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IMF-World Bank Message to Ortega: First Solve the Political Crisis. By Ivan Olivares. Havana Times.  
  
17-08-2018

web/article.asp?artID=39415

IMF-World Bank Message to Ortega: First Solve the Political Crisis 
 By Ivan Olivares  (Confidencial)
Havana Times
August 14, 2018

The visit to the IMF’s headquarters had a different intention: request funds to strengthen reserves.

At the end of July, Ivan Acosta, head of the Treasury and Public Credit Ministry, visited the Head Offices of the World Bank (WB) and the International Monetary Fund (IMF), both in Washington D.C. He was seeking funds to oxygenate the depleted coffers of the Nicaraguan Treasury.

The mission to the World Bank was to request a “policy-based loan” similar to those that the Inter-American Development Bank (IDB) had granted in the past, and which were given as “budget support loans”, comparable to the ones that this multilateral bank has currently frozen.

The visit to the IMF headquarters had a different intention: request funds to strengthen the reserves. The responses of the IMF and the World Bank were very similar. Both institutions told Acosta that the cause of the economic slowdown in Nicaragua is political in nature; so, if there is no resolution of the political crisis, such requests for new economic loans cannot be considered.

On the one hand, regarding the loans meant for projects, the IDB is disbursing funds quite slowly. This is not yet a political decision, but is caused by bureaucratic reasons. The bank has reduced its capacity to supervise in Managua, because some of its staff was withdrawn from the country for personal security reasons. And, on the other hand, there is some caution in the disbursement of funds to prevent them from being diverted for other purposes and also because the rhythm of project execution has diminished due to the crisis in the country.

The situation with the Inter-American Development Bank could worsen drastically, if Daniel Ortega decides not to receive the Working Group created by the Organization of American States, to which the IDB belongs. Because the hemispheric entity could decide to escalate the pressure against Ortega’s Government by closing access to disbursement of funds already approved, and by denying new credits if the foreign ministers declare that in Nicaragua there is a breakdown of constitutional order.

Regarding policy loans, a source familiar with multilateral entities recalled that in the past, the World Bank and the IDB promoted (with the conditioning of disbursements), the Civil Service and Administrative Career Law; the Access to Public Information Law and the INIDE (Institute of Development Information) Survey and Database Decree, in addition to supporting public education and health.

However, neither bank “have expressed the slightest concern about the flagrant violation of these laws and decrees, nor complained about the use of ambulances financed by these organizations to transport paramilitaries and government supporters to marches by the ruling party”, stated the source.

 

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