Category: Central America

Guatemala’s interior minister, Carlos Vielmann, has resigned following the political scandal that has engulfed the country following the assassination last month of three Salvadorian politicians and the subsequent murders of four police officers who had been charged with the crime. Vielmann had come under pressure to resign, allegedly for having links with death squads operating within the police force.

Venezuela and Nicaragua have signed a series of agreements during a visit by President Hugo Chávez to the Central American nation. Venezuela has assigned $430 million to Nicaragua in projects covering energy, health and education. The lion’s share – or $340 million – is accounted for by cheap oil supplies, while $20 million goes towards capitalizing a branch of Venezuelan development bank Bandes in Managua. This is the second time Chávez has visited Nicaragua since the election of Daniel Ortega last year.

Polaris Energy Nicaragua, a subsidiary of Canadian renewable energy producer Polaris Geothermal, has announced that the office of Nicaragua’s Attorney General has informed it that it has annulled the assignment of the San Jacinto-Tizate geothermal concession awarded in 1999. Polaris announced that although the government has not decided to annul its interests in the concession, it does intend to review its right of ownership, “which may include seeking the annulment of such rights”. Polaris said it was “extremely surprised” by the recent events as it believed the assignment of the concession had been investigated fully and cleared three years ago by the Office under the previous administration. Daniel Ortega’s Sandinista government recently announced it would review all geothermal concessions.

Ratings agency Fitch has released comments on the absorption of Guatemala’s Banco de Comercio (Bancomer) by Banco Industrial, announced on January 13. On January 12, Guatemala’s banking regulator ordered the suspension of activities of small-sized local bank Bancomer. Fitch Ratings said it is maintaining its current ratings on Banco Industrial but that: “Bancomer could potentially impact BI’s asset quality and earnings over time, as Bancomer’s asset quality is relatively worse than BI’s figures.” Banco Industrial currently carries a long-term foreign and local currency issuer default rating (IDR) of BB.

Venezuela’s president, Hugo Chávez, has announced that Venezuela is to build an oil refinery in Nicaragua. The announcement came after the Central American nation joined the ALBA (Alternativa Bolivariana para las Américas) trade agreement. The new facility will have a capacity of between 100,000 and 150,000 barrels of oil, said the president speaking in the capital Managua, telling Nicaragua it could stop worrying about its fuel problems. The country has seen a growing energy crisis since last year and a mounting number of power outages.

Guatemala has suspended the operations of Banco de Comercio, after it overextended its loan portfolio and asked the Central Bank to intervene, according to a report by Reuters. It will be the second bank to go under in the country in the past few months. Apparently, Guatemala’s banking superintendent insisted the problems did not affect the rest of the banking system and were confined to Banco de Comercio. In September the country’s fourth-largest bank, Bancafe, collapsed because of liquidity problems.

Sandinista leader and former Marxist guerrilla Daniel Ortega is back in power in Nicaragua 17 years after he was last in charge. Ortega, who was inaugurated on Wednesday, won a convincing victory in elections last November to get a second shot at running the Central American nation. He is taking over a very different country to the one he last managed in the 1980s and his supporters say his management of the economy this time around will also be very different. He has pledged to tackle energy problems and speed up economic growth as his priorities. With the very high-profile support on offer from Venezuela’s Hugo Chávez, and with a difficult political history with the US, it will be interesting to see how Ortega handles relations with his country’s largest trade partner and biggest foreign investor.

Nicaragua recorded inflation of 6.91% during the first 10 months of the year, according to figures offered by the country’s Central Bank. This compares with 9.51% for the same period last year. In the 12 months through October inflation fell to 6.98%, down 3.53 percentage points against the same period in 2005. The Central Bank is forecasting annual inflation this year of 9.1%.

Nicaraguan conservative presidential candidate Eduardo Montealegre has conceded defeat in Sunday’s elections, confirming the win by Sandinista leader Daniel Ortega. With almost all the votes now counted, Ortega won 38% of ballots cast against 29% for Montealegre. Meanwhile, Ortega has said he is in favor of constitutional reforms that will see presidential powers reduced. “There will be no dramatic or radical changes to the economic foundations that have been laid over these years”, the former Marxist guerrilla said on a visit with outgoing president Enrique Bolaños, according to Nicaraguan daily La Prensa.