The government said Saturday it would lay off 10,000 soldiers and 15,000 state workers as part of a program to reduce the fiscal deficit and save Nicaragua's failing economy.

"The army and the public sector will be reduced with the new measures," Economy Minister Silvio de Franco said. "Ten thousand members of the army and 15,000 state workers will be placed in productive activities through programs that the government plans to implement so as not to act irresponsibly."He said Nicaragua is "on the edge of collapse like no other country in the world and there are no magical answers or fairy godmothers that can save the economic situation."

Franco said laying off the workers and further reducing the size of the Sandinista army, which has dropped by 35,000 members since President Violeta Chamorro assumed power, will help bring down government spending. Nicaragua has a fiscal deficit of about $220 million a year.

On Thursday, the government began a "national dialogue" with various social sectors of the society, including labor, industry and peasants to discuss economic policy measures to breathe life into the country's failing economy.

The Sandinistas and their powerful labor umbrella union refused to attend the economic talks.