Category: Central America

Guatemala registered its second month of deflation this year, with a fall in prices by 0.38% in September. The decline in the rate of inflation was driven mainly by the drop in international oil prices, according to the country’s national statistics institute, INE. September’s inflation takes the rate accumulated for the year to 3.87% and year on year inflation down to 5.7% from 7% in August.

The Guatemalan central bank shut down operations at Banco del Café to protect depositors after it suffered heavy losses investing in the United States. The bank had been warned before over its investments in Refco, a bankrupt brokerage firm. The bank had deposited $204 million with Refco, and these funds were frozen when it folded. The central bank will transfer the accounts of 300,000 individuals, worth some $600 million, to other Guatemalan banks and promised no one would lose their savings.

The battle between Venezuela and Guatemala for the fifth available non-permanent seat in the United Nations Security Council will continue in New York today, Tuesday. After 10 rounds of voting Monday there was still no clear winner to replace the seat’s current occupant, Argentina, when it steps down on December 31. Although Guatemala managed to beat Venezuela in each round of voting, it failed to secure a two-thirds’ majority needed to win the seat. The battle between the two Latin American nations has been billed by many as a battle against the will of the US, which has been openly backing Guatemala’s bid. Behind the scenes, negotiations are taking place to propose an acceptable compromise candidate from the region – most likely either Uruguay or Dominican Republic. The 10 non-permanent seats on the UN Security Council have a two-year tenure (two seats are allocated for Latin America and the Caribbean region). Only five of the 10 are up for renewal at the end of this year. The permanent members of the Council, who enjoy the power of veto, include the US, Russia, the UK, France and China.

Guatemala has signed an agreement with the US to swap $24 million of debt owed for conservation of specially designated regions within the country, known as a debt-for-nature swap. The agreement seeks to conserve Guatemala’s high-altitude cloud forests, rain forests, and coastal mangrove swamps. Guatemala is one of only six countries eligible under the 1998 Tropical Forest Conservation Act (TFCA) to benefit from debt relief of certain official debt owed to the US. In June, Paraguay – another of the six eligible countries – swapped $6.5 million of debt owed to the US under the same scheme.

Nicaragua’s Institute of Energy (INE), the country’s energy regulator, is to launch an exploration and production tender for three geothermal blocks. The government claims the blocks – Volcán Casita-San Cristóbal, Caldera de Apoyo and Volcán Mombacho – comprise the largest geothermal resources in Central America. The concession is due to be awarded next April. Nicaragua currently generates only around 20% of its daily energy from geothermal sources, but has the potential to generate much more, according to the government. The country has been struggling with an energy crisis this year and has faced increasing power outages.

María Antoineta de Bonilla will take the reins at Banguat, Guatemala’s central bank, from October 1 from Lizardo Sosa who steps down at the end of his four-year term. De Bonilla is currently finance minister, a post she has held since 2004. Prior to this she was a director of Banco del Quetzal, held posts at the Inter-American Development Bank and was vice-president of Banguat in 1994. Her position at the ministry will be filled by Hugo Beteta who is in charge of economic planning.

Despite the continuing political instability in the country, Nicaragua’s government says the country is ready to be inspected by the International Monetary Fund (IMF) to be included in the multilateral’s lending program. Nicaragua’s completed tax law and budget reform, requirements laid down by the IMF for inclusion of the Central American nation, means it is confident of securing an initial $100 million loan from the lender.

Nicaraguan presidential candidate, right-wing former finance minister Eduardo Montealegre, may face corruption charges after a parliamentary committee called for him to be investigated along with other former, and current, government members. The allegations are in connection with Nicaragua’s bond issuance scandal, known as the CENIS crisis, which took place during the presidency of Arnoldo Alemán. The $500 million debt led to the bankruptcy of four private banks in the country. Montealegre, the candidate of the Alianza Liberal Nicaragüense (ALN) party and reportedly the postulant favored by the US, is currently lagging behind former president and Sandanista leader Daniel Ortega in the polls ahead of the November 5 elections. Montealegre and incumbent president Bolaños, who has been billed as an anti-corruption crusader, have accused the committee of political maneuvering on behalf of their opponents.

Campaigning has officially opened in Nicaragua ahead of presidential elections on November 5. Left-wing Sandanista leader, Daniel Ortega, former president (1985-1990) and one-time bête noire of the US, is one of the front-runners. His main rivals are the right-wing candidates: former vice-president José Rizo of the ruling Liberal Constitutionalist Party (PLC) and e- finance minister Eduardo Montealegre of the Liberal Nicaraguan Alliance-Conservative party (ALN). This will be the fifth time Ortega has run for president, losing his bids in 1990, 1996 and 2001. However, this time around his more friendly overtones to the private sector may well secure him the presidency. To avoid a second round of voting, the winning candidate must secure 40% of the votes or 35% and a clear five-point margin over the nearest rival.

The value of Nicaragua’s exports for the months January through July rose 23% to $629.5 million, up from $511.3 million for the same period last year, according to the public-sector center for export services (CETREX). Heading up the list of exports was coffee, which accounted for 24.7% of total exports, followed by beef (12.6%). The United States continues to be the largest export market for Nicaragua’s mainly agricultural commodity exports, which also include bananas, sugarcane, beans and lobster.