Nicaragua’s economy remains in suspense amid controversial elections

A file photo dated 19 August 2020 shows a group of people collecting what may be useful or edible in a garbage dump in Managua, Nicaragua. EFE / Jorge Torres

Managua, Nov 2 (EFE) .- Nicaragua’s small economy, which has contracted in the last three years, remains in suspense before the general elections next Sunday, which have been questioned by the United States and the European Union (EU ) by the closure of democratic spaces.
In the last three years, the Nicaraguan Gross Domestic Product (GDP) has decreased to an average of 3.03% per year as a result of the socio-political crisis that has affected the country since April 2018, as well as the covid-19 pandemic and the damage caused by hurricanes Eta and Iota in November 2020, according to the Central Bank.
Although this year’s forecasts are for GDP to grow by 6%, there is uncertainty as to whether or not the international community will recognize Sunday’s elections, in which President Daniel Ortega is the favorite for his fifth and fourth consecutive term, in through the arrest of seven opposition presidential hopefuls who were emerging as his main rivals.
“Some questionable elections would deepen the international isolation of the country and aggravate its economic situation,” valued the international organization Crisis Group, in an analysis.
For the Nicaraguan sociologist Oscar René Vargas, a questioned election that leaves Ortega clinging to power, as in his opinion is expected, will have its costs and will probably deepen Nicaragua’s international isolation.
“The regime is in a situation with no prospect of definitively overcoming the five crises (economic, social, political, health and international),” he said.
In fact, several countries and multilateral organizations have broken ties with the Government, suspending cooperation and imposing sanctions on individuals and institutions, including Vice President Rosario Murillo, who is Ortega’s wife, and the National Police.
The Organization of American States (OAS) has discussed the situation in Nicaragua on several occasions and has considered applying Article 20 of the Inter-American Democratic Charter, which could lead to the country’s expulsion from the inter-American system.
The United States Congress, for its part, approved a bill known as the Nica Act at the end of 2018, which orders US officials from multilateral credit institutions to use their influence to stop funding to Nicaraguan state agencies.
The US Senate passed the “Reborn” bill, supported by both Democrats and Republicans, which would add electoral violations to possible grounds for US sanctions.
The so-called bill to Enforce Compliance with Conditions for Electoral Reform in Nicaragua (Renacer) expands the supervision of loans from international financial institutions to Nicaragua.
Likewise, it advocates the imposition of selective sanctions on Nicaraguan officials and that these be coordinated with the Government of Canada and the EU, in addition to requesting that Nicaragua’s continued participation in the Free Trade Agreement with Central America (Cafta) be reviewed.
These measures have made it difficult for Nicaragua, one of the poorest in Latin America, to emerge from the economic depression it has experienced since the 2018 protests, which hurt national and foreign investment and caused the collapse of tourism.
International cooperation funds, that is, loans and grants to the public sector, have decreased significantly since 2018.
Ortega, who already administered a war economy during the first Sandinista regime (1979-1990), is committed to resuming the consensus alliance that he maintained with businessmen and unions before the crisis, and that allowed Nicaragua to grow by a 5.1% per year in the period between 2010 and 2017.
Before the crisis, Nicaragua was the country in the region, after Panama, with the highest growth.
However, according to the non-governmental Nicaraguan Foundation for Economic and Social Development (Funides), Nicaragua’s economic deterioration cannot be reversed with economic measures or alliances, because its origin lies in the crisis that broke out three years ago.
Therefore, according to Funides, an economic recovery goes through political agreements must include, at least, guarantees of respect for constitutional rights, the freedom of political prisoners, the clarification of the truth behind the acts of violence, as well as elections free, observed, and transparent.

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