Category: Central America

Guatemala’s inflation was down to 7.55% in the first half of the year, compared with 8.80% for the same period last year. However, monthly inflation in June rose 0.6% against the previous month and the central bank, Banguat, chose to raise the benchmark interest rate from 4.50% to 4.75% to keep prices in check.

Costa Rica’s government has chosen to keep the country out of the Central American parliament, Parlacen, saying it is a costly institution that brings no benefit. Guatemala, which plays host to Parlacen, had asked the new government of Oscar Arias to reconsider the country’s decision to remain out of the parliament. Costa Rica has earned criticism from its neighbors and has been accused of isolationism for its stance. Permanent members of the parliament are Dominican Republic, El Salvador, Guatemela, Honduras, Nicaragua, Panama.

Nicaraguan presidential candidate Herty Lewites, of the Sandanista Renovation Movement (MRS), has died of a heart attack in the capital, Managua. The center-left ex-mayor of Managua had served as tourism minister under Daniel Ortega in the 1980s but later broke away from the Sandanista Party to run for the presidency later this year against Ortega. He had been expected to take away votes from the former president.

Guatemala joined El Salvador, Honduras and Nicaragua to become the fourth Central American nation to implement Cafta, the free trade agreement with the US. Meanwhile, Dominican Republic delayed the planned July 1 implementation of the Treaty while it continued to negotiate some aspects of the agreement.

Guatemala’s consumer price index rose 0.82% in April, prompting fears that inflation this year may push past the 6% forecast. This would make it the third consecutive year that the country’s rate of inflation has exceeded the 4%-6% range targeted by the government’s monetary committee. Last year inflation ended the year at 8.57%, according to the central bank, Banguat.

Nicaragua’s opposition leader and presidential candidate in November’s elections, Daniel Ortega, has promised the country a development bank which he says will be supported by Venezuela’s president, Hugo Chávez. The bank would help fund small and medium-sized businesses as well as agricultural producers.

For the first time ever, Guatemala and Nicaragua have adopted “Summer Time” – pushing forward the time by one hour – in order to save energy costs. Both countries put their clocks forward by an hour on Sunday, midnight. They will remain at GMT-5 until September 30. Guatemala estimates the change will save around 4% in energy consumption.

Nicaragua’s largest right-wing party, Partido Liberal Constitucionalista (PLC), has chosen José Rizo as its presidential candidate for the country’s upcoming elections in November. Rizo will stand against former president and Sandinista Daniel Ortega. The prospect of either candidate as the future president of Nicaragua has set off alarm bells in the United States, which has been lobbying all the right-leaning parties to unify and pick a candidate, other than Rizo, to defeat Ortega.

US jeans manufacturer Cone Denim, part of International Textile Group, is to build a plant in Managua, Nicaragua, which will be the country’s largest plant. The planned investment of $100 million is equal to 2% of Nicaragua’s total GDP, according to a government spokesman, who said the agreement reinforces the message that “Nicaragua is open for CAFTA business.” The Central American Free Trade Agreement (CAFTA) with the US came into effect in Nicaragua earlier this month. CAFTA has been opposed by small textile manufacturers in the region who say the Agreement will result in the closure of local businesses.

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.