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.

World Bank approves $350 million to strengthen Costa Rica’s disaster-resilient infrastructure. The executive board of the World Bank (WB) approved an allocation of $350 million for the implementation of a project that will strengthen climate and disaster-resilient infrastructure and services in Costa Rica. In addition, the Global Concessional Finance Facility will contribute $20 million to this initiative. Click for more information

Government wants to grant concessions for electric charging stations so that bus companies do not have to build them. The Executive Branch is fine-tuning a proposal to grant concessions for “clean recharging” stations to serve electric units that would be operated by bus companies with routes authorized by the Public Transportation Council (CTP).  This government has a plan on the table to obtain funds to subsidize the purchase of electric buses. They are working on the terms of the proposed concessions with technical cooperation from other countries. Click for more information

Pre-investment phase and financing for electric train to be ready by 2025. The Instituto Nacional de Ferrocarriles (INCOFER) expects to have the pre-investment phase and its financing ready for the electric train in the Greater Metropolitan Area (GAM) by 2025. By August 2024, the pre-investment studies are expected to be ready, as well as some phases of the bidding process. There was a rethinking of the demand for the service, in which 100,000 users are being considered. In a second stage, the railroad pre-design and the definition of operating conditions are contemplated. Click for more information

Production of medical implements maintains strong momentum for Costa Rican economic activity. Costa Rican production, measured with the cycle trend series of the Monthly Index of Economic Activity (IMAE), registered an inter-annual growth of 3.7% in January 2024, according to the most recent information published by the Central Bank of Costa Rica. The expansion of production in the first month of the year was mainly driven by the dynamism of the food and medical equipment industry, professional services, commerce, and transportation. Click for more information

Costa Rica exports first batch of Deforestation Free coffee to the European Union. The first batch of coffee with the “deforestation free” certification has been exported. The 275 bags, equivalent to 18,975 kilos, were sent to Trieste, Italy, as a result of a pilot project that complies with a regulation established by the European Union (EU), which will come into force next December. The country is thus positioned as a pioneer in the implementation of EU Regulation 2023-1115, approved in May 2023, which will become effective in nine months. The instrument obliges traders (exporters and importers) of the 27 countries of the bloc not to trade without a certification that raw materials associated with deforestation and environmental degradation will not be used in the production process. Click for more information

Income Tax exemption for investment capital in El Salvador. The Legislative Assembly approved in its most recent plenary session an amendment to the Income Tax Law to exempt from this tax all investment capital in El Salvador, whether domestic or foreign. The purpose of the measure is to encourage the economic development of the country.  The amendment summarizes the activities, products and profits that are excluded from income while also expanding the list of activities excluded from income tax contained in Article 3 of the law. In addition, it adds values received in any kind of business transaction conducted abroad or any capital movement by deposits abroad or by investments, remuneration or emolument, in cash or in kind, such as credits, repatriation of capital, remittances, funds for investment and income from investment of securities or in other ways. Click for more information

El Salvador: Epicenter of innovation in the blockchain ecosystem.  The DFINITY Foundation announced a global initiative, deploying a $220 million investment fund to foster the blockchain ecosystem. As a result of this global initiative, ICP Hub Mexico emerged. The decision to strengthen the adoption of the ICP protocol in El Salvador is not accidental; it is a strategic response to the growing importance of the country in the technological arena, ICP Hub Mexico’s presence in El Salvador has already made a difference, with significant events and partnerships. Click for more information

El Salvador presents projects for trade development and investment to Spanish companies. A representative of the Government of El Salvador and a group of Spanish businessmen held a meeting in which strategic projects for commercial development and increased investment in the Central American country were presented. For Spanish companies, it is “especially interesting” to continue exploring business opportunities in the country. Click for more information

Salvadoran exports are expected to recover as of July. Salvadoran exporters expect foreign sales to recover, from all the falls of 2023, after the first half of 2024. Despite the improvement, the figures will remain far from the results of 2022. The latest data from the Central Reserve Bank (BCR) indicates that in January El Salvador exported $531.1 million, $8.6 million more than in January 2023, reversing the negative trend since November 2022 (with the exception of February 2023). Click for more information

Remaining funds to combat COVID-19 will be invested in the hospital system. Strengthening the National Health System is one of the commitments of President Nayib Bukele and the Legislative Assembly, which is why the deputies approved reforms to the Budget Law 2024 to incorporate $12,138,714 from external loans to the Health sector. Click for more information

Real estate investment rebounds. The global data and business intelligence platform, Statista, forecasts an inflow of at least $1.3 billion in the country’s real estate market over the next 4 years, analyzing that the sector has experienced a significant rebound, with a growing residential demand in vertical and horizontal projects. Click for more information

They call for policies to encourage foreign investment. Guatemala has a high potential for foreign investment in strategic sectors that are booming such as renewable energy and tourism, and for projects to move forward there must be public policies that unite efforts and alliances, was the conclusion of the Fiscal Policy, Investment and Opportunities panel. In the event, national investors and businessmen participated, who analyzed the challenges of the new government in fiscal policy and the impact of long-term initiatives in order to contribute to the development of the country in priority and strategic issues. Click for more information

Aiming at a new mining scenario. In the search for a sustainable oil and hydrocarbon industry, the country’s proposal is to discuss the mining legal framework, under parameters that include environmental, social, and economic impacts. The Government supports a mining moratorium, which means not granting licenses during the moratorium period, and discussing fully the conditions for sustainability. The Government’s position is not against oil or hydrocarbons but in favor of “a sustainable industry.” Click for more information

Challenges and opportunities in the real estate sector are analyzed. In an initiative to promote analysis and reflection on the current state and future of the real estate sector in Guatemala, the challenges and opportunities for this section were pointed out, where it was emphasized that vertical housing is the modality that will mark the future of the country, given the geographic conditions and demographics of the region. Click for more information

Guatemala led Central American countries in remittance income in 2023. This nation received $19.804 billion in the last annual period, followed by the land of Quisqueya with $10.157 billion and Honduras with $9.177 billion, the entity detailed. The fourth place in this key index for each of the respective economies was occupied by El Salvador, with $8.182 billion and in last place was Nicaragua, with$ 4.66 billion. Click for more information

Honduras and the European Union formalize a $25.5 million forestry partnership. The Government of Honduras and the European Union (EU) formalized a $25.5 million financing agreement that allows the country to reduce the illegal timber trade, restore 1.3 million hectares of forest, and promote green businesses. The agreement will enable the implementation of a “Forestry Alliance” between Honduras and the European Union, which will contribute to compliance with the Voluntary Partnership Agreement on Trade in Timber (VPA-FLEGT) and promote green business, according to a statement from the EU office in Tegucigalpa. Click for more information

Government to pay $200 million for sovereign bond placed in March 2013. The government of Honduras will pay $200 million to international bondholders for an 11-year sovereign bond placed by the Ministry of Finance (SEFIN) on March 12, 2013. This was confirmed by the president of the Central Bank of Honduras (BCH), Rebeca Santos. According to SEFIN, public debt service has been allocated 66,181.4 million lempiras for this year, equivalent to 16.2% of the current budget of the public administration (407,265.3 million lempiras). So far, 12,857.9 million lempiras (19.43% of the total) have been used for debt service. Click for more information

For every dollar of investment, Honduras receives 10 dollars in family remittances. The Economic Policy Officer of the Honduran Council of Private Enterprise (COHEP), Alejandro Kaffati, reiterated that family remittances continue to be the main economic source of the country. According to COHEP’s estimates based on data from the Central Bank of Honduras (BCH), for every dollar that enters the national territory through foreign direct investment, at least 10 dollars come in through remittances. Click for more information

Honduras received $1.361 billion in remittances in the first two months of the year. Between January and February 2024, Honduras received $1.361 billion in family remittances, 1.3% more than in the same period of 2023, informed the Central Bank (BCH).  Of the total remittances received between January and February, about 86 % came from Hondurans living in the United States, 8.8 % from Spain, 1.2 % from Mexico, and the remaining 4 % from Canada, Guatemala and Costa Rica, according to a BCH survey. Click for more information

Nicaragua registers progress in electricity coverage at the national level. According to the bulletin, Pastrán Report, which quotes an official statement, the Sandinista Government guaranteed electricity coverage to 1,288,320 homes, which represents 3,714,273 benefited inhabitants. The information specified that between February and so far in March, the Ministry of Energy and Mines and the National Electricity Transmission Company electrified 8,735 homes and normalized some 4,969 homes, with an investment of $26.5 million. Click for more information

Nicaragua regulates artistic performances in order to guarantee security and internal order. The Government of Nicaragua, through the Ministry of the Interior, approved regulations that will allow it to regulate public artistic events and performances, in order to guarantee citizen security, the security of the State, and internal order in the national territory. Click for more information

Ortega proposes a law in Nicaragua that requires telephone companies to provide information about their users. The President of Nicaragua, Daniel Ortega, sent a bill to the National Assembly (Parliament), which seeks to get telephone companies to divulge information about their users. The initiative of the General Law on Converging Telecommunications will replace the General Law on Telecommunications and Postal Service. Click for more information

Public debt in Latin America and the Caribbean is declining. The public debt of Latin America and the Caribbean decreased between 2020 and 2023 to approach pre-pandemic levels, revealed the Inter-American Development Bank (IDB) on March 11. Public debt experienced a decrease of 11 percentage points in relation to gross domestic product (GDP), going from 71% in 2020, to 66% in 2021, 62% in 2022 and 60% in 2023, the report stated. Click for more information

IDB highlights future growth opportunities for Latin America and the Caribbean. Latin American and Caribbean economies demonstrated unexpected strength in 2023 and can put in place reforms to capitalize on untapped economic opportunities, allowing the region to play a pivotal role in the global economic landscape, according to the Inter-American Development Bank’s (IDB) new macroeconomic report. According to the report, the region grew by 2.1% in 2023, exceeding initial estimates of 1%. This growth is expected to slow to 1.6% by 2024 and then pick up to 2% by 2025. Click 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 Interannual Inflation
Costa Rica 509,43 4,99% 5,75% B B2 B -1,13%
El Salvador 6,40% Not available B- B3 B-
Guatemala 7,80 3,56% 5,00% BB- Ba1 BB- 4.18%
Honduras 24,67 6,16% 3,00% BB- B1 No rating 4.50%
Nicaragua 36,62 3,30% 7,00% No rating B3 B- 5,60%

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