LatinNews Daily - 27 October 2022

*S&P Global Ratings (S&P) has raised its foreign and local currency long-term sovereign credit ratings on Nicaragua to ‘B’ from ‘B-‘. The outlook is stable. S&P said that this reflects “our view of continued economic recovery coupled with fiscal and monetary policies that sustain economic stability”. S&P expects GDP growth of 3%-4% over the next three years, below the pace of around 5% registered prior to the 2018 political crisis. S&P expects Nicaragua’s fiscal deficits will remain low and debt levels steady. It expects the general government deficit will remain less than 2% of GDP in 2022, from barely 1.2% in 2021. It expects Nicaragua’s net government debt to remain broadly stable, at around 48% of GDP in 2022-2025 from barely 45% in 2018. However, it signals concerns about Nicaragua’s institutions, highlighting “weak checks and balances and rule of law”.  S&P adds that the legacy of the 2018 protests, including international pressure against the Daniel Ortega administration, has affected its capacity to obtain external funding. S&P expects uncertainty will likely persist given the risk of new sanctions from the US government (which on 24 October expanded its sanctions regime on Nicaragua) or diminishing access to official lenders like the Inter-American Development Bank and the World Bank. However, it notes that finance from the Central American development bank (BCIE) has significantly increased over the past few years.

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