BLP’s summary of the most important regional news and opportunities offers an overview of the economic, social, and political landscape of Central America at just a click away.

The Treasury raised ¢191,000 million in its first bond auction of 2022. The Ministry of Finance obtained financing for ¢191,362 million in the first auction of internal debt bonds of 2022, held on January 10. Of the total, 90% was placed in an issue maturing in 2040, that is, ¢174,137 million at a fixed yield of 6.07%. The remaining 10% included ¢17,025 million due in 2032 at a fixed rate of 6.52%, and ¢200 million in 5-year notes yielding 5.44%. Treasury stated that they had a high demand for the instruments offered and, in the end, they allocated the bonds among 10 different brokerage firms. Click here for more information.

‘Nearshoring’ led to a record attraction of investment projects for Costa Rica in 2021. The nearshoring trend, in which companies relocate their investments to be closer to the parent company and in a place with legal security and other advantages, produced a record of 103 projects in 2021, of which 32 were new programs, while 71 were reinvestments, according to Carlos Wong, president of the Association of Free Zone Companies (Azofras), who cited the survey by the Costa Rican Coalition of Development Initiatives (Cinde). Click here for more information.

Congress of Costa Rica legalizes medicinal cannabis and hemp. On January 13, the Costa Rican Congress approved in a second and definitive vote, the legalization of medical cannabis and industrial hemp, an initiative that now awaits the signature of the country’s president, Carlos Alvarado, who has recently expressed doubts. In a vote of 29 in favor and 10 against, with 39 deputies present out of the 57 that make up the Legislative Assembly, the Law on cannabis for medicinal and therapeutic use and hemp for food and industrial use was approved. Click here for more information.

The World Bank estimates Costa Rica’s production growth this year at 3.5%. The World Bank estimates a 3.5% growth for Costa Rica’s production in 2022, after an estimated 5% growth in 2021, according to the World Economic Prospects report. The agency’s projection is lower than the 4.5% increase for this year estimated on October 2021, by the country’s Central Bank. According to a statement released by the agency, after the strong rebound recorded in 2021, the world economy is entering a sharp slowdown. Click here for more information.

Treasury adopts IMF standards in a new fiscal statistics report. The Ministry of Public Finance issued a new statistical report of fiscal figures, which is based on the standards established in the 2014 Public Finance Statistics Manual of the International Monetary Fund (IMF). According to a statement released by the Ministry of Finance, the objective is to improve the presentation of the Government’s financial information, including its link with national accounts and debt statistics, so that fiscal information analysts improve decision-making. Click here for more information.

El Salvador is among the five fastest-growing economies in Latin America. The pace of economic recovery in El Salvador has been stable since 2020, making it stand out from other nations in the region. The Economic Commission for Latin America and the Caribbean (ECLAC) presented a series of calculations about how the countries that make up the region closed in 2021, measured by the Gross Domestic Product (GDP). El Salvador, according to these ECLAC scenarios, had a positive variation of 10%. The country is listed among the “Top five” nations that had the best performance. Click here for more information.

The World Bank projects that El Salvador will grow 4% this year, a forecast that remains unchanged from the one presented in the previous October and also coincides with the figure expected by the Central Reserve Bank (BCR) for the end of 2022. In general, the multilateral forecasts that Central American countries will grow between 3% and 4.4% this year, (except for the region’s standout, Panama, which is forecasted to achieve 7.8%), driven by public investment as local Governments build transportation-related infrastructure. Click here for more information.

El Salvador stands out worldwide for advances in the development of renewable energies. The decision made by President Nayib Bukele to convert renewable energy into a strategic sector has brought unprecedented results, benefiting consumers and the environment. Now, that same concept has led the country to be a benchmark on a world scale. El Salvador will chair the XII Assembly of the International Renewable Energy Agency (IRENA), a virtual meeting of 160 countries that concludes on January 16. Click here for more information.

Government must refinance $800 million of debt in the first quarter of 2022. Between LETES and CETES, heavy debt will come due in the first months of the year. Without an agreement with the IMF, the country cannot replace the maturing loans with long-term debt. In the first quarter of the year, the Salvadoran Government must face the expiration of almost $850 million in short-term loans (LETES and CETES). According to estimates based on information from the Ministry of Finance and the Salvadoran Stock Exchange, in January alone there are five maturities of Treasury Bills (LETES) totaling $199 million and one of Treasury Certificates (CETES) for $150 million. Click here for more information.

El Salvador’s public debt will be 107% of GDP in 2026. The debt burden will remain high for a dollarized economy with limited financing options, warns a report by The Economist Intelligence Unit (EIU) that foresees greater political and financial risk from bitcoin. Although El Salvador’s economy is recovering from the recession caused by the Covid-19 pandemic, the EIU predicts that fiscal and debt dynamics “will remain weak in 2022-2023.” Click here for more information.

Guatemala recorded unprecedented historical growth in 2021. During a press conference, the president of the Bank of Guatemala (Banguat), Sergio Recinos, confirmed that the country’s economic growth was 7% of the Gross Domestic Product (GDP) during 2021. “It was a dynamic growth that had not been seen in the country’s recent history,” said Recinos. In addition, he reported that the most dynamic sectors for 2022 will be hotel accommodations, food service, minerals, exports, industry, electricity supply, water, and construction. Click here for more information.

The Guatemalan stock market closes in 2021 with great dynamism. The National Stock Exchange closed the year with favorable results despite the general difficulties caused by the acute global crisis triggered by the Covid-19 pandemic. As of December 31, the total volume of operations reached Q836,692 million, and the annualized volume of operations totaled Q246,368 million. Although the year presents a decrease in trade totals versus 2020, the annualized volume of the year (which allows comparing the amounts traded over the same length of time) is higher than the previous year with the Private Primary Market achieving great growth, reaching record levels, which shows greater solidity and confidence of investors in the national stock market. Click here for more information.

Inflation slows down in Guatemala with 3.07% registered in 2021. Guatemala closed the year 2021 with an inflation of 3.07%, which represents a “slowdown” compared to 2020, according to official information from the National Institute of Statistics ( INE). The data released by the state on January 13 indicates that, after collecting the latest reports for December, prices rose by 3.07% during 2021 in Guatemala. The figure represents a “slowdown”, according to the INE, compared to 2020, when inflation rose to 4.82% in a year marked by the start of the covid-19 pandemic. The inflation of 2021 is very similar to that of 2019, before the pandemic when it amounted to 3.41% (source: Guatemalan National Institute of Statistics). Click here for more information.

Honduras’ economic growth is approaching 12%. Authorities of the Central Bank of Honduras (BCH) expressed satisfaction by results in the context of the goals set in the Monetary Program, among them, the growth rate that is close to 12 percent. The latest data on exports, imports, and credit lend greater weight to this growth projection. In terms of country risk Honduras appears among the best of a tier of 17 countries, a reflection of how the national economy appears abroad by the banks that lend money, the private sector, the public sector, investors, and those who buy bonds. Click here for more information.

At year-end, remittances exceeded $7 billion. Family remittances sent to Honduras until December 30, 2021, totaled $7,353 billion, a year-on-year increase of 28.3 percent, reported the Central Bank of Honduras (BCH). The dollars sent by more than one million Hondurans abroad, especially from the United States where most are there in irregular status, increased by 28.9 percent ($1.622 billion), compared to the amount received at year-end 2020 ($5.731 billion). The BCH also reported that the income of foreign currency from foreign exchange agents at the end of 2021 amounted to $15.725 billion, 28.9 percent more than at the same date of the previous year when 46.8 percent of the money coming in was derived from family remittances. Click here for more information.

In 2022 no taxes will be paid when importing biosafety supplies and equipment. In 2022, the validity of the measures decreed for the non-subjection to the payment of the Sales Tax, Customs Duties, and other import taxes on the local purchase and import of biosafety supplies and medical equipment necessary to attend to the health emergency caused by Covid-19 and its variants. The purpose is to maintain contagion prevention measures through the acquisition of medical equipment for the treatment of COVID-19 disease and its variants, as well as the strengthening of the health system in general. Click here for more information.

Honduran debt rises 1.7% and exceeds $11.3 billion in 11 months. On January 12, the Central Bank of Honduras (BCH) indicated that Honduras’ external debt reached $11.322 billion between January and November 2021, which represents an increase of $190 million compared to the same period in 2020, an increase of 1.7% compared to the $11.132 billion of the first eleven months of 2020. The increase in the Honduran debt is due to “the net use of $406.1 million, a product of the difference between the disbursements received ($2.354 billion) and the amortization of capital ($1.948 billion)”, according to the BCH. Click here for more information.

A portfolio of $1.3 billion is the long-term debt of the Honduran government with CABEI. The Central American Bank for Economic Integration (CABEI) maintains a balance with the government of Honduras of $1.3 billion, said the president of the financial institution, Dante Mossi. “Our portfolio amounts to more or less $1.3 billion and is close to disbursing close to one billion dollars,” commented the president of CABEI. Mossi stated that what the Honduran government owes CABEI is long-term concessional debt. He explained that the reprofiling of the debt has to do with the payment of sovereign bonds. Click here for more information.

Nicaragua presents to an international forum the country’s advances in the generation of energy with renewable sources. The Nicaraguan Parliament participated in a Forum of Legislators convened by the International Renewable Energy Agency (IRENA) focused on national energy transition policies, at which Nicaragua described its experience in the transformation process in this area, achieving to date the generation of more than 75% of the energy through renewable sources. Click here for more information.

ECLAC estimates that the Nicaraguan economy will experience a 3% slowdown in 2022. The Nicaraguan economy grew by 7.4% in 2021; however, it will experience a 3% slowdown in 2022, according to projections by the Economic Commission for Latin America and the Caribbean (ECLAC), in its Preliminary Balance of the Economies of the region. By contrast, the Ministry of Finance and Public Credit has indicated that the economy has registered a recovery after the resounding drop it suffered in its Gross Domestic Product (GDP) in 2020. The entity assured that 2021 closed with a growth of 9.5%. Click here for more information.

Nicaragua is in negotiations on a cooperation program with Iran. The Government of Nicaragua reported that it is negotiating a cooperation agreement with Iran, which would cover scientific and educational issues, among others. The announcement was made by the Nicaraguan Executive during the controversy unleashed by the presence of Iran’s Vice President for Economic Affairs, Mohsen Rezai, at the fifth (fourth consecutive) inauguration of Daniel Ortega as Nicaraguan president on January 10. Click here for more information.

Daniel Ortega assumes the presidency of Nicaragua with new alliances. The inauguration of President Daniel Ortega and Vice President Rosario Murillo on January 10 was highlighted by the signing of four cooperation agreements between Nicaragua and China. Click here for more information.

ECONOMIC INDEX

Country Exchange rate (x USD) Basic passive rate in local currency Current monetary policy rate S&P sovereign debt indicator Moodys Sovereign Debt Indicator Fitch indicator
Costa Rica 636,51 3,05% 1,25% B B2 B
El Salvador 8,75 6,50% Not available B- Caa1 B-
Guatemala 7,70 1,75% 1,75% BB- Ba1 BB-
Honduras 24,43 6,14% 3% BB- B1 No rating
Nicaragua 35,54 0,93% 3,50% No rating B3 B-

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