Category: Central America

The International Finance Corporation (IFC) has agreed a subordinated loan of $30 million to Guatemala’s largest financial institution, Banco Industrial, aimed at strengthening the capital base of the Bank. Atul Mehta, IFC’s director for Latin America and the Caribbean, said: “IFC’s investment will constitute a signal of approval in the international market and help put Banco Industrial on a very competitive footing as CAFTA is implemented in the region.” The move is part of a strategy to encourage the development of Guatemala’s banking sector as a whole. The loan will help Banco Industrial expand its financing of local companies, as well as the country’s growing export sector. IFC is the private sector arm of the World Bank.

The annual meeting of the Inter-American Development Bank ended with no agreement on debt relief for the region’s poorest countries. Haiti, Bolivia, Honduras, Nicaragua and Guyana had hoped the bank would agree to forgive as much as US$3.5 billion in debt, arguing they cannot afford the payments without cutting back on desperately needed social programs. Bolivia owes US$1.6 billion and Honduras another US$1.4 billion.

An agreement has been reached between President Enrique Bolaños of Nicaragua and the left-wing Sandanista leader Daniel Ortega to delay until next year constitutional reforms which will weaken presidential powers. Growing conflict between President Bolaños and the opposition-controlled Congress has created a deepening political crisis in the country, described by the President as a ‘creeping coup’.

Nicaragua has recalled its ambassador to Costa Rica, Francisco Fiallos Navarro, as a long-running border dispute between the two countries escalates. Since 2001, Nicaragua and Costa Rica have been disputing sovereignty of the San Juan River border between the two nations. Costa Rica says it is considering bringing the case in front of the International Court of Justice in The Hague.

The World Bank’s board of directors has said it will provide grants worth $780 million to Guatemala over the next three years. Guatemala, one of the poorest countries in the world, needs to increase growth by approximately 5 percent annually and raise public spending on human development and infrastructure investments to meet the World Bank’s Millennium Development Goals and halve poverty by 2015.