley), the spectacled caiman, and the American crocodile.

HISTORY

Nicaragua derives its name from that of the Amerindian chief Nicarao who once ruled the region. The first European contact came with Columbus in 1502. At that time the northern part of the country was inhabited by the Sumo Amerindians, the eastern by the Miskitos, and the region around Lakes Nicaragua and Managua by agricultural tribes.

The first Spanish settlements in Nicaragua were founded by the conquistador Gil González de Ávila in 1522. The cities of Granada and León were founded in 1524 by Francisco Hernández de Córdoba. During the next 300 years--most of the colonial period--Nicaragua was ruled as part of the captaincy-general of Guatemala. On 15 September 1821, the independence of the five provinces of Central America, including Nicaragua, was proclaimed. After a brief period under the Mexican empire of Augustín de Iturbide (1822-23), Nicaragua joined the United Provinces of Central America. On 30 April 1838, Nicaragua declared its independence from the United Provinces, and a new constitution was adopted.

Nicaragua did not immediately consolidate as a nation. The Spanish had never entirely subdued Nicaragua, and the Mosquito Coast at the time of independence was an Amerindian and British enclave, especially around the Bluefields area. Britain occupied the Mosquito Coast during the 1820s and 1830s, and maintained a significant presence thereafter. Beyond that, Nicaragua was torn apart by a bitter struggle between liberals, based in León, and conservatives, based in Granada.

Yet another factor impeding Nicaragua's development was constant foreign intervention focusing on the trade route through the country. Commodore Cornelius Vanderbilt competed with the British for control of the transisthmian traffic, a rivalry settled by the Clayton-Bulwer Treaty of 1850. In 1853, liberals led by Máximo Jérez and Francisco Castellón revolted and invited the US military adventurer William Walker to help their rebellion. Walker invaded Nicaragua in 1855, capturing Granada and suppressing Jérez, and had himself elected president in 1856. He lasted only one year, and was captured and executed in Honduras in 1860. Conservatives seized control in 1863 and ruled until 1893.

The 30-year conservative reign brought increases in coffee and banana production. Liberals successfully revolted in 1893, and José Santos Zelaya became president. Zelaya's dictatorship lasted 16 years, during which he incorporated most of the Mosquito territory into Nicaragua, developed railroads and lake transportation, enlarged the coffee plantations, and stirred up revolts among his Central American neighbors. In 1901, by the Hay-Pauncefote Treaty, Great Britain gave the US the undisputed right to build a Central American canal. Zelaya was finally deposed in 1909, after a conservative revolt.

From 1909 until 1933, the US grew in influence in Nicaragua. Conservatives immediately asked for help from Washington. The US placed an American agent in the customhouse in 1911, and US banks extended considerable credit to the bankrupt Treasury. US marines and warships arrived in 1912 in support of president Adolfo Díaz. US forces remained active in Nicaraguan politics and administered the country directly or through handpicked rulers until August 1925. During this period, the Bryan-Chamorro Treaty of 1914 allowed the US to build a canal across Nicaragua. After the marines withdrew, the liberals revolted against the US-backed conservative government of Diego Manuel Chamorro and established a government on the Mosquito Coast. The marines returned in 1926 to reimpose Díaz.

In November 1928, the marines supervised the electoral victory of the liberal José María Moncada, with whom the conservatives had made peace. The guerrilla hero Gen. Augusto César Sandino began organizing resistance to the marine occupation force in 1927, and fought the US troops to a standstill. With the inauguration of US President Franklin D. Roosevelt's "good neighbor" policy in 1933, the marines were pulled out for the last time. But the marines left a legacy, having built the Nicaraguan National Guard, headed by Anastasio ("Tacho") Somoza García.

In the following year, the liberal Juan B. Sacasa was elected to office. Also during 1934, officers of the National Guard shot Sandino after offering to negotiate a settlement with his forces. The National Guard was now unchallenged in Nicaragua, and three years later, Somoza unseated Sacasa and assumed the presidency. Somoza and his family were to rule Nicaragua directly or indirectly for the next 42 years.

Somoza was president until 1947, making constitutional changes as necessary to prolong his term. Although he retired in 1947, he returned in 1950, and was assassinated in 1956. "Tacho's" son, Luis Somoza Debayle, was president of Congress, and immediately became president under the constitution. The next year, he was elected by a rather suspicious 89% of the vote.

In 1962, a law was passed prohibiting relatives within four generations from immediately succeeding Luis Somoza as president. Accordingly, in February 1963, René Schick Gutiérrez of the National Liberal Party was elected president for a four-year term. Schick died in office in August 1966 and was succeeded by his first vice-president, Lorenzo Guerrero. The presidential election of February 1967 returned the Somozas to power with an overwhelming victory for Anastasio Somoza Debayle, the younger brother of Luis.

According to Nicaraguan law, Anastasio's term in office was due to end in May 1972. But by March 1971, Somoza had worked out an agreement allowing him to stand for reelection in 1974, ruling in the interim with a three-man coalition government. Anastasio and his triumvirate drew up a new constitution, signed by the triumvirate and the cabinet on 3 April 1971. Then, after declaring nine opposition parties illegal, Somoza easily won the September 1974 elections.

While Somoza consolidated his hold on Nicaragua, an insurgent organization, the Sandinista National Liberation Front (Frente Sandinista de Liberación Nacional--FSLN), began to agitate against his rule. At first, the group was small and confined to the foothill and mountain regions of Nicaragua. But domestic opposition to Somoza mounted, driven by the family's monopolistic and corrupt economic practices. One powerful example of the corruption was the disappearance of half the US relief aid extended to Nicaragua after a devastating 1972 earthquake. Most of the rebuilding of Managua was done by Somoza-controlled firms on Somoza's land. Throughout the 1970s, Somoza's opposition grew, and US support began to dissipate.

In December 1974, guerrillas kidnapped 13 prominent political personalities, including several members of the Somoza family. The group secured a ransom of $1 million and the release of 14 political prisoners. Somoza responded by declaring a martial law and unleashed the National Guard. The Guard's repressive tactics created even more enemies of the Somoza regime. Repression continued throughout the 1970s, and climaxed in January 1978 with the assassination of Pedro Joaquín Chamorro, editor and publisher of the opposition newspaper La Prensa. The assassins were never found, but most felt that Somoza and the National Guard were behind the killing of this moderate leader from a prominent family.

By 1979, loss of support from the Church and the business community left Somoza without domestic allies. He had become isolated diplomatically, and after the Carter administration cut off military aid, his ability to remain in power further weakened. In May, 1979, the Sandinistas launched a final offensive. By July, Somoza had fled the country (he was assassinated on 17 September 1980 in Asunción, Paraguay). By this time, an estimated 30,000-50,000 people had died during the fighting.

Nicaragua was now ruled by a coalition Government of National Reconstruction, made up of various religious and political leaders, but dominated by the Sandinista leadership. That coalition had unraveled by mid-1980, when Alfonso Robelo and Violeta Barrios de Chamorro, widow of Pedro Chamorro, resigned from the government. Chamorro continued publishing La Prensa and preserved the paper's reputation for independence, while Robelo went into exile and supported the resistance. The Sandinistas dissolved the National Guard, and in 1982 a number of anti-Sandinista guerrilla groups (broadly referred to as the "contras") began operating from Honduras and Costa Rica. These groups consisted of former Guard members and Somoza supporters ("Somocistas") who engaged in guerrilla-style offensives, aimed at disrupting Nicaragua's agriculture and oil supplies.

The Sandinistas engaged in an ambitious program to develop Nicaragua under leftist ideals. They nationalized Somoza's land and commercial interests. They also initiated agrarian reform, and announced a series of social programs, including literacy and public health campaigns. Politically, they professed democratic ideals, but delivered only sporadically. A Statute on Rights and Guarantees was adopted, but elections were postponed. As antigovernment activity increased, the government became increasingly authoritarian. A state of emergency, proclaimed in March 1982 and extended into 1987, introduced prior censorship, particularly felt by La Prensa. Daniel Ortega emerged as the leader of the Sandinistas, and became president when elections were finally held in 1984. However, in that election, the major opposition groups withdrew from the election, making it a rather hollow victory.

In April 1981, the Reagan administration cut off aid to Nicaragua and, citing the Sandinistas' support for leftist guerrillas in El Salvador, began aiding the contras with funds channeled through the CIA. The Reagan administration sent military aid to Honduras and Costa Rica and sought increases in funding for the contras. Despite some overtures from the Sandinistas, including the expulsion of 2,200 Cuban advisors, the US continued to support the contras.

Internationally, the Sandinistas made some gains. In 1986, the World Court ruled that the US had violated international law by mining the harbors in Nicaragua. The rulings made little difference because the US refused to recognize the decision. In the US, Congress proved reluctant to fund the Nicaraguan resistance. In 1986, it was revealed that US government funds derived from covert arms sales to Iran had been secretly diverted to provide aid to the contras in violation of a US congressional ban on such aid.

On the domestic scene, the Sandinistas were less successful. Their economic policies had not produced impressive results. The inflation rate reached 33,000% in 1988 and reserves dwindled. Price controls had led to serious shortages in basic foodstuffs. Lacking any capital for investment, the situation was becoming hopeless. Attempts to pin the economic woes on the civil war fell on deaf ears as the economic situation worsened.

The Sandinistas continued to seek negotiated settlements for their internal strife. In 1986, they signed an accord with leaders of the Miskito Amerindians, granting autonomy to their region. In August 1987 Nicaragua signed the Arias peace plan for Central America. Nicaragua promised guarantees of democratic rights, and a reduction of hostilities with the contras, including a cease-fire, a reduction in the armed forces, repatriation or resettlement of refugees, and amnesty for the rebels. In exchange, the Nicaraguans were to receive guarantees of nonintervention by outside powers. Implementation was sporadic, but elections were held in 1990. The US, for its part, pledged $9 million in support of free elections, and urged all other outside donors to tie aid to the holding of elections.

The 1990 elections had a surprise winner--Violeta Chamorro. Heading a 10-party alliance called the National Opposition Union (UNO), Chamorro received 54% of the vote to Daniel Ortega's 41%. UNO also took a majority in the National Assembly. Chamorro moved to liberalize the Nicaraguan economy, but found it sluggish. Austerity measures led to dislocations and political disquiet. The US delivered miniscule amounts of economic aid, to the disappointment of hopeful Nicaraguans. Nevertheless, Chamorro's government succeeded in driving down hyperinflation that had reached 13,500% to an acceptable single-digit level, and obtaining relief of much of the country's $10 billion foreign debt, as well as achieving stable economic growth of around 4% from 1994 to 1996.

Politically, Chamorro's situation was tenuous. With the Sandinistas still in control of the military, Chamorro had a difficult time achieving a reduction in force. Sandinista organizations and syndicates remained, often striking against the Chamorro government. Meanwhile, the resettlement and repatriation of the contras moved slowly. Some former contras took to the field again, resuming their previous attacks on civilian installations. Chamorro's own coalition, UNO, proved shaky, withdrawing support from her government in 1993 after she attempted to call for new elections. The beleaguered government persisted, but by 1994 the outlook for further progress in unifying the country and implementing democratic and free-market reforms was bleak.

The prospect of a peaceful political transition in the politically polarized country were considered so shaky that international observers were called in for the October 1996 elections, as they had been in 1990. Although the results were later contested, and some irregularities found, the elections proceeded peacefully and without incident. With 80% of the electorate voting, Arnoldo Alemán, the conservative former mayor of Managua, and leader of the Liberal Constitutionalist Party (PLC) defeated Sandinista leader Daniel Ortega in Nicaragua's first peaceful transition of power in 100 years. The Liberal Party took 41 of the 93 seats Chamber of Deputies, while the Sandinistas took 38; the remaining seats were won by leftist and conservative groups. Challenges facing Alemán included the privatization of government-owned enterprises, reduction of underemployment, and the return of (or restitution for) property appropriated by the Sandinistas.

Arnoldo Alemán Lacayo was born on 23 January 1946 in Managua to the Minister of Education during the Somoza dictatorship. He attended the Universidad Nacional Autónoma in Léon to study law, which he practiced upon his graduation in 1967 until 1979. Alemán opposed the Sandinista revolution and became politically active to illustrate this. He was supportive of the Somoza regime and vehemently opposed the Sandinista desire to convert Nicaragua into a communist state after the 1979 revolution. His links to the Cuban-American contingency in the United States as well as with exiled Nicaraguans helped further establish him politically in Nicaragua.

President Arnoldo Alemán Lacayo, and Vice-President Enrique Bolanos Geyer, were inaugurated into office on 10 January 1997. Though the elections were plagued with allegations of corruption, Alemán began his term in office positively. His close ties with right-wing groups and American entrepreneurs helped establish Nicaragua's market economy, and he worked hard to instill strict economic reforms focused on economic growth. Throughout Alemán's term, the GDP has steadily increased. Until 1998, Alemán's efforts paid off--reforms were reaping some success, even amidst the muddied waters the legacy of civil war and years of financial mismanagement had left behind. Then came Hurricane Mitch in 1998, devastating Nicaragua and neighboring Honduras and leaving Nicaragua, already the poorest country in Central America, with $1 billion worth of damage. Worst hit was the agricultural sector, which the country depends on for the majority of its exports. By 1999, Alemán was forced to deal with a trade deficit approaching $900 million. However, despite the destruction caused by Hurricane Mitch, Nicaragua's economy has continued to grow slightly. Aid and debt relief have contributed to this and thus helped stabilize the economy, but the hand of President Alemán and his commitment to free market reforms and economic growth have no doubt played a role as well. Alemán has increased talks with the Sandinistas during his term, and the two parties have indeed found common ground in one area: scandal allegations. In 1998, Daniel Ortega, the Sandinista former president faced accusations from his stepdaughter of sexual abuse dating back to her childhood. Meanwhile, Alemán faced charges that the presidential plane he had been using was actually reported stolen in the United States and that it had been used throughout Central America and Colombia to carry cocaine. Both Ortega and Alemán denied all charges against them.

Alemán has also faced border disputes during his term: in March 2000, it coupled with Costa Rica to continue an ongoing battle over its border with Honduras, each claiming sovereignty over the Gulf of Fonseca. Other challenges during Alemán's presidency have been land reform and the land distribution process (favoring Sandinistas and their supporters), as well as growing poverty and migration issues.

MIGRATION

During the 1980s, Nicaragua hosted more than 10,000 refugees, mainly from El Salvador and Guatemala. Most have since repatriated. Those who chose to remain have been naturalized or granted permanent resident status.

After the Sandinista takeover in 1979, thousands of Nicaraguans left the country. It was estimated in 1987 that 24,000 had fled to Honduras, 16,000 to Costa Rica, and over 200,000 to the US, chiefly to Florida. After the defeat of the Sandinistas in the 1990 elections, some 200,000 Nicaraguans returned from abroad. Under the CIREFCA plan, 1989-94, 70,000 Nicaraguans repatriated. In 1999, the net migration rate was -1.06 migrants per 1,000 population.

ARMED FORCES

In 2000, the regular armed forces, a fusion of the Sandinista and Contra armies, numbered 16,000. The army had 14,000 personnel, the navy 800, and the air force 1,200 (with no combat aircraft and 15 armed helicopters). A reorganization of the army was under way as of 1999. The navy operated five patrol boats and two minesweepers. Weapons remain Russian, but foreign advisors are gone as are foreign subsidies. Nicaragua spent $26 million for defense in 1998 or 1.2% of GDP.

INTERNATIONAL COOPERATION

Nicaragua is a charter member of the UN, having joined on 24 October 1945, and belongs to ECLAC and all the nonregional specialized agencies. It also participates in CACM, G-77, IADB, and OAS, as well as the International Coffee Agreement and other inter-American and international organizations. Nicaragua is a signatory to the Law of the Sea.

The Sandinistas enjoyed considerable international support even before the July 1979 revolution. Not only Cuba, but also Panama and Venezuela backed the guerrillas, and by mid-June 1979, Brazil, Costa Rica, Ecuador, and Mexico had cut diplomatic ties with the Somoza regime. Later in that month, the OAS called for "immediate and definitive replacement" of Somoza with a broadly based democratic government. During the 1980s, relations with the US and other Western governments deteriorated, the borders with Honduras and Costa Rica grew tense, and the Sandinista government found its firmest support in Mexico and in the Communist-bloc countries. In August 1987, Nicaragua signed the Central American peace plan outlined by Costa Rican President Oscar Arias Sánchez.

CUSTOMS AND DUTIES

In 1990, the government's liberalized import schedule allowed private sector imports for the first time in 11 years. Import licenses are only required for the import of sugar. Nicaragua follows the CACM common import tariff schedule with rates ranging from 5% to 15%. Duties are set on an ad valorem basis, and there is a specific consumption (less than 15%) and sales tax (15%). There are also a few prohibitive import duties, like that of chicken at 190%. An Industrial Free Zone operates at Las Mercedes near the Managua international airport. Employment in the Zone more than doubled from 1995 to 1998. There are also two private free zones, and construction of four others was authorized in 1999.

Nicaragua has free trade agreements with Mexico and the Dominican Republic; and is a member of the Central American Common Market (CACM). The country is also a Caribbean Basin Initiative beneficiary.

DEPENDENCIES

Nicaragua has no territories or colonies.

LOCAL GOVERNMENT

In July 1982, the nation's departments were consolidated into six regions and three special zones, each to be administered by an official directly responsible to the central government. However, under the Chamorro government, Nicaragua has returned to the old system, with 15 departments and two autonomous regions along the Atlantic coast.

Local elections for mayoralties accompany national elections.

GOVERNMENT

Although constitutionally defined as a democracy, Nicaragua, between 1934 and 1979, was ruled by the Somoza family, who did not hesitate to suppress political opponents violently. The last of the constitutions promulgated during the Somoza period, effective 3 April 1974, provided for a bicameral Congress and a president elected for a six-year term, and guarantees of political rights. After the FSLN took power as the Government of National Reconstruction in July 1979, this constitution was abrogated and Congress dissolved. From July 1979 until November 1984, executive power was vested in a junta composed of five members (three members after April 1980).

The 1984 electoral reforms created an executive branch with a president elected for a six-year term by popular vote and assisted by a vice president and a cabinet. (The presidential term was shortened to five years in 1995.) Legislative power is vested in a 93-member unicameral National Constituent Assembly elected under a system of proportional representation for six-year terms. The electoral process in Nicaragua is said to be one of the most complicated in the Americas as it forces voters to select candidates for the office of president, National Assembly posts, and local municipalities from a vast number of political parties. Further, vote count is still a tedious, manual process.

The Sandinista constitution of 1987 is still in effect; it preserves the previous institutional structure. President Arnoldo Alemán's Liberal Alliance, a conservative group that supported the Somoza dictatorship, also supported the National Opposition Union (UNO) candidate and its candidate former President Violeta Chamorro during her six-year reign. Alemán's support diminished when Chamorro failed to control the UNO coalition; Aleman thus switched to the Liberal Party to launch his presidential campaign in 1996. The disbanded UNO party forced Chamorro to link with the Sandinistas in Congress to maintain control of her office; she thus maintained the Sandinista control over the Revolutionary Army. Alemán's main purpose as the National Liberal Party representative was to overturn Chamorro and try to reverse some of the economic policies of her regime.

President Alemán pledged to increase collaboration between his ultraconservative Liberal Party and the Sandinistas. Alemán, who has been commended for his efforts to achieve some consensus with his political opponents, renewed collaboration talks in 1999--much to the approval of the numerous aid agencies working in the aftermath of Hurricane Mitch.

JUDICIAL SYSTEM

At the head of the judicial branch is the Supreme Court in Managua whose justices are appointed by the National Assembly for six-year terms. The Supreme Court consists 12 judges and has administrative, criminal, civil, and constitutional matters divisions.

The judicial system consists of both civilian and military courts. Military courts investigate, prosecute and try crimes committed by or against the police or armed forces. Therefore, the military courts have jurisdiction over citizens involved in security-related offenses. In a controversial 1993 decision, a military court exercised jurisdiction to convict a former member of the EPS (Sandinista Popular Army).

LIBRARIES AND MUSEUMS

The National Library in Managua is the largest library in the country, holding a collection of 80,000 volumes. The National Autonomous University of Nicaragua in Leon holds the largest university collection with 36,700 volumes. In 1990, Nicaragua had 13 branch public libraries holding a total of 187,000 volumes. The largest branch is in Leon, and holds 32,000 volumes. There is a Central American Institute in Managua with 39,000 volumes focusing on the social and economic conditions of the region. The National Museum, founded in 1896, is in Managua. There is an archeological museum in Granada and three provincial historical and archeological museums.

POLITICAL PARTIES

Nicaragua's traditional two parties were the National Liberal Party (Partido Liberal Nacionalista--PLN) and the Nicaraguan Conservative Party (Partido Conservador Nicaragüense--PCN). The PLN favored separation of church and state, some social legislation, no foreign interference in the political process, and limited land reform. It was supported by government employees, the National Guard, and large segments of the middle and lower classes. The PCN desired government cooperation with the Catholic Church (but also advocated freedom of religion), less government interference in private business, and a regressive tax structure.

When the leftist Sandinista National Liberation Front (FSLN), which was founded in 1962, came to power in July 1979, all political parties except those favoring a return to Somoza rule were permitted. Since the Somozas had all been liberals, the PLN was specifically banned.

Under the Sandinistas, Nicaragua's governing political coalition, the Patriotic Front for the Revolution (Frente Patriótico para la Revolución--FPR), formed in 1980, consisted of the FSLN, the Independent Liberal Party (Partido Liberal Independiente--PLI), the Popular Social Christian Party (Partido Popular Social Cristiano--PPSC), and the Moscow-oriented Nicaraguan Socialist Party (Partido Socialista Nicaragüense--PSN). Opposition parties included the Conservative Democratic Party (Partido Conservador Demócrata--PCD), the Nicaraguan Social Christian Party (Partido Social Cristiano Nicaragüense--PSCN), and the Social Democratic Party (Partido Social Demócrata-- PSD).

The National Opposition Union (UNO), under which Violeta Chamorro was elected president in 1990, was a 10-party coalition that included both the Conservatives and the Liberals, as well as several parties formerly aligned with the Sandinistas, including the PLI and the PSD. The PLI was also the party of Vice President Virgilio Godoy. Others included the Christian Democratic Union (UDC), the National Democratic Movement (MDN), the National Action Party (PAN), and the Neo-Liberal Party (PALI).

By the mid-1990s, the UNO coalition had disbanded. Nicaragua had numerous parties ranging across the political spectrum, although the country was dominated by two principal opposed groups, the Liberal Constitutionalist Party (PLC), a right-wing successor to the traditional liberal party, and, on the left, the still-active FSLN. In the October 1996 presidential election, Arnoldo Alemán, former mayor of Managua and leader of the PLC, was elected with 51% of the vote, supported by a coalition of parties and factions called the Liberal Alliance (AL). Daniel Ortega, the FSLN candidate, won 38% of the vote, with the rest going to candidates from smaller parties. In the legislative elections, 42 of the 93 seats in the National Assembly were won by the National Alliance, with the FSLN winning 36, and the remaining 15 going to candidates from nine other parties. These included the Christian Way (Camino Cristiano), the Conservative Party of Nicaragua (PCN), the center-right Nicaraguan Resistance Party (PRN), the center-left Sandinista Renovation Movement (MRS), and the center-right Independent Liberal party (PLI). Altogether, 24 political parties and popular organizations participated in the 1996 elections. The next national elections were scheduled for the year 2000.

TOURISM, TRAVEL, AND RECREATION

Although Nicaragua has beaches on two oceans, magnificent mountain and tropical scenery, and the two largest lakes in Central America, a decade of military conflict retarded the development of the tourist industry. In 1997, 358,000 tourists arrived in Nicaragua and tourist revenues reached $74 million. In that year there were 2,217 hotel rooms with 4,002 beds and an occupancy rate of 65%. All visitors must have a valid passport. US citizens can obtain 30-day visas. Baseball is the national sport. Basketball, cockfighting, bullfighting, and water sports are also popular.

According to 1999 UN estimates, the cost of staying in Managua ranges from $118 to $166 depending upon the choice of hotel.

SOCIAL DEVELOPMENT

Nicaragua's basic social welfare system was established during the Somoza period. A social insurance law enacted in 1956 provides for national compulsory coverage of employees against risks of maternity, sickness, employment injury, occupational disease, unemployment, old age, and death. These programs are financed by contributions from employers, employees and the government, and provide coverage for paid employees. Family allowance legislation enacted in 1982 provides benefits for the children of employees under the age of 15, but are provided on an earnings-tested basis.

There is no official discrimination against women, and a number of women hold government positions. However, women continue to suffer de facto sex discrimination in many segments of society. They tend to hold traditionally low-paid jobs in the health, education, and textile sectors while occupying few management positions in the private sector. In 1995, however, women held both the presidency and the vice-presidency. As of 1996, 9 of 93 members of Parliament were women. Domestic and sexual violence are common, and the perpetrators are seldom prosecuted, In 1997, the stepdaughter of Sandinista leader and former president Daniel Ortega filed charges accusing Ortega of having sexually molested her from the age 11. She led an effort to rescind Ortega's immunity from prosecution as a National Assembly deputy; the matter was still pending at the end of 1998.

Dire economic circumstances force many children to work to contribute to household income. Labor laws prohibit children under the age of 12 from working, and limit children aged 12-16 to working six hours a day. Many children work for low wages on banana or coffee plantations, while in urban areas, children often work as vendors in the streets. The Child and Family Act that took effect in late 1998 barred juveniles from being held in adult correction facilities and extended other types of protection to minors.

Human rights abuses have declined since 1995, but there were continued reports of the mistreatment of detainees, although torture is punishable by law.

ETHNIC GROUPS

The Nicaraguan population is basically mestizo, a mixture of white and Amerindian. There are no census data on racial composition, but estimates place the mestizo component at 69% and the white population at 17%; blacks account for 9%, and Amerindians for the remaining 5%.

Traditionally, the Atlantic littoral has been inhabited mainly by blacks from Jamaica, Belize, and various present and former British possessions in the Caribbean. The more densely populated Pacific coast highland has long been basically mestizo in composition. Most Amerindian groups in Nicaragua have been assimilated, but Miskito Amerindians, as well as Sumus, make their traditional homes on the Mosquito Coast and neighboring areas.

LANGUAGES

Spanish is the official language and is spoken by the overwhelming majority of the population. Some Nahuatl and other Amerindian words and phrases are in common use. English is often spoken as a second language at professional levels.

ORGANIZATIONS

In 1993 there were three cooperative organizations including one for cotton growers and one for shoemakers and leather workers. There were four employers' organizations as of that year. Of the employers' associations, the most important was the Higher Council of Private Enterprise (Consejo Superior de la Empresa Privada--COSEP).

RELIGIONS

Roman Catholicism is the predominant religion, claiming the allegiance of about 79.2% of the population. The country comprises one archbishopric (with its seat at Managua) and five bishoprics (León, Granada, Bluefields, Matagalpa, and Estelí). Relations between the Sandinista government and the Roman Catholic Church deteriorated in 1982-83. There were assaults on individual churches and members of the clergy, and several antireligious incidents occurred during the visit by Pope John Paul II in March 1983. Relations began to improve in 1987, aided by the presence of a new papal nuncio, Pablo Giglio.

Approximately 15.1% of the populace are members of evangelical churches. Another 1.5% are members of the Moravian Church, and 0.1% belong to the Episcopal Church. An additional 1.9% claim membership in other churches or religious groups; 8.5% profess no religion or are atheistic. There are also small communities of Jews, Muslims, Mormons, Mennonites, Jehovah's Witnesses, and the Church of Scientology. Amerindian tribal religionists and spiritists also practice, sometimes combining elements of Christianity and African religions.

SCIENCE AND TECHNOLOGY

Among Nicaragua's scientific learned societies and research institutes are the Geophysical Observatory, founded in 1980, the Nicaraguan Society of Psychiatry and Psychology, founded in 1962, and the National Center of Agricultural Information and Documentation, founded in 1984, as part of the Ministry of Agriculture; all three are in Managua. Nicaragua has six universities and colleges offering degrees in agricultural studies and other scientific studies. In 1987-97, science and engineering students accounted for 33% of college and university enrollments. The National Museum of Nicaragua, founded in 1896 in Managua, has exhibits concerning archaeology, ceramics, zoology, botany, and geology.

At last estimate, total research and development expenditures amounted to c$989 million cordobas; 302 technicians and 725 scientists and engineers were engaged in research and development.

TRANSPORTATION

Main transportation arteries are concentrated in the more densely populated Pacific region. The national road network in 1999 totaled 16,382 km (10,026 mi), of which 1,818 km (1,130 mi) were paved. The Inter-American Highway from Honduras to Costa Rica was completed in 1972. The Pacific Highway begins in Granada and passes through Managua, León, and Chinandega to Corinto. In 1995 there were 72,000 passenger cars and 75,000 commercial vehicles registered. Pacific Railways of Nicaragua, government-owned, with a length of 373 km (231 mi), was shut down in 1993.

The Naviera Nicaragüense provides regular services to Central America, the US, and Europe. As of 1998, Nicaragua had no merchant fleet. Corinto is Nicaragua's only natural harbor on the Pacific coast and the major port, handling about 60% of all waterborne trade. Other ports include Puerto Sandino and San Juan del Sur on the Pacific and Puerto Cabezas on the Atlantic coast. In 1983, Bulgaria pledged to help Nicaragua build a deepwater port at El Bluff, on the Atlantic; the port now allows ships from Europe, Africa, and the Caribbean to deliver goods to Nicaragua without passing through the Panama Canal. Inland waterways total 2,220 km (1,380 mi), including Lake Nicaragua and the San Juan River.

Air transportation is important because of limited road and railway facilities. In 1998 there were an estimated 184 airports, only 13 of which had paved runways. A new state-owned airline, Aerolíneas de Nicaragua (AERONICA), provides services to El Salvador, Costa Rica, Panama, and Mexico. The principal airport is Augusto Sandino, an international terminal at Las Mercedes, near Managua. In 1997, 51,000 passengers were carried on scheduled domestic and international flights.

FAMOUS NICARAGUANS

International literary fame came to Nicaragua with the publication of Azul, a collection of lyric poetry and short stories by Rubén Darío (Félix Rubén Garcia-Sarmiento, 1867-1916). Born in Metapa (renamed Ciudad Darío in his honor), Darío created a new literary style in Spanish, exemplified by "art for art's sake" and a revelry in the senses. Miguel Larreynaga (1771-1845) was an outstanding figure during the colonial period and later an ardent independence leader, teacher, jurist, and author. Santiago Arguëllo (1872-1940) was a noted poet and educator. Three modern poets are Fray Azarías Pallais (1885-1954), Alfonso Cortés (1893-1963), and Salomón de la Selva (1893-1959). Luis Abraham Delgadillo (1887-1961), a writer, educator, and musical conductor, was also Nicaragua's leading composer.

The Somoza family, which ruled Nicaragua from 1934 to 1979, included Anastasio Somoza García (1896-1956), president during 1937-47 and again during 1950-56; his oldest son, Luis Somoza Debayle (1922-67), president during 1956-63; and a younger son, Anastasio Somoza Debayle (1925-80), president during 1967-72 and again from 1974 until the 1979 revolution. The Sandinistas, who overthrew the Somoza dynasty, take their name from the nationalist Gen. Augusto César Sandino (1895-1934). José Daniel Ortega Saavedra (b.1946) emerged as the leading figure in the junta that governed Nicaragua from 1979 to 1990.

EDUCATION

After the Sandinista takeover, a literacy campaign (with the help of 2,000 Cuban teachers) was launched in 1980. At the end of the campaign, the government claimed that the adult illiteracy rate, which was 50% in 1975, had been reduced to 13%. For the year 2000, the rate of adult illiteracy has been estimated at 35.7% (males, 35.8%; females, 35.6%).

Primary and secondary education is free and compulsory between the ages of 6 and 13. In 1998, 783,002 pupils attended 7,224 primary schools. Also in 1998, 287,476 students were enrolled in secondary schools, with approximately 6,000 teachers. In 1997, there were a total of 56,558 students enrolled in institutions of higher learning, with 3,840 teachers.

The National Autonomous University of Nicaragua offers instruction in 10 faculties: medicine, law and social sciences, dentistry, chemistry, and humanities in León; and agriculture, education, economics, physical and mathematical sciences, and humanities in Managua. The Central American University, affiliated with Georgetown University, opened in Managua in 1961, and the privately controlled Polytechnic University of Nicaragua, also in Managua, attained university status in 1977. Some others include the Central American Institute for Business Management, affiliated with the Harvard Business School, the University of Mobile, affiliated with Mobile College, Alabama; Nicaraguan Catholic University, and the National Engineering University. There were a total of 14 universities in Nicaragua in 1998.

HEALTH

Slow progress in health care was made from the 1960s through the 1980s, as the crude death rate dropped from 19 per 1,000 population in 1960 to 6.8 in 1990-95; during 1996, the infant mortality rate was 47 per 1,000 live births, and average life expectancy was 68.4 years in 1998. The maternal mortality rate was 124 per 100,000 live births in 1997. However, malnutrition and anemia remained common, poliomyelitis and goiter were endemic, and intestinal parasitic infections (a leading cause of death) afflicted over 80% of the population. The prevalence of child malnutrition was 12% of children under 5 in 1989-95. The goiter rate was 4.3 per 100 school age children. There were 2,836 reported cases of tuberculosis in 1990-95. Immunization rates for children up to one year old in 1997 were as follows: tuberculosis (99%); diphtheria, pertussis, and tetanus (94%); polio (99%); and measles (94%). Total health care expenditures for 1995 were $35 per capita.

Safe water is available to 61% of the Nicaraguan population in 1990-95. In 1997, according to UNICEF, the maternal mortality rate was 124 per 100,000 live births. The fertility rate was 5 per 1,000 people in 1990-95. The 1990-95 birthrate was 3.9 births per woman, with 44% of married women (ages 15 to 49) using some form of contraception in 1997. In 1995, there were 11 hospital beds per 1,000 inhabitants. In 1997 there were 7 doctors per 10,000 people.

The HIV-1 seroprevalence was 0.2 per 100 adults in 1997. A total of only 114 AIDS cases had been reported by 1995. Common diseases reported in Nicaragua were malaria (70,235 cases in 1995), cholera (2,979 in 1996), and tuberculosis (2,836 in 1990-95).

HOUSING

Both urban and rural dwellers suffer from a dire lack of adequate housing. As a result of the 1972 earthquake, approximately 53,000 residential units were destroyed or seriously damaged in the Managua area. The Sandinistas launched housing-construction and tree-planting programs, but were hampered by a shortage of hard currency to pay for the construction equipment required. An estimated 69% of dwellings are detached houses; 19% are rural homes called ranchos; and 9% are cuartes, or private units with some common facilities. Over 60% of all housing is owner occupied and 20% is rented.

POPULATION

The population of Nicaragua in 2000 was estimated at 4,850,976. An estimated 3.0% of the population is 65 years of age or older. The projected population for the year 2005 is 5,522,000, assuming a crude birthrate of 30 per 1,000 population and a death rate of 5, resulting in a natural rate of change of 2.5% for the period 2000-2005. The population rate of change between 1995 and 2000 was 2.6%. The population density in 1998 was 40 per sq km (104 per sq mi).

It was estimated that 65% of the population lived in urban areas in 2000, up from 53% in 1980. The capital city, Managua, had a 2000 metropolitan population of 1,319,000. Other major cities are León, 100,982; Granada, 88,636; Masaya, 74,946; Chinandega, 67,792; Matagalpa, 36,983; Esteli, 30,653; Tipitapa, 30,078; Chichigalpa, 28,889; and Juigalpa, 25,625.

MEDIA

Postal, telegraph, and telephone facilities are government-owned. Since 1990, TELCOR, the national communications company, has invested over $100 million on upgrading its facilities. Telephone service is limited to the heavily populated west coast and, except for Managua (where there is an automatic dial system), is inadequate. In 1995 there were 66,800 telephone lines. Radiotelephone circuits allow communication between the west and east coasts. As of 1999 there were 45 AM radio stations, no FM stations, and 3 TV stations. Radio Católica, a Roman Catholic station, was closed by the government in 1986 but was reopened in 1987 in accordance with the democratic freedoms outlined in the Arias peace plan. The Voice of Nicaragua is the government station. In 1997, 283 radios, 190 television sets, and 2 mobile phones were in use per 1,000 population.

There were four daily newspapers in 1999 including Nuevo Diario, with a circulation of 50,000, and the Barricada with 95,000. La Prensa, a harsh critic of Somoza rule and of the Sandinista regime, was closed in 1986 but, in accordance with the Arias peace plan, was allowed to resume publication in 1987; its 1999 circulation was 75,000. Press censorship ended with the departure of the Sandinista government. The constitution provides for freedom of speech and the press, and the government is said to be supportive of these rights in practice. The privately owned print media and the broadcast media openly discuss diverse viewpoints without government interference.

As of 1996, there were 295 Internet hosts in Nicaragua. Online access is extremely limited, with approximately one Internet host per 1,000 population in 1998.

AGRICULTURE

Nicaragua's economy is predominantly agricultural. Land under cultivation amounted to 1,270,000 ha (3,138,000 acres), or about 10.5% of the total land area. Some 88,000 hectares (217,400 acres) were under irrigation in 1994. The harvest season begins in November and lasts through January; during the rest of the year, most rural laborers are unemployed. Plantings begin in May immediately before the wet season.

The main agricultural exports are coffee, cotton, sugar, and bananas. Nontraditional exports are growing and include: honeydew melons, cantaloupe, sesame seed, onions, baby corn, asparagus, artichokes, and cut flowers. Sorghum, cacao, yucca, tobacco, plantains, and various other fruits and vegetables are produced on a smaller scale for the local markets. Bananas were once nearly totally decimated by Panama disease. By the late 1960s, however, production had begun a slow recovery, reaching 135,000 tons in 1992 (up from 29,000 tons in 1970). Banana production in 1998, however, was just 80,000 tons. Cottonseed production has expanded from virtually zero prior to 1950 to 105,700 tons in 1985, before falling to 3,000 tons by 1998. During the 1980s, coffee was severely threatened by contra activities; production of 64,000 tons in 1998 was an improvement over the 28,000 tons produced in 1990. In 1998, 370,000 tons of processed sugar from 3,843,000 tons of cane were produced, largely for export. Major food crops in that year were corn, 296,000 tons; rice, 212,000 tons; sorghum, 111,000 tons; and dry beans, 85,000 tons.

During the Somoza era, most of the titled land was held by large landowners (with farms of 140 hectares/346 acres or more), who owned some 60% of the land while representing only 5% of the farming population. About 36% of the farm population controlled individual holdings of less than 3.5 hectares (8.6 acres). The Sandinista government expropriated almost one million hectares (2.5 million acres) of land, of which over two-thirds became state farms and 280,000 hectares (692,000 acres) were turned into peasant cooperatives. Agriculture was severely disrupted in 1979 and 1980 because of the revolution, but by 1981 it had recuperated. In May 1982, severe floods caused damages estimated at $180 million; the withdrawal of the Standard Fruit Co. in the following October caused losses of $400,000 per week in foreign exchange earnings. Bad weather continued to plague the sector through 1984. An estimated 450,000 hectares (1,111,500 acres) of land were redistributed in 1985. From 1983 to 1987, the contras sought to destabilize Nicaraguan agriculture by damaging agricultural machinery, destroying crop storage sheds, and intimidating farm workers. After eight years of steady decline, the agricultural sector grew by a modest 1-2% in 1992, mostly due to the largest coffee harvest since 1984.

ANIMAL HUSBANDRY

Nicaragua, the second largest cattle-raising country of Central America (after Honduras), had 1,688,000 head of dairy and beef cattle in 1998. There were also 245,000 horses, 400,000 hogs, and 55,000 mules and donkeys. Total beef production in 1998 was 47,763 tons. Meat exports, perennially one of Nicaragua's most important trade commodities, were valued at $23 million in 1981 but had fallen to $7 million by 1987, but have increased since then to $42.4 million in 1998. The primary markets for Nicaraguan beef are the US, El Salvador, and Puerto Rico. In 1990, Nicaragua was given back access to the US beef products market, and since then the livestock industry has been a profitable business and a key economic indicator for the country. Milk production in 1998 totaled 215,000 tons.

ENERGY AND POWER

The National Light and Power Co. (Empresa Nacional de Luz y Fuerza--ENALUF) is responsible for most of the electricity generated in Nicaragua. Production of electricity increased from 77 million kWh in 1948 to 2,714 million kWh in 1998. Nicaragua had a net capacity of 446,000 kW, of which approximately 20% was hydroelectric and 15% was geothermal. In August 1983, a geothermal electrical generating plant was opened at the foot of the Momotombo volcano; its generating capacity of 70,000 kW provided about 30% of Nicaragua's electricity generation in 1994. A new 40-MW diesel plant was completed in 1998. In 1999 Nicaragua's electricity consumption was the lowest in Central America.

Since the US removed its economic embargo against Nicaragua in 1990, Nicaragua has been seeking to attract international exploration interests, especially along its Caribbean coast.

FISHING

Commercial fishing in the lakes and rivers and along the seacoasts is limited. In 1997, the total catch amounted to 16,130 tons, over 93% of which came from marine waters. About 80% of the marine catch comes from the Atlantic coast. Shrimp and lobster catches in 1997 amounted to 6,437 and 3,690 tons, respectively. Exports of shrimp and lobster expanded after the 1960s and by 1980 had reached an export value of $25.9 million. In 1997, exports of fish products nearly reached $81.2 million. Commercial fishing is now trying to diversify its catch to include more red snapper, grouper, and flounder.

After the Sandinistas took over, the fishing industry was nationalized. After an agreement made in 1982, the former USSR expanded the fishing port at San Juan del Sur to service its tuna fleet. In late 1991, the government privatized the Atlantic seafood packaging plants, causing seafood production to rise by 19.8% in 1992.

FORESTRY

About 26% of Nicaragua is still forested. The country has four distinct forest zones: deciduous hardwood, mountain pine, lowland pine, and evergreen hardwood. Nicaragua's largest remaining timber resources, in the evergreen hardwood zone, are largely inaccessible. Nicaragua is the southernmost area of natural North American pine lands. The most well-known cloud forest in Nicaragua is Selva Negra (Black Forest), in the Matagalpa region. In 1997, roundwood production totaled 3,874,000 cu m, with 94% burned as fuel wood. Sawn wood production was about 148,000 cu m that year.

MINING

Mining contributed less than 1% to the country's GDP in 1997. In the mid-20th century, Nicaragua ranked roughly 15th among the world's gold producers, and the development of gold mining was emphasized during the Sandinista years, when the entire mining industry was nationalized. Gold exports reached $39.9 million in 1980. In 1982, they had fallen to $15 million, and they were suspended thereafter through 1985. After a long period of low production, gold output more than doubled between 1996 and 1997, from 1,500 kg to 3,400 kg.

BANKING AND SECURITIES

The banking system, nationalized in July 1979, is under the supervision of the comptroller general. The National Bank of Nicaragua, established in 1912, has been government-owned since 1940. In 1979, the bank was reorganized to become the National Development Bank. The Central Bank of Nicaragua (Banco Central de Nicaragua), established in 1961, is the bank of issue and also handles all foreign exchange transactions. As of 1979, deposits in foreign banks were prohibited, but in May 1985, the establishment of private exchange houses was permitted. In 1990, legislation was passed that allowed for the establishment of private banks. There are no state-owned commercial banks in Nicaragua.

By 2000, there were at least 11 private banks operating. Commercial banks included the Banco Mercantil, the Banco de la Producción, the Banco Caley Dagnall, the Banco de América Central, the Banco de Crédito Centroamericano, the Banco de Finanzas, Banco Intercontinental, the Banco de Exportación, the Banco del Café, the Banco Européo de Centroamérica, and the Banco Nicaraguense de Industria y Comercio. Total assets of the Nicaraguan financial system reached $1.6 billion in 1998.

A small stock market began operations in the late 1990s.

ECONOMIC DEVELOPMENT

The Somoza government's 1975-79 National Reconstruction and Development Plan had as its major objective the improvement in living conditions through increased employment, continuing reconstruction of Managua, reduction in the economy's dependence on the external sector, acceleration of regional development, and strengthening of the country's role in CACM. The plan was disrupted by the civil strife in the late 1970s.

After the 1979 revolution, the government nationalized banking, insurance, mining, fishing, forestry, and a number of industrial plans. Although the government officially favored a mixed economy, in practice the private sector took second place in a development strategy that focused on public investment and control.

In response to the macroeconomic problems that arose in 1992, a series of measures were adopted by the Chamorro administration aimed at consolidating the stabilization process, increasing the competitiveness of exports and establishing a base for the promotion of growth.

Nicaragua now appears poised for rapid economic growth. However, long-term success at attracting investment, creating jobs, and reducing poverty depend on its ability to comply with an International Monetary Fund (IMF) program, resolve the thousands of Sandinista-era property confiscation cases, and open its economy to foreign trade.

The Alemán government was faced with poverty (over 70%), unemployment and underemployment (over 50%), one of the highest per capita debt ratios in the world ($6 billion) and one of the highest population growth rates of the hemisphere (2.8%); in 1999. The new president signed an IMF Structural Adjustment Program for Nicaragua in 1998 that aimed at cutting the fiscal deficit, continuing liberalization, and maintaining monetary stability. Nicaragua received at least $2.5 billion for reconstruction in the aftermath of the hurricane, debt deferral until 2001, and debt forgiveness through the Highly Indebted Poor Country (HIPC) program.

ECONOMY

Nicaragua has long had, in effect, two economies: an export segment, producing mainly cotton, meat, coffee, and sugar; and a subsistence segment, tying a majority of both urban and rural Nicaraguans to an impoverished existence. Agriculture and forestry remain the mainstays of the Nicaraguan economy, employing nearly half of the labor force. During 1960-64, the GDP increased by an annual average of 8.1%, the highest rate in Latin America. Annual growth ranged from 4% to 6% during 1965-73, largely because of favorable world prices for Nicaraguan commodities. The 1972 earthquake that struck Managua caused material losses estimated at $845 million, but the agricultural sector was left largely unscathed.

The civil war of the late 1970s disrupted the economy. During this era, 80% of the economy was nationalized. In 1978, the GDP fell by 7.9%; in 1979, the year of the Sandinista takeover, by 25%. Massive public spending resulted in a GDP growth of 10.4% in 1980 and 7% in 1981. However, because of floods in May 1982, a weak international market for export crops, the virtual collapse of the CACM, continuing political uncertainty, mounting economic pressure by the US, and disruption by the contras, the economy suffered a GDP decline of 1.4% in 1982, and continued to decline through 1986 (with the exception of 1983, when high world prices and a bumper harvest boosted GDP by 4.6%). The average annual inflation rate during 1980-82 was 35%, but by 1984, it had risen to 50%; in 1985 it soared to 334%, and the 1986 rate was 778%. Because of shortages, rationing of soap, flour, and cooking oil was introduced in 1982.

In response to both domestic and international pressure, the Sandinista regime entered into negotiations with the Nicaraguan Resistance and agreed to nation-wide elections in February 1990. Nicaraguan voters elected as their president the candidate of the National Opposition Union (UNO), Violeta Barrios de Chamorro. President Chamorro instituted the first democratic government in more than 50 years when she took office in April 1990. She inherited a country with a totally controlled economy and the highest per-capita foreign debt in the world. Inflation was ascending uncontrollably and the economy was in shambles. During President Chamorro's nearly seven years in office, her government achieved major progress toward consolidating democratic institutions, advancing national reconciliation, stabilizing the economy, privatizing state-owned enterprises, and reducing human rights violations.

Nicaragua began free market reforms in 1991 after 12 years of economic free-fall under the Sandinista regime. Despite some setbacks, it has made dramatic progress: privatizing 351 state enterprises, reducing inflation from 13.5% to 12.1%, and cutting the foreign debt in half. As a result of the strong decline in foreign debt, the country's current account balance declined as a percentage of GDP from 60.0% in 1992 to 38.3% in 1996. In addition, the government's budget deficit in 1996 stood at 13.6% of GDP, down considerably from 20.3% in 1990. The economy began expanding in 1994 and grew at a rate of 5.5% in 1996 (its best performance since 1977). The election of Arnoldo Alemán in 1996 served to continue the social and economic reforms perpetuated by the Sandinista regime. Damage caused by Hurricane Mitch in 1998 reduced the GDP to 4% for that year, but improved estimates for 1999 ranged from 5% to 6.3%. The government planned to reduce taxes and further liberalize trade in 1999.

PUBLIC FINANCE

Since the mid-1960s, government spending has consistently exceeded revenues. During the Sandinista regime, detailed public finance budgets were not a priority. The government budget deficit shrank from 18% of GDP in 1987 to 4% in 1998, while government revenues consistently reflected almost one-third of GDP.

The US Central Intelligence Agency (CIA) estimates that in 1996 Nicaragua's central government took in revenues of approximately $389 million and had expenditures of $551 million including capital expenditures of $206 million. Overall, the government registered a deficit of approximately $162 million. External debt totaled $6 billion.

INCOME

The US Central Intelligence Agency (CIA) reports that in 1998 Nicaragua's gross domestic product (GDP) was estimated at $11.6 billion. The per capita GDP was estimated at $2,500. The annual growth rate of GDP was estimated at 4%. The average inflation rate in 1998 was 16%. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange. It was estimated that agriculture accounted for 32% of GDP, industry 24%, and services 44%.

Private consumption includes expenditures of individuals, households, and nongovernmental organizations. It was estimated that between 1990 and 1998 private consumption grew at an annual rate of 3.4%. The richest 10% of the population accounted for approximately 40% of household consumption and the poorest 10% approximately 1.6%.

INDUSTRY

Nicaraguan industry expanded during the 1970s but was severely disrupted by the civil war and nationalization in 1979. In 1980, the manufacturing sector began to recuperate, and modest growth continued through 1984. In 1985, however, net output again declined, by an estimated 5%. In the mid 1980s, there were still many state enterprises, some of them created by nationalization; in 1985, the government announced plans for a mixed economy. All state monopolies except for public utilities have been eliminated; price controls have ended; and more than 300 state enterprises have been privatized since 1990.

In 1998, the industrial sector contributed approximately 22% to the GDP and employed approximately 24% of the labor force. Industrial production grew by 4.6% in 1998. Among the most important industries are processed food, chemicals, metal products, textiles, clothing, petroleum refining and distribution, beverages, and shoes. The services sector has become the major player in the country's economy since the reforms instituted by the Chamorro government. Services account for 44% of GDP and include commerce, financial services, transportation, energy and construction.

INSURANCE

In 1979, the Nicaraguan Institute of Insurance and Reinsurance took over all domestic insurance companies. There were five domestic insurance companies operating in 2000, including the government-owned Iniser; and Seguros America, Seguros Centroamericanos, Seguros Metropolitana, and Seguros Pacificano. All private insurance companies were majority owned by Nicaraguan banks.

FOREIGN INVESTMENT

Until the 1979 revolution, Nicaragua encouraged private investment. Virtually no restrictions were imposed on the remittance of profits or the repatriation of capital. The economic and political climate for foreign investors in the 1980s was bleak, despite the claim that the Sandinista government was prepared to offer more favorable investment terms (including 100% foreign ownership and repatriation of profits) than the Somoza government had provided. As of 1984, direct US investment in Nicaragua had stopped completely.

As of 1994, Nicaragua has recovered some of the international credibility lost in the previous decade. Under the New Foreign investment Law, the government of Nicaragua has concentrated most of its efforts on the expansion and promotion of foreign and national investment. This law, among other things, guarantees the repatriation of invested capital and generated capital. Also, it allows for 100% foreign ownership in all areas.

Foreign private capital inflows doubled from $97 million in 1996, to $184 million in 1998. The US is Nicaragua's largest trading partner by far--the source of 32% of its imports and the destination for 42% of its exports. About 25 wholly or partly owned subsidiaries of US companies operate in Nicaragua. The largest investments are in the energy, communications, manufacturing, fisheries, and shrimp farming sectors. Good opportunities exist for further investments in those same sectors, as well as in tourism, construction, services, mining, and agriculture.

LABOR

In 1998, the official estimate of the total economically active population was 1,630,000. In 1995, the labor force was distributed as follows: services, 54%; agriculture, 31%; and industry, 15%. However, according to some estimates, more than 50% of the work force remains unemployed or underemployed. Officially, unemployment was at 13.3% in 1998.

Nicaragua became a member of the ILO in 1919, withdrew in 1938, and rejoined in 1957. The former labor code, effective January 1945, was patterned on Mexican labor legislation. In establishing and protecting the rights of workers, emphasis was placed on law rather than collective bargaining. A new code, effective as of 1996, allows all public and private sector employees to form and join unions and legally recognizes cooperatives, as well as the right to strike. The maximum legal work week is 48 hours, with one day of rest per week.

As of 1999, less than 50% of the labor force was organized.

Children may not work until the age of 14 but this regulation is not effectively enforced and many children work in agriculture and in cities as urban street-peddlers.

The minimum wage varies from sector to sector throughout the formal economy. In 1999, the monthly minimum wage was $37.50 in agriculture, $10.00 in construction, and $50.00 in manufacturing.

BALANCE OF PAYMENTS

An adverse balance of trade with Nicaragua's major trading partners is the major factor in its deficit. Incoming capital in the form of public and private loans, as well as foreign capital investment and tourism, traditionally offset amortization and interest payments abroad. The current account balance has sustained a deficit averaging 30% of GDP throughout the 1990s.

The US Central Intelligence Agency reports that in 1997 the purchasing power parity of Nicaragua's exports was $704 million while imports totaled $1,450 million resulting in a trade balance of -$746 million.

The International Monetary Fund (IMF) reports that in 1998 Nicaragua had exports of goods totaling $579 million and imports totaling $1,384 million. The services credit totaled $182 million and debit $272 million.

TAXATION

In 1999, the individual income tax ranged up to 25%, and the corporate income tax rate was 25%. Other taxes included a 15% sales tax; a luxury tax generally lower than 15%; a 1% municipal tax levied on sales; a 1% tax on net worth; and a real estate tax at 1% of assessed value.

DOMESTIC TRADE

Managua is the principal trading and distribution center, and all importers and exporters have offices there. Exporters, except those concerned with cotton, coffee or lumber, are usually importers also. Managua has a variety of retail establishments, including department stores and numerous general stores; many small shops are in private homes. Managua also has a central market to which merchants come daily with all types of produce and domestic and imported consumer goods. Retail sales are mainly for cash.

The usual business hours are from 8 to noon and from 2:30 to 5:30, Monday through Friday, with a half-day on Saturday. Banking hours on weekdays are from 8:30 to noon and from 2 to 4 ; on Saturday, from 8:30 to 11:30 .

FOREIGN TRADE

Nicaragua's total trade volume grew considerably during the 1970s because of the country's membership in the CACM and because of worldwide inflation. Following the Sandinista revolution and the virtual collapse of the CACM because of political instability in the region, Nicaragua's imports and exports fell by more than half from 1976 to 1985.

By 1986, Latin America and EEC member countries, particularly Germany, accounted for the bulk of Nicaragua's trade volume; and the Communist bloc had filled the breach opened by the shutting down of US commerce. The Chamorro government changed Nicaragua's trading partners as it reduced trade barriers in 1991. The government issued export promotion incentives with special tax benefits for products sold outside Central America. The Communist bloc was discarded in favor of the US and South American countries, but Germany remained an important partner. By the Law of Free Trade Zones, Nicaragua waived all duties for imports used in the free zones. The result was widespread availability of US goods in several newly established Managua supermarkets.

One of the key engines of economic growth has been production for export. Although traditional products such as coffee, meat, and sugar continue to lead the list of Nicaraguan exports, during the late 1990s the fastest growth came in nontraditional exports: maquila goods (apparel), bananas, gold, seafood, and new agricultural products such as sesame, melons, and onions.

The most important commodity export from Nicaragua is coffee (23%), followed by meat (14%), and shell fish (13%). Other exports include office supplies and machines (7.0%), oil seeds (4.8%), and sugar (4.0%).