Ahmadinejad, on his visit to the Central American nation, said the two countries have "common interests, common enemies and common challenges" and that the accords will focus on politics, culture, economics, investment and construction.

Daniel Ortega, who took office as Nicaraguan president on Wednesday, said he had begun working with Ahmadinejad on Saturday night "to reach constructive agreements to fight hunger, unemployment and poverty.

He added that there is an urgent need to "take initiatives that contribute to the well-being of our people, defending our sovereignty and our right to progress".

Described Ortega as "a symbol of justice and independence," Ahmadinejad said he is confident that the two countries will boost their relations and reach accords beyond expectations.

The two governments also agreed to work together to re-open embassies in each other's countries, which had been closed since 1990 when Ortega left office.

Ahmadinejad arrived in Nicaragua from Venezuela, where he announced the creation of a 2-billion-dollar fund for helping Venezuela and Iran.

He will visit a mosque in the southeast of Managua later on Sunday.