Caribbean & Central America - May 2014 (ISSN 1741-4458)

Foreign cooperation:

According to the latest report by Nicaragua’s central bank, released in April 2014, direct foreign cooperation to Nicaragua reached US$1.29bn in 2013 (equivalent to 11.5% of GDP), a 5.4% drop in absolute terms compared to 2012. Of the total, 60.1% went to the private sector and the rest to the public sector. The main overall donors were: Venezuela (US$559.1m- although the bank also includes an additional US$95.1m in foreign direct investment[FDI], bringing the total to US$654.2m); the Inter-American Development Bank (US$168.2m); the Central American bank for economic integration (US$152.1m); the World Bank (US$70.3m); the European Union (US$49.5m); Russia (US$35.1m) and the US (US$32.2m). The local media was quick to trumpet the 10.2% drop in aid from Venezuela, which controversially remains out of the State budget and is mostly petrol cooperation channelled through Albanisa, the bi-national oil company set up in 2007, 51% owned by Venezuela’s state oil firm, Pdvsa, and the remainder by Nicaragua’s Petronic. Yet upon closer inspection, most of the drop was due to a reduction in FDI which was down from US$173.0m in 2012. According to the central bank report, US$558.5m of Venezuela’s cooperation comprises loans from Pdvsa of which 62% went to social productive projects like energy subsidies (US$133.7m), while US$65.3m went to the so-called “solidarity bonus”- a monthly cash stipend of N$750 (US$27.5) which benefits more than 150,000 public sector workers on a monthly income of less than N$5,500 (US$202). The opposition has long complained that President Daniel Ortega has used these hand-outs to buy support for his Frente Sandinista de Liberación Nacional (FSLN) government.

Inflation: According to the most recent (6 May) report by Nicaragua’s central bank, monthly inflation in April reached 0.44%, down from the 0.64% registered in the same month the previous year. This brings the accumulated rate to 1.83% (compared with 2.58% in April 2013) and the year-on-year rate to 4.90% (compared with 6.34% in 2013). Nicaragua closed 2013 with a 5.54% inflation rate.