As a part of the assistance to the Government of Nicaragua in generating a Medium Term Expenditure Framework, this project will generate a rigorous macroeconomic analysis to complement the new medium term expenditure framework - thus providing a stronger analytical underpinning for setting the 'macroeconomic envelope' in which the planning and execution of the MTEF will take place. Generating a supporting macroeconomic framework for the MTEF which enjoys broad political and technical consensus is one of the most critical elements to ensuring programme success according to previous case studies of implementation. In particular, in depth macroeconomic analysis of the situation prior to the MTEF and the likely impact of the budget on the macroeconomic setting are crucial. Additionally, the project will review revenue generation and taxation policy in the Nicaraguan economy, while providing examples of international best practice, in order to complement ongoing public sector expenditure reviews.