Download COUNTRY PROFILE: NICARAGUA

The largest country in Central America, Nicaragua has borders Costa Rica to the north and
Honduras to the south with coastlines on both the Atlantic and Pacific sides of the isthmus. The
capital and largest city is Managua. The government is republican with a constitution
renegotiated most recently in 1995. Nicaraguan President Enrique Bolaños, is from the Liberal
Constitutionalist Party (PLC) and is backed by the United States government. In the November
5, 2006 elections Bolaños will face stiff competition from former Sandinista revolutionary leader
and current Sandinista party leader Daniel Ortega. Although political transitions have been
peaceful since the Sandinista movement gained power in 1979, the country faces significant
challenges in development and is particularly vulnerable to hurricanes. Nicaragua ratified the
Central American-Dominican Republic Free Trade Agreement (CAFTA-DR) in 2005,
establishing free trade with the United States. Economically, the country faces high inflation,
widespread unemployment and deepening international debt.
For context--this report is meant to help the corporate security group understand the primary
concerns when establishing manufacturing operations within the country. As such, they are
concerned about certain things within the above categories:
1. Is the government stable?
2. If the current government does not survive, will the rule of law continue?
While President Bolaños won the election in 2001 with 56.3 percent of the vote compared to
opposition leader Daniel Ortega’s 42.3 percent of the vote, it appears as thought the tide may be
turning. A poll released on Oct. 18 indicated that Ortega is ahead by about 17 points and could
even win the election outright, with no need for a runoff. If Daniel Ortega wins the presidential
election on November 5, it is likely that rule of law will persist, but he may put pressure on the
country to adopt a more negative stance towards business in general and the United States in
particular. In terms of national stability, the Sandinista National Liberation Front (FSLN) was
instrumental in setting up the government in its current form, as it instituted democratic reforms
during its almost 12 years in power following a successful armed revolution in 1979.
3. Is the current government pro-business? Pro-U.S. business? Are successive governments
likely to maintain these policies?
4. What are the primary modes of transportation through the country?
Are there redundant forms of infrastrucure in case of emergencies?
5. What is the general nature of infrastructure within the country?
Is it reliable and well maintained?
6. Do companies that currently operate in the area experience problems with infrastructure?
This is not a full list--just a guide for consideration. Please include any information that would be
beneficial for the client to understand.
FROM CIA FACTBOOK
Economy - overview:
Nicaragua, one of the Western Hemisphere's poorest countries, has low per capita income,
widespread underemployment, and a heavy external debt burden. Distribution of income is one
of the most unequal on the globe. While the country has progressed toward macroeconomic
stability in the past few years, GDP annual growth has been far too low to meet the country's
needs, forcing the country to rely on international economic assistance to meet fiscal and debt
financing obligations. Nicaragua qualified in early 2004 for some $45 billion in foreign debt
reduction under the Heavily Indebted Poor Countries (HIPC) initiative because of its earlier
successful performances under its International Monetary Fund policy program and other efforts.
In October 2005, Nicaragua ratified the US-Central America Free Trade Agreement (CAFTA),
which will provide an opportunity for Nicaragua to attract investment, create jobs, and deepen
economic development. High oil prices helped drive inflation to 9.6% in 2005, leading to a fall
in real GDP growth to 4% from over 5% in 2004.
Telephone system:
general assessment: inadequate system being upgraded by foreign investment
domestic: low-capacity microwave radio relay and wire system being expanded; connected to
Central American Microwave System
international: country code - 505; satellite earth stations - 1 Intersputnik (Atlantic Ocean region)
and 1 Intelsat (Atlantic Ocean)
GABBY’S SCIM PROFILE:
COUNTRY PROFILE: NICARAGUA
President - Enrique Bolaños, is from the Liberal Constitutionalist Party (PLC). He came to
power in November in 2001 and sought to distance himself from the stained reputation of his
predecessor and Liberal leader, Arnoldo Aleman. Bolaños last year of his tenure began with low
numbers. The next presidential election is scheduled for Nov. 5. Former PLC member and
presidency secretary Eduardo Montealegre, former president Daniel Ortega of the FSLN, former
Managua mayor Herty Lewites of the Sandinista Renewal Movement (MRS), and former vicepresident José Rizo of the PLC are the main contenders.
Presidential Election 2006 – Top Issue
Election Date: 5 November 2006
What is to be elected: President and congress
Term: 5 years
US-backed President Bolanos has been increasingly isolated since he led an anti-corruption drive
against his predecessor, Arnoldo Aleman, who has since been convicted of fraud. Bolanos own
Liberal Party turned against him in congress why? Shouldn’t a successful anti-corruption
campaign make you MORE popular? There must be more to this story… and joined forces
with former rivals, the left-wing Sandinistas. The election is seen as an opportunity for who? to
put an end to this pact, which has dominated Nicaraguan politics in recent years. Sandinista
leader Daniel Ortega plans to run for president for the fourth time how is he doing?, while the
Liberal Party has yet to nominate a candidate. Observers say that the US is concerned about the
possibility of Ortega returning to power. The Sandinistas were voted out of office in the 1990
elections, following a 10-year civil war against the US-backed Contras. Up coming November
elections have already created tension in Nicaraguan politics. How is this tension visible?
Economy:
Investment is key for the struggling country, which has seen its exports of what? grow by nearly
50 percent in the last three years, yet still lags behind its Central American counterparts with
$1.5 billion in exports in 2005, according to the Nicaraguan Central Bank. That's the same
amount the country exported the year before the Sandinistas first came to power.
Nicaragua is also a member of the Central American Free Trade Agreement (CAFTA) which it
ratified in October 2005. It is estimated that CAFTA will increase Nicaraguan exports of what?
by 20%; last year Nicaragua exported goods worth $291.7 million to the US and imported
$524.8 million, with a net deficit of $233.1 million.
Emerging from the ashes of a devastated state controlled economy in the 1980s, Nicaragua has
quietly reconstructed part of its private sector to become the fastest growing exporter in Central
America. Nicaraguan exports have increased by 47 % over the last three years, according to
national export promotion group NICAEXPORT. But the nation still has ample of room to catch
up.
How are unemployment levels? Distribution of wealth?
How is Nicaragua influenced by Costa Rica? By Honduras?
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Need a better understanding of Nicaragua’s government’s relationship to business, will
research more on this