Public Investment in infrastructure effects in Public Investment in - PowerPoint PPT Presentation

Public Investment in infrastructure effects in Public Investment in infrastructure effects in the growth and human development of the growth and human development of Nicaragua Nicaragua Expert Group Meeting “ “Macroeconomic Chalanges to Macroeconomic Chalanges to Expert Group Meeting development policies post- -20125: lessons from recent 20125: lessons from recent development policies post country experiences “ “ country experiences December Marvin Miranda Banco Central de 2013 Nicaragua

Agenda I . Background I I . Methodology I I I . Results I V. Considerations

Background Background The Government objective is to achieve the Millennium Development Goals (MDG) by 2015 It has invested in health, education, and housing But… .. There is an evident necessity to make structural changes in the context in which the population lives Currently, the public fixed capital expenditure in for roads and energy is 2.2% of GDP The purpose is to trigger processes multipliers Banco Central de Nicaragua

Methodology Methodology Banco Central de Nicaragua

Methodology Methodology Transmission mechanism of increasing the public investment in infrastructure Banco Central de Nicaragua

Results Results

Macroeconomic indicators Macroeconomic indicators (Average growth rate, deviations in percentage points) Financing Scenarios I ndicator Base Scenario Dom estic Taxation External Debt Borrow ing GDP 4.17 0.29 -0.02 0.38 Private 2.98 -0.38 -0.05 0.41 Consum ption Governm ent 3.95 0.26 0.26 0.26 Consum ption Fixed Private 2.12 0.12 -3.15 0.46 I nvestm ent Fixed Governm ent 9.66 13.33 12.78 13.48 I nvestm ent Exports 6.2 -0.14 -0.26 -1.0 I m ports 3.44 0.28 -0.31 0.73 Source: MAMS Banco Central de Nicaragua

Unenployment Rate Unenployment Rate Unem ploym ent rate Percentage Projetion Base Base 2 0 1 5 Unem ploym ent rate 2 0 0 6 Desviation from the projected base scenario projected to Total 2 0 1 5 5.17 4.43 Source: MAMS. Source: MAMS. Banco Central de Nicaragua

MDG: Base and MDG: Base and alternatives scenarios alternatives scenarios Base Scenario w ithout a Goal Financing Scenarios ( 2 0 1 5 ) shock MDG and indicators Dom estic External 2 0 0 6 / 1 2 0 1 5 2 0 1 5 Taxation Borrow ing Debt ODM1 : Population in poverty (% ) 42.5 37.0 38.4 36.8 34.2 ODM1 : Population in extreme poverty 14.6 12.7 13.6 12.4 10.9 (% ) MDG2: Primary School completion rate 10.1 74.5 86.8 76.2 78.2 81.3 (%) MDG4: Infant mortality (rate by 35.0 17.2 17 16.9 16.4 15.8 thousands) MDG5: Maternal Mortality (rate by 89.6 45.2 40 44.1 42.8 40.9 hundreds of thousands) MDG7 a: Effective coverage of clean 63.0 76.6 85.0 78.5 78.9 79.6 water (%) MDG7 b: Sanitary cover aqueducts (%) 36.1 57.0 73 57.4 58.7 60.6 : 1/ Para los indicadores asociados al ODM1 el año base es 2009, y no 2006 como sucede Notas para el resto de los ODM. Fuente: Estimación MAMS Banco Central de Nicaragua

Inequality Inequality Marginal efects at the GINI indicator Percentage points Dom estic External Categories of effects Base Taxation Borrow ing Debt Unem ploym ent rate by group 0.007 0.007 0.007 0.007 Em ploym ent by productive sector ( p,s,t) 0.009 0.008 0.007 0.005 I ncom e Structure ( adjust factor by average labor -0.012 -0.009 -0.012 -0.013 incom e) Average level if labor incom e 0.000 0.000 0.000 0.001 Educative calification ( c, nc) 0.009 0.006 0.008 0.008 Total 0.401 0.400 0.399 0.396 Source: Microsimulations using MAMS results.. Note: 2009 Gini is 0.388. Banco Central de Nicaragua

Considerations Considerations Public investment is a policy instrument that: • Has a positive effect in the product, private investment, and employment. • Also increment the acces to education ant health. It has a transmission mechanism which improve social indicators generating oportunities The scenerio that presents better performance in the macroeconmic and social sense is the financing with external debt But… in general the results don’t have the expected magnitude • The impacts of the increment in the invesment in infraestructure will be evident in the long run, because it has a cumulative multiplier effect.

Summary Summary Banco Central de Nicaragua

www.bcn.gob.ni Banco Central de Nicaragua