Nicaragua’s Central Bank President Is Out of Touch

The President of Nicaragua’s Central Bank (BCN), Ovidio Reyes, at a press conference in August 2015 // Photo: Carlos Herrera

As long as Ortega continues to cling to power, the economy will not lift its head and we will continue to suffer from unemployment, the closing of companies, hardships and distress.

By Enrique Saenz  (Confidencial)

HAVANA TIMES – After months of not showing his face, the President of the Central Bank finally appeared. Well, neither the President of the Central Bank had shown his face, nor the institution he leads provided relevant figures on the performance of the economy.

For example, no information on the state of the Social Security finances has been published since December. We all know that the party they made with the funds of that institution has it hanging by a thread.

And it’s a problem that crosses the entire national economy because it affects both public finances and the finances of companies and families, as well as the health care attention received by contributors, and in the pensions of current and future retirees. We are talking about hundreds of thousands of Nicaraguans.

In 2018 the INSS (National Social Security Institute) closed with a deficit of almost five billion Cordobas (1 USD = 33 Cordobas). And the matter has not been heard again.

Could it be that they are doing well, that they are doing badly or that they are worse?

An official document of the Treasury Ministry registers that in the first five months of the year, more than 17,000 contributors had stopped paying in. This means that thousands of companies either closed or moved into the informal economy. And that thousands of families lost their source of income.

On the other hand, thousands of companies and hundreds of thousands of workers were punished with the reforms of February this year.

Did these reforms work, or should we be prepared for another blow?

Mr. President of the Central Bank: You are required to report on the status of the INSS finances!

But neither does the Central Bank report on the performance of the economy. The latest data was published back in February.

Why don’t they disclose that information?

Business people, consumers and potential investors need to know the real state of the economy in order to make their decisions.

It is even less likely that they release the figures on unemployment or on wages.

Why is that? Is it because they are doing well, because they are going badly or because they are worse?

But returning to the appearance of the President of the Central Bank before the official media, the only thing clear is that the projection for 2019 is that the economy will have a down turn similar to last year. That is, a fall of approximately 4 percent of the Gross Domestic Product.

This is a difficult piece of information to digest for someone who is not an economist. Let’s explain it simply.

Last year, according to official figures, the economy fell by 3.8%, that is, almost 4.0%.

That year, more than 3 thousand businesses affiliated with INSS closed. And tens of thousands of companies that were not affiliated. More than 150,000 workers stopped contributing, and more than 300,000 lost their jobs.

By elementary logic, if in 2019 the economy will have a negative behavior, similar to last year, it is not necessary to be an economist to deduce that the results in terms of employment, sales, income, investment and closing of companies will be as negative as last year.

Why would the economy fall again? If the monarch repeats and repeats that everything here is stability and peace. Either the monarch lies, or his repression-based stability is not enough to reactivate the economy. Or both.

On the other hand, the first thing that the economic officials of the regime should do is agree, because just two months ago, the Treasury Minister stated in an official document that the economy would fall only by two percent in 2019. Now the President of the Central Bank says that the fall will be double.

Who are we going to believe? The President of the Central Bank or to the Treasury Minister?

Since, in the end, the word of the monarch is law for these civil servants, or servants, the figure will be whatever Daniel wants. They will accommodate the statistics to the desires and whims of the monarch.

The President of Central Bank also assured that next year the economy will be reactivated. And, he put it easy. According to him: it is enough that international financing returns, that banks reduce interest rates and that bank credit be restored…

And zap…the economy will grow again!

A dictionary of political economy should be given to the president of the Central Bank.

Mister government official, it has been proven, in theory and in practice, that the economic performance of a country does not depend solely on economic variables.

Distrust, uncertainty, political perceptions, power relations, economic and social contradictions are factors that influence the decisions of economic agents.

Why does financing not arrive? Why do depositors keep an eye on their deposits? Why don’t banks open their credit portfolio? Why does the Government fail to find takers for the bonds to reduce the fiscal deficit? Why do foreign investments continue to crawl? Why did Nicaragua leave the list of the big world tour operators? Why don’t consumers take long-term loans?

Because of the distrust and rejection generated by the Ortega regime!

There will be distrust as long as in Nicaragua a clique that does not respect either the Constitution, nor laws, nor rights, nor freedom, nor companies, nor property, remains clinging to power. As long as the bands of thugs continue to be deployed to terrorize everyone.

Again. As long as Ortega continues to cling to power, the economy will not lift its head and we will continue to suffer from unemployment, closing of companies, hardships and distress.



One thought on “Nicaragua’s Central Bank President Is Out of Touch

  • Article is proof Ortega must be removed

    Reply

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