Nicaragua 

Nicaragua country policy

Policy established 28 April 1987

• The country ceiling is 80 mln euro
• Early warning signal 30 mln euro
• Public buyers: ORIO facility
• Private buyers: SIF facility, FX generating buyers only

Country class: 7

Restrictions

• Special conditions, consult your accountmanager

Nicaragua country facts

Atradius Dutch State Business Economic Research
Country Report last updated 12 January 2012
Country NICARAGUA 

Political Situation
Stable

Head of state
President Daniel Ortega.

Form of government
Government of the Frente Sandinista de Liberacion Nacional (FSLN).

Internal Economic Situation
Depending On External Factors

General situation
Nicaragua’s small and open economy is reliant on global trade, multilateral loans and foreign donor aid. After the recession of 2009, the domestic economy has recovered with a real GDP-growth of appr. 4% in 2010/’11. Private consumption is strongly depending on the inflows of remittances from the USA: 13% GDP. All economic sectors are showing positive growth rates; the incipient mining sector will be boosted by expanding gold production. The maquilasector is growing from a low level. Sound profitability and solvency indicators in the banking sector with low level of NPL’s. But high dollarisation exposes the private sector (corporates and banks) to a major currency risk in case of a Cordoba-devaluation. Structural high inflation (appr. 9% p.a.) as a result of supply side constraints in food and energy. Rather poor governance and a weak legal system burden the business environment; high corruption (127th  of 178 on the TI Index).
 
External Economic Situation
Better Ratios But Still Vulnerable

Main sources of foreign exchange
Sugar, coffee, meat, private transfers, financial donor support.

Main foreign markets
Latin America (42%), USA (34%), EU (13%).

Main expenses of foreign exchange
Consumer goods, raw materials.
 
Balance of payments  
Large trade deficits are partly financed by net income of services and private remittances (13% GDP) but still high current account deficits are normal. Capital imports have to close the finance gap, mostly concessional finance, Venezuelan and other international aid. Crawling depreciation of the Cordoba vs US$ by 5% p.a; de facto effective appreciation in real terms because of higher inflation than in the US.