According to Countryaah data, 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-P1resident 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.
According to thesciencetutor, 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 life.
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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.