Central American Bank offers loans to Nicaraguan businesses

View of the new Central American Bank building on the outskirts of Managua. Photo: Office of the Presidency

The bank has over US$400 million to distribute. Business leaders met with banking officials, the Minister of Finance, the President of the Central Bank of Nicaragua and the Banking Superintendent.

By Ivan Olivares (Confidential)

HAVANA TIMES – The Central American Bank for Economic Integration (CABEI) met with representatives of the Nicaraguan private sector on May 5 and offered them a wide range of financing programs, with amounts that could exceed US$400 million. The meeting took place at the bank’s recently inaugurated site in Managua.

In addition to providing resources to member country governments, CABEI provides funds to private enterprise in the region. They justify this as a means of ensuring an adequate balance between the public and private sectors. At the same time, it serves to mitigate the financial risks involved in concentrating loans on a very small number of customers, making them a very high percentage of their loan portfolio.

The bank’s offer included a US$200 million fund that was part of a $350 million package to ‘facilitate support for the financial sector’, so they can offer loans to small, medium and micro-enterprises. The bank had not been able to complete the disbursement of this last sum in Central America. Now that the deadline for requesting the funds has passed, the credit entity had little objection to concentrating these resources solely in Nicaragua.

The money can be used to finance technology, economic development, industry, Central American integration, job creation, gender programs, environment, irrigation, projects in the dry corridor, electromobility, the creation of renewable energy sources, the increase in the value of export products, or construction.

This possibility is of particular interest to the Nicaraguan Chamber of Urban Developers, although they are still awaiting the disbursement of US$171 million already approved by CABEI. This last fund is intended for the construction and acquisition of some 18,660 dwellings under the National Program for the Construction of Social Housing. After the candidates had complied with all the bureaucratic requirements, Dante Mossi, President of CABEI, announced that he was allocating an additional 12 months for the transfer of resources. The delay infuriated the business group.

At Thursday’s meeting, representatives of the regional bank had two pieces of good news for developers. First, that the funds for the housing construction loan would be disbursed in the coming months, since “the review of tender requests is now complete”.

The second “good news” concerns the creation of a financing mechanism for businesses registered with the Chamber. The plan consists of issuing bonds in cordoba [Nicaraguan currency] for sale on the Nicaraguan stock exchange to create resources for promoters. Developers, in turn, will then be able to promote the supply of housing, supplemented by a large fund of loans to buyers that the banks will manage.

It was not clear whether these bonds would be issued by the Central Bank of Nicaragua with the guarantee of CABEI, or directly issued by the Central American Bank. According to CABEI’s website, Mossi said that “the possibility of issuing local currency bonds to finance projects in the construction sector will be considered as an alternative to direct financing of constructions”.

A member of the Chamber of Urban Developers, who was not present at the meeting with Mossi, said the business association was hopeful because they had received notice that they too could apply. for “Facilitated support to the financial sector”. to help micro, small and medium-sized enterprises. Alternatively, they may be able to negotiate directly with the Bank for loans of up to US$20 million.

Politics not discussed, but ‘companies have to be careful who they partner with’

Several businessmen who took part in the meeting spoke anonymously with Confidential. They called it “a very formal meeting, where they [CABEI representatives] met first with us, and later with the bankers.

“At no time have I seen any of the business leaders who support the [Ortega-Murillo] government,” a source said, referring to the Nicaraguan Association for Development and Sustainability, allied with the government.

CABEI issued a press release quoting the president, Dante Mossi, who said that he had “conversed with thirteen representatives of chambers of commerce, eight financial institutions, the Association of Nicaraguan Banks and the Microfinance Chamber regarding the mechanisms funding that CABEI has at hand for the recovery and revitalization of the economy.

A professional present at the meeting said that the Ortega regime was represented by the Nicaraguan governor and the deputy governor of CABEI (Ivan Acosta and Ovidio Reyes, as well as the bank superintendent Luis Angel Montenegro.

“CABEI was in charge of the meeting, and there was no reference to political issues,” said a professional present at the meeting.

Asked about this high-level meeting, lawyer Eliseo Nuñez said: “I don’t expect the leaders of big companies to be outspoken opponents of the government. Yet they need to be clear about which partner they are acquiring when talking with the government about anything.

Nuñez, at one time a Liberal Party deputy, urged the business community to remember that Ortega “had them as partners before 2018. Now he’s suing them again.” He cornered them, he made them pay huge sums of money in taxes and he imprisoned their key leaders past and present.

“Because of this, I believe business leaders are once again looking at things in a very myopic way. They don’t see beyond the benefits they can get in the short term, when in reality having a relationship with Ortega has no strategic value,” Nuñez explained.

Finally, CABEI promised to review the cost structure of its financing opportunities linked to the creation of the CABEI capital fund, whose launch is scheduled for June 30, “so that the final beneficiary receives the resources at a reasonable cost”. The regional bank also spoke of an opportunity to access South Korean funds for the creation of cutting-edge initiatives.

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