inflation fell from 7,000% in 1990 to 3.8% in 1992 following
the implementation of an economic policy formulated by the
IMF and the World Bank. Productive investment and spending
on education and health were reduced, while unemployment
rose to 60%.
The contradictions between President Chamorro and the UN
culminated in 1993, when the alliance broke up. From then
on, the president had to rely on the FSLN and the UNO center
group. One month later, the UNO threw out this group and
changed its name to Alianza Política Opositora (Political
Opposition Alliance, APO).
The debate in Parliament over a constitutional reform led
the orthodox wing of the FSLN led by ex-President Daniel
Ortega to throw the party's parliamentary group chairman and
former Vice President Sergio Ramírez out of the party.
Across the party, the parliamentary group had drafted a
constitutional proposal that hampered the re-election of the
president and prevented the president's family members from
taking public office. This would ruin the chances of
Chamorro's son-in-law, Minister Antonio Lacayo.
The economic situation worsened as drought destroyed the
crops on 80,000 hectares of land and thus the subsistence
basis of 200,000 farmers. The malnutrition affected 300,000
children and some became blind due to a lack of vitamin A.
Following the breach of Chamorro, the UN had boycotted
parliament, but with less than half its founders and unable
to obtain a majority for the convening of a constitutional
assembly, the alliance canceled its boycott in January 1994.
Around the country, clashes between the army, robbery gangs
and smaller groups of former partisans still came.
General Humberto Ortega confirmed that he would retire
after the enactment of a new military law. In August, the
law was passed in parliament. It aimed to depoliticize the
army and increase its dependence on civilian authorities,
even though power over it was in fact placed in the hands of
a military council.
The government signed a three-year agreement with the IMF,
which allowed it to renegotiate public debt. The
unemployment rate was 43-60%, and per share. capita income
fell for the 11th consecutive year.
The debate on constitutional reform came to dominate
political life in 1995. In February, Parliament proposed
changing the name of the army, abolishing mandatory military
service and issuing guarantees to the private sector -
measures all supported by Chamorro. On the other hand, the
president did not agree with a proposed change in the
strength of government-parliamentary relations, e.g. in the
matter of the increase of taxes. Nevertheless, Parliament
adopted the reforms in February and began to implement them.
In June, agreement was reached on legislation regarding
Constitutional reforms. The law said that at least 60% of
parliament members must vote for amendments before they can
be submitted to the president. At the same time, Parliament
appointed new judges to the Supreme Court and appointed a
new Supreme Electoral Council.
The proposal for a ban on political activity among the
president's family members was postponed. The president's
son-in-law, Lacayo, therefore, remained in the government,
although he declared his intention to resign to devote
himself to the November 1996 presidential election.
The presidential election was won by Managua's former
mayor, the conservative businessman Arnoldo Alemán with 49%
of the vote, thus warding off a second round of elections.
FSLN candidate Daniel Ortega got 39% of the vote. Despite
criticism of irregularities in the electoral process, the
FSLN re-entered after a few weeks in the country's political
Upon his accession, Alemán pledged to create 500,000 new
jobs, and presented a plan to reduce the debt burden in
agriculture, where the debt was valued at $ 150 million.