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President Daniel Ortega may well be leading the opinion polls by a country mile ahead of the 6 November general elections (see sidebar). Yet last month saw the revival of a challenge, other than that posed by his political opponents, which could jeopardise the harmonious state of relations he has managed to maintain with the powerful private sector, hitherto won over by his refusal to touch tax reform, a flourishing export sector and the influx of foreign investment [RC-11-03].
On 12 July, the private sector lobby (Cosep) and the national microfinance association (Asomif) issued a joint statement demanding a “firm response” from the Ortega government in relation to a revival of unrest which had taken place over the previous three weeks, staged by the so-called ‘No Pago’ (I won’t pay) movement -which is comprised of medium-sized producers-, demanding the renegotiation of defaulted loans.
Initially stirred up by President Ortega himself in July 2008 when he came out in support of protests by debtors against the micro-finance institutions (MFIs), (although he has since taken pains to distance himself from this stance), the chief complaint of the No Pago movement is that MFIs charge interest rates that are too high leaving borrowers swamped in unmanageable debt. The MFIs gross loan portfolio is put at some US$538m, including funds from savings and credit cooperatives, according to a 2011 report by a local think tank, Funides.
According to figures cited by Omar Vílchez, the leader of the ‘No Pago’ movement, there are 13,758 debtors owing US$43.9m of overdue debt to the Nicaraguan banking system. One of Vilchez’s proposals is that those who owe more than US$10,000 (1,788 people whose total debts come to US$24.5m) should have their debts restructured at a “symbolic rate of interest” over a 10 year period.
In their joint statement, however, the Asomif/Cosep grumbled that since 2008, uncertainty caused by ‘No Pago’s’ actions, together with the economic crisis, had caused losses of US$80m from foreign donors, with a further US$300m earmarked for the current agricultural cycle also at risk. The statement also highlighted that few members of ‘No Pago’ had bothered to avail themselves of a so-called moratorium law, approved in 2010, which, among other measures, had ordered microfinance companies to sit down and renegotiate with their delinquent borrowers all loans past due since 30 June 2009.
Disgraced former President Arnoldo Alemán (1997-2002) might well have raised some eyebrows at last month’s annual Partido Liberal Constitucionalista (PLC) convention with his description of Ortega as a “national filibuster” – a reference to William Walker, the US “filibuster”, who established himself as president in Nicaragua (1856-1857) following rigged elections and became synonymous with imperialist exploitation.
While there might be some substance to Alemán’s declared concerns regarding the lack of transparency surrounding Ortega’s management of Venezuelan funds – a far from novel complaint – [RC-11-04], Alemán’s dubious honour of being ranked the ninth most corrupt leader in recent history by NGO Transparency International in 2004, having embezzled an estimated US$100m, left the credibility of his assertion subject to considerable doubt.
Addressing his supporters at the convention, which served as (another) opportunity to launch his presidential candidacy, Alemán also indirectly criticised Ortega over job creation, pledging to create one million new jobs if elected. Ortega, who set similarly ambitious (and unrealistic) targets, continues to face accusations from his detractors of misrepresenting his government’s achievements with regard to the issue.
Following criticism amid inconsistency between figures cited by the social security institute and Paul Oquist, the presidential adviser on public policy [RC-11-07], the local think tank Fundación Internacional para el Desafío Económico Global (Fideg) most recently took a pop shot at the government by questioning the quality of the jobs created, pointing out that informal sector employment increased from 72% in 2009 to 75% in 2010.
The most recent poll by M&R Consultores published in national daily la Prensa on 25 July showed President Daniel Ortega with a record 56.5% support ahead of the 6 November presidential election, well above the 35% required for an outright victory. Fabio Gadea, the presidential candidate for the Unidad Nicaragüense por la Esperanza (UNE), is in second place with 14.1% while former president Arnoldo Alemán, of the Partido Liberal Constitucionalista (PLC), trails in third with 5.8%. Of the 1,600 people surveyed, 22.4% were undecided. The poll was carried out between 29 June and 14 July and had a 2.5% margin of error.
In line with IMF requirements, Nicaragua’s congress passed a law (in June) regulating the microfinance industry. While providing for greater transparency regarding commissions and other fees, the law failed to cap interest rates – a common complaint of the ‘No Pago’ movement. It was also slammed by government critics for failing to include Alba-Caruna, a savings and credit cooperative closely linked to the ruling Frente Sandinista de Liberación Nacional, which is funded with money from the Venezuela-led Alianza Bolivariana para los pueblos de nuestra América (Alba).
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