The IMF on Nicaragua: Ignorance, Naivete or Complicity?

Facilities of the International Monetary Fund (IMF).   Photo: Archive.

International Monetary Fund bureaucrats made recommendations and left. The dead, prisoners and exiles are recorded in other accounts.

By Enrique Saenz (Confidencial)

HAVANA TIMES – After visiting Nicaragua in the second week of November, an International Monetary Fund mission issued a statement on the Ortega dictatorship’s recent economic management. These missions are carried out periodically in the context of the IMF’s regulatory provisions.

The text contains such flagrant omissions and displays such obvious misrepresentations and falsifications of reality that any moderately informed Nicaraguan ends up wondering whether they are due to ignorance, naivete or complicity. The fact is that it suits perfectly as a resource that strengthens the regime’s deceitful propaganda.

Let us examine some of the most striking aspects:

Almost at the outset we find the following assertion: “The mission supports the authorities’ efforts to sustain medium-term growth by investing in infrastructure, reducing energy costs, and enhancing human capital.”

Which are those efforts aimed at “enhancing human capital?” Do the Fund’s experts know the magnitude of the human capital drain that outward migration represents in terms of human capital? If they do, how can they make such an assertion? If they do not know, so much the worse. In any case, here is some data: US immigration authorities report that between October 2020 and October 2022 having detained at the border 239,469 Nicaraguans trying to enter illegally. If we add the refugee applicants in Costa Rica and the migrants who went to other countries, Nicaragua will have lost at least 7% of its population by the end of 2022. In only 2 years!

Do the Fund’s experts have any idea of the number of technicians, professionals, skilled labor, and even unskilled workers that this percentage represents? Is this social drain what they call “enhancing human capital”? Or do they consider the repeal of university autonomy and the illegal nationalization of private universities carried out by the regime as “enhancement”?

Is this…ignorance or complicity?

  • Regarding energy costs, does the mission know how much are the technical losses in energy distribution? They are the highest in Central America. Do they know that while the generation capacity increases, at the same time they have increased in a sustained manner electricity imports? Do they know that Nicaragua has become the largest importer of energy in Central America?

Do they know the reason why? So that the operators of the energy business, among which are companies clearly linked to Daniel Ortega, increase their profit margins by buying cheap energy in Central America and selling it at higher cost to Nicaraguan consumers and businessmen.

Is this…ignorance or complicity?

  • Another paragraph of the statement states: “The mission supports the authorities’ efforts to tackle the structural imbalance in public companies and social security accounts.” It also mentions “structural reforms” to “strengthen the social security accounts.”

The INSS (Social Security Institute) financial crisis was for a while one of the IMF’s main concerns. In fact, the Ortega government faithfully and obediently applied the formula recommended by the Fund’s experts. And it was the imposition of that recommendation that was the spark that lit the fuse of the April 2018 protests.

The Fund’s bureaucrats made recommendations and left…the dead, prisoners and exiles are recorded in other accounts.

But let us return to the economy. The Central Bank reports that between January and September the INSS affiliates of the agricultural sector fell by 25%. A percentage that contains a hole that the experts…did or did not, see?

But there is more. In September, the number of affiliates, in the various branches, is less than in March. And in September the loss of affiliates reached its highest number.

Any first-time economist knows that structural imbalance in the social security finances is caused by the inability of an economy to generate enough jobs and salaries to sustain expenditures. And in Nicaragua we are before a strange case of an economic growth that rather causes the decrease of social security affiliates. And if we talk about real wages, the situation is worse. According to the Central Bank, real wages have been plummeting uninterruptedly, month after month, since more than three years ago. And each month is worse than the previous one.

Why did the mission ignore this data? What structural reforms are they talking about?

Is this…ignorance or complicity?

  • There is a mysterious assertion in the statement. They talk about the need to overcome “data gaps for the savings and credit cooperatives and begin supervision, prioritizing the largest ones.”

Data gaps means concealment of information. Which cooperatives are they talking about? Are they talking about CARUNA? Isn’t that the “cooperative” controlled by Ortega that gobbles up a good portion of Venezuelan oil cooperation?

Gentlemen! Some years ago, such “triviality” was included among one of the IMF conditionalities, although it was never enforced. And now they talk about “widening the perimeter of prudential supervision.”

Is that…ingenuity or complicity?

  • The mission states: “The Office of the Comptroller has taken measures to strengthen the oversight of spending in relation to the use of public funds…And it adds, “The Office of the Comptroller has introduced a platform to collect financial disclosures of public officials.”

How can they make such a statement? Do they ignore that corruption is the essence and raison d’être of the control that the party in power exerts over all public institutions? Do they ignore that members of the Comptroller’s Office are appointed by Ortega who removes or changes them at will?

Is my assertion political? Yes, it is. Is it not also a political assertion to say that the Comptroller’s Office has taken measures to strengthen oversight of spending in relation to the use of public funds?

Besides being a political assertion, it is a gross lie.

As far as financial disclosures, please! Financial disclosures have been regulated for decades…for scorn, it is enough to see the last financial disclosure presented by Ortega.

The height of naivete, to use a kind word, is the following phrase: “The state must strengthen the capacity to detect and prosecute possible acts of corruption throughout all levels of government…”

Do they ignore what happened with the Venezuelan oil cooperation funds and that those who occupy the highest echelons of political power appropriated more than US$ 5 billion? Are they unaware that the Transparency International report places the regime as the most corrupt in Central America and the second worst in Latin America?

Is this…ignorance, naivete or complicity?

  • Let us go to the following expression of wishful thinking: “Guarantee just and impartial access to the judicial system and legal resources in judicial proceedings supporting property rights, enforcing contracts and protecting investments.” In terms of Nicaragua, this is plainly and simply a silly phrase. Or cynical. Everyone knows that the judiciary lacks the most basic independence. And that it is an instrument of political repression.
  • Regarding government information, the mission “welcomes the intentions of the authorities to further develop the recommendations for technical assistance to improve the quality and coherence of statistics.” The Fund’s mission has been repeating this for many years. However, the government’s “compliance” is such that the mission resigned itself to citing data from 2014, 2015 and 2016 in its statement. What improvement are they talking about?

Finally, it is important to note that in 2020 the IMF granted a credit for US $185 million to combat the pandemic and in November 2021 granted the equivalent to US $353.5 million to strengthen international reserves. This totals more than 500 million dollars in two years.

Did the Fund bureaucrats need such a report to justify these operations? If so, they could have produced a less ridiculous report.

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