This report does not constitute a rating action. Key Rating Factors Institutional and economic profile Flexibility and performance profile Nicaragua?s economy is recovering following internal and external shocks in recent years, but medium-term GDP growth is likely to remain moderate and subject to potential political uncertainty. External shocks will temporarily increase fiscal deficits, although the government is likely to remain committed to fiscal consolidation and macroeconomic stability Economic activity will recover in 2021, although structural weaknesses will likely keep GDP growth subdued. We expect fiscal deficits to widen as a result of the COVID-19 pandemic and reconstruction projects following hurricanes Eta and Iota in 2020. In our view, political risks remain high ahead of the November general election and continue
