Nicaraguan businessmen believe that electoral reform is essential to reactivate the country's economic activity, which has been in decline since the crisis erupted in 2018.
According to estimates by the International Monetary Fund (IMF), Nicaragua's Gross Domestic Product contracted by 5.7% in 2019, a drop that complements the year-on-year variation of -3.8% recorded in 2018.
Guatemala and El Salvador are the Central American economies that have registered the lowest levels of economic growth, when this is associated with the size of their public sector.
Panama, Nicaragua, Honduras and Costa Rica are the countries that would be obtaining exceptional results in their economic growth from the average expenditure of the region during 2011 to 2018, which could be associated with the investment made in past periods, informed the Central American Institute of Fiscal Studies (Icefi).
In the midst of Nicaragua's political and economic crisis, the National Assembly approved a tax reform that increases the income tax of large taxpayers from 1% to 3%.
On the morning of February 27th, the reform of the Tax Concentration Law was approved, which also contemplates raising from 1% to 2% the income tax for medium sized companies with higher incomes.
In a new attempt to solve the political and economic crisis affecting Nicaragua since April last year, the businessmen proposed to the government to resume negotiations in a "fast, effective and credible" way.
"… We hope that the Government and the Civic Alliance negotiators will carry out the necessary actions reflecting a sincere political will to solve the situation the nation is going through, through a fast, effective and credible negotiation", details a statement signed by businessmen Roberto Zamora, Carlos Pellas, Ramiro Ortiz M., Juan B. Sacasa, and José Antonio Baltodano.
In Nicaragua, the government plans to increase employer, labor, and state Social Security contributions, and to approve a tax reform that would increase taxes for medium and large companies.
Although the country has been in a serious economic and political crisis since April 2018, when the government tried to implement reforms to the Nicaraguan Institute of Social Security (INSS), the Ortega administration is once again trying to make changes to the institution, this time through an administrative resolution.
Preserving macroeconomic and financial stability and restoring private sector confidence are part of the IMF's recommendations to the Nicaraguan government to mitigate the impact of the political and economic crisis.
A team from the International Monetary Fund (IMF) visited Nicaragua, and after evaluating the situation of the economy after more than six months of social and political crisis, forecasts a 4% contraction of the Gross Domestic Product by 2018.
Businessmen in Nicaragua expect to reduce by at least 50% the investments they had previously planned for 2018, waiting for the problems affecting the country to be solved.
The research by the Consejo Superior de la Empresa Privada (Cosep) and the Fundación Nicaragüense para el Desarrollo Económico y Social (Funides), takes place in the context of more than 160 days of political and social crisis, which has severely affected the performance of the country's economy.
Five months after the socio-political crisis in Nicaragua, it is estimated that this year Gross Domestic Product will contract between by 2.1% and 4%, in real terms.
The Nicaraguan Foundation for Economic and Social Development (FUNIDES) has updatedits estimates on the economic and social impact of the crisis in 2018, in which it poses a first scenario that assumes that people and companies will adapt to a "new reality". In this context, the losses in added value would amount to $946 million.
In response to the rupture of the dialogue on the part of the Ortega administration, companies and citizen organizations have called for a national strike on Thursday, June 14.
Demanding the cessation of repression by the Government and the resumption of the National Dialogue, social and business organizations, called for a general strike to take place tomorrow.
In the optimistic scenario, which foresees an end to the crisis in Nicaragua by the end of July, economic growth at the end of 2018 would be only 1.7%, with $400 million losses in added value.
The Nicaraguan Foundation for Economic and Social Development projects that a possible first scenario would be one where "...the government accepts an early exit negotiated and implemented no later than the end of July, thus achieving a framework of understanding focused on the issues of justice and democratization, putting an end to repression, violence and citizen insecurity."
Due to the crisis in the country, the Central Bank has reduced the estimate of economic growth for this year from the range of 4.5% to 5%, to the range of 3% to 3.5%.
Ovidio Reyes, president of the Central Bank of Nicaragua (BCN), explained that "... the hardest and most regrettable thing about this is the generation of employment.We are expecting the loss of 58,300 new jobs as a result of the lower economic dynamics."
In the view of Fitch Ratings, continued political unrest could undermine investment conditions and economic growth, as well as raise the risks of confidence shocks to the financial system and macroeconomic stability.
From a statement issued by from Fitch Ratings:
Fitch Ratings-New York/San Salvador-17 May 2018: Continuing protests and resulting political violence in Nicaragua heighten risks to political stability and governability, says Fitch Ratings. Continued political unrest could undermine investment conditions and economic growth as well as elevate risks of confidence shocks to the financial system and macro stability.
Citizens are less than two months away from going to a ballotage to elect a new government without having discussed the country's priority issues, even though some of them require urgent attention and a deep national discussion in order to find a solution.
The vast majority of nicaraguans intend to vote for the re-election of the current President, Daniel Ortega, which would ensure the continuity of the current policies used to run the country.
EDITORIAL
Confirming what has been published by other pollsters,M & R Consultoresnotes that the results of its seventh national survey put the clear favorite to win the presidential election as Daniel Ortega and his wife Rosario Murillo, who accordingtothis survey now have 66.3% of the vote. The nearest contender has only 8% of the vote, while the so-called hidden vote is 20.6%.
Less investment, depletion of international reserves and contraction of public spending, in the opinion of Funides, are some of the effects that might be felt if the US Senate approves the bill.
The Nicaraguan Foundation for Economic and Social Development (Funides) has analyzed the potential impact of a possible US approval of the bill known as the "Nica Act", which aims to place conditions on the granting of loans by international institutions to the Ortega administration.