The Downfall of Nicaragua's Finance Minister: Shockwaves and Uncertainty

The sudden departure of Iván Acosta as Nicaragua's Minister of Finance after 12 consecutive years in the position has sent shockwaves through the upper echelons of the government, according to sources close to the public sector. Acosta had become a key economic operator for the regime, working closely with Ovidio Reyes, the President of the Central Bank.

Uncovering the Secrets of the Regime's Financial Mastermind

The Pivotal Role of the Finance Minister

The Finance Minister was the "general manager of the economic operation of the dictatorial regime," explained economist Juan Sebastián Chamorro, a former political prisoner exiled in the United States and a member of the Monteverde Nicaraguan Democratic Concertation. Acosta had access to sensitive information not only on public finances and government contracts, but also on the personal and business dealings of the regime's inner circle. This level of knowledge must have unsettled many within the public sector and the emerging private sector that is currently vying for government contracts.

The Mysterious Circumstances Surrounding Acosta's Departure

The circumstances surrounding Acosta's departure, officially presented as a resignation, remain shrouded in mystery. Contradictory reports have surfaced, with some claiming he is in jail, while others suggest he has been spotted in public. Regardless of his current whereabouts, his fall from grace represents a significant change within the regime. Acosta was not part of the Ortega family's inner circle, but he was a close economic and political operator, making his sudden departure all the more intriguing.

The Shifting Power Dynamics in the Finance Ministry

The new Finance Minister, Bruno Gallardo, is a former civil servant in the ministry but is better known as a veteran teacher's union leader from the 1970s. Gallardo's lack of relevant experience in public finance management raises questions about his qualifications for the role. Chamorro suggests that the appointments of such ministers are largely irrelevant, as power is concentrated in the hands of the dictators. These ministers are merely "operators" who lend their signatures to the regime's decisions.

The Increased Influence of the Central Bank President

With Acosta's departure, the President of the Central Bank, Ovidio Reyes, is poised to gain more power. Reyes was part of the original team that assumed the finance portfolio and has a background in the Ministry of Finance and Public Credit. He managed an important office adjacent to the minister, giving him intimate knowledge of budget management and international negotiations. Chamorro believes that Reyes may now have increased responsibilities, potentially representing Nicaragua in international organizations such as the World Bank, the Monetary Fund, and the Central American Bank for Economic Integration (CABEI).

The Weakening of the Finance Ministry

The departure of Acosta and the appointment of Gallardo have weakened the credibility and stability of the Finance Ministry's economic policy management. As the "general manager of the State," the Finance Minister plays a crucial role in overseeing public resources, budget execution, and negotiations with international organizations. Chamorro suggests that Acosta's fall from grace will further undermine the regime's economic credibility, particularly at a time when they had celebrated an improvement in their risk rating.

The Decline in Nicaragua's Exports

Data from the government's National Production Plan reveals a concerning trend of declining production and exports across various sectors, including coffee, sugar, seafood, milk, and beans. Chamorro analyzes the specific factors contributing to these declines, such as weather conditions, government policies, and the loss of trade agreements.

The Negligible Impact of the China Free Trade Agreement

Despite the government's frequent announcements of trade deals and shipments to China, the impact of the Free Trade Agreement with China has been minimal. Chamorro explains that it is challenging for Nicaragua to be competitive in the Chinese market, given the presence of countries like Vietnam that are geographically closer and produce similar products. He also suggests that the agreement has primarily benefited government cronies through the distribution of import contracts, rather than providing any significant benefits to the broader population.

The Bleak Outlook for Nicaragua's Exports

Chamorro predicts that 2024 will not be a good year for Nicaragua's exports, both due to the agricultural issues and the decline in free trade zone exports, which have already experienced significant closures in 2023. The loss of the Free Trade Agreement with Taiwan, which had been a growing market for Nicaraguan exports, has also contributed to the overall decline.