Nicaragua Table of Contents
Having won the 1990 elections and made significant steps toward peace, the new Chamorro government expected that Western nations and financial institutions would rally to its support. The United States, however, made resumption of economic assistance conditional on steadfast adherence to privatization of government-controlled resources, cuts in the military, and cancellation of Nicaragua's 1985 damage suit against the United States in the International Court of Justice (ICJ). Additional requirements for trade and tariff liberalization would quickly follow the more general conditions that the United States placed on resumption of foreign assistance.
To enable Nicaragua to meet eligibility requirements for borrowing from international financial institutions, the United States government promised Nicaragua approximately US$300 million in 1990. These funds were designated primarily for debt repayment and petroleum imports (the country's petroleum bill in 1989 was US$90 million). A smaller portion was earmarked for employment generation. However, these promised funds would prove slow to come. Two hundred days after the inauguration of President Chamorro, only US$160 million of the US$300 million pledged by the United States had been delivered.
Conditions for new loans were also placed by international banking organizations. In 1991 the IMF approved a US$55.7 million standby credit over an eighteen-month period to support President Chamorro's economic program. Requirements for the money, however, were similar to those of the United States government and included accelerated privatization.
In July 1991, President Chamorro signed a US$420 million loan with the World Bank and the IDB. Beginning in 1992, US$220 million was disbursed for investment in coffee, cotton, and cattle and for improvement of damaged and worn infrastructure. The remainder was to be used to pay off a bridge loan from Colombia, Spain, Venezuela, and Mexico, money those countries had loaned Nicaragua to pay a US$360 million debt to the World Bank and the IDB. Arrears payments to the international financial institutions were a standard condition for eligibility for new loans. Nicaragua also received additional aid from seventeen other countries to pay off arrears.
Data as of December 1993