Caribbean & Central America - May 2013 (ISSN 1741-4458)

Foreign debt rises: Last month, Nicaragua’s central bank released a report which showed that at the end of 2012, the country’s foreign debt reached US$8.66bn, 11.2% up on the previous year. Of the US$870.8m increase, US$654m corresponded to the private sector. The ratio of total external debt to GDP was 82.5%, up from 80.9% in 2011.

Slowing growth: According to another report issued by the central bank, the monthly economic activity index (Imae) registered a 4.1% year-on-year increase in February, led by construction (21.1%), agriculture (20.1%), and financial services (11.5%). Real annual GDP growth was 5.2% in 2012, down from 5.4% in 2011, while inflation was 6.6%, down from 8.0%. For this year, the bank is forecasting that growth will slow to just above 4%, with inflation down to 1%. Also indicative of this slowdown was an 8.3% year-on-year drop in exports in the first quarter of 2013 to US$642m, according to separate central bank figures. The central bank attributes this to a fall in key exports such as beef (which fell by 21.3% to total US$104m) gold standard coffee (which declined 29.6% to US$96.2m) and sugar (which registered a 17.7% drop to US$59.7m). The exception was gold, Nicaragua’s top export, which registered a 21% increase to reach US$119.9m. Total exports reached US$4.6bn in 2012.

Rise in formal employment: According to the government of President Daniel Ortega, the number of workers making social security contributions grew by 46.6% between 2006 (when the Frente Sandinista de Liberación Nacional [FSLN] government took office for a second time) and 2012. The government-aligned online publication, el19digital, cites figures from the central bank and the national development information institute which suggests that some 439,000 workers were registered with the social security system (INSS) at the end of 2006, rising to 643,538 by December 2012. This is equivalent to 21% of the economically active population of some 3.1m inhabitants (out of a total population of 5.8m). According to these statistics, the rate of open unemployment in the last quarter of 2012 was 5.07%.

• U-turn over Telcor decree

On 19 April Nicaragua’s telecommunications regulatory agency (Telcor) performed a U-turn: it revoked its highly controversial administrative order which stipulated that private telecoms companies required Telcor’s approval for appointments ranging from managers and directors to security personnel [RC-13-04]. The order had caused major outrage among Nicaragua’s two largest private sector lobbies, the Consejo Superior de la Empresa privada (Cosep) and the Cámara de Comercio Americana de Nicaragua (Amcham) who complained that it was unconstitutional and would scare off foreign investors.