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This is thanks to the softer approach the country has taken to fighting crime. From the NPR report:
While Nicaragua's neighbors have embraced so-called "mano dura" or iron fist policies, Nicaragua has taken a softer approach.
The Nicaraguan police, for example, pacified the Dimitrov neighborhood by having the community patrol itself and by having police officers mediate talks between gang members often after soccer games.
The government has also developed a program that sends kids to school instead of prison. A new youth training center in Managua helps high-risk youth from bad neighborhoods leave or avoid gangs by educating them in practical fields. Currently, only 70 Nicaraguan juveniles are in jail.
The Economist pointed out in 2012 that Nicaragua's murder rate was 13 per 100,000, which had remained unchanged in five years. By comparison, the murder rate in neighboring Honduras was 82 per 100,000.
Despite the fact that it has become safer, Nicaragua is still the poorest country in Central America and the second-poorest in the Western Hemisphere, according to the CIA.