Saturday 18 September 2021

U.S. warns “extreme” caution when investing in Nicaragua

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TODAY NICARAGUA – The U.S State Department advised international investors that they “should be extremely cautious” when investing in Nicaragua, “under the authoritarian government of President Daniel Ortega” and Rosario Murillo.

U.S. State Department: Regime has created “an unpredictable investment climate, fraught with reputational risks and arbitrary regulation”

In a report on the investment climate in Nicaragua, “2021 Investment Climate Statements: Nicaragua”, the U.S. Administration details that since 2018, the Orteguista regime has suspended “civil rights” – constitutionally guaranteed – detained political prisoners, and omitted rule of law”.

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Under these circumstances, the regime has created “an unpredictable investment climate, plagued by reputational risks and arbitrary regulation,” warns the report, published this Wednesday, July 21.

“Nearly three years have passed since the 2018 political-economic crisis left more than 300 peaceful protesters dead, 2,000 protesters injured and more than 100,000 Nicaraguans displaced and seeking asylum outside Nicaragua,” it notes.

“Presidential elections are scheduled for November 2021. Failure to restore civil liberties and guarantee free and fair elections could provoke further unrest and lead to further isolation of the Ortega regime,” the report continues.
Four years of falling foreign investment in Nicaragua

This Wednesday, Confidencial published that the Foreign Direct Investment (FDI) has plummeted in the last four years. In 2017, 970.9 million dollars were captured in that area, whereas about 159.4 million dollars are expected for 2021, according to economist Alejandro Aráuz, who published an analysis on his blog.

“In the period from 2008 to 2017, the weighted annual growth was 12.4%. In contrast, the deceleration of FDI from 2018 to 2021, is estimated at a weighted annual decrease rate of 64.1%, implying a forceful contractionary effect on fixed investment and the net position of Nicaragua’s international balance of payment,” he explained.

In its report, the State Department emphasizes that the Ortega government “seeks foreign direct investment to project normalcy and international support, at a time when foreign investment has all but ground to a halt”.

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“As traditional sources of foreign direct investment fled the ongoing political crisis, the Government has increasingly sought foreign investment from other countries, such as Iran and China. Investment incentives are targeted at export-focused companies that require large amounts of unskilled or low-skilled labor,” the report states.

Article originally appeared on Today Nicaragua and is republished here with permission.

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Article originally appeared on Today Nicaragua and is republished here with permission.

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