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.
Costa Rica stands out with positive numbers in the midst of a productivity downturn in Latin America. The most recent McKinsey Global Institute (MGI) study, “Investing in Productivity Growth,” reveals that, in the case of Latin America, 25 years ago the level of productivity was much higher than other emerging regions. But today their growth is below zero percent, except in the case of Costa Rica, as the country managed to increase its productivity. These are results that allow the country to continue on the road to development. Increased investment is associated with higher output and productivity growth, lower inflation, better fiscal and external balances, and lower rates of poverty and inequality. Click for more information
CABEI re-launches bidding for Caldera project linked to ferry operation. The Central American Bank for Economic Integration (CABEI), after declaring “unsuccessful” the previous call for bids for the Conditioning of New Yards for Puerto Caldera project, has decided that the project will be financed with a non-reimbursable technical cooperation of $1,050,000, approved by the financial entity. The deadline for receipt of bids is April 30. Click for more information
Companies paid in dollars are pre-paying salaries and giving bonuses due to the drop in the exchange rate. Companies in Costa Rica that pay their workers in dollars are taking measures such as the delivery of bonuses or the early payment of salaries in order to compensate for the fall in the exchange rate, which directly affects the income of their employees translated into colones. The digital technologies and services sectors are the ones that mostly use this currency for remuneration. Click for more information
MOPT promises to build four interchanges on the San José-San Ramón road next year. The Minister of Public Works and Transportation, Mauricio Batalla Otárola, announced that in June the bidding processes for the construction of four interchanges that are part of the expansion project of the San José-San Ramón road corridor will begin. The overpasses at the intersections of San Ramón, Grecia, Naranjo and Coyol de Alajuela are part of the so-called “can’t be postponed” works (OBIS), which were paralyzed in 2022, when the Ministry of Public Works and Transportation (MOPT) announced its intention to terminate the Ruta 1 Trust Fund created to manage the project. Click for more information
IMF mission recommends disbursements for $510 million. The International Monetary Fund (IMF) mission that visited Costa Rica recommended making the last disbursements for a total of $510 million to the country, after reviewing the fulfillment of commitments and the evolution of the national economy. The disbursements correspond to $270 million from the IMF’s Extended Fund Facility (EFF) and $240 million from the Resilience and Sustainability Facility (SRS). Both disbursements recommended by the IMF team will be subject to the approval of the IMF Executive Board. The mission also recommends that BCCR should continue its prudent return to a neutral monetary policy in the coming months. Click for more information
The Salvadoran government has already confirmed the amount of bonds it will purchase in advance. The Salvadoran government confirmed that it will buy 71.3% of the 2025 bonds. El Salvador invited bondholders to tender their offers if they wanted to sell. The government has already accepted offers, which imply more money than initially expected, since it will be around $486.7 million. Of this, $248.3 million of the 2025 bond (71.3% of the total); $166 million of the 2027 bond, 50.97% of the total; and $71.5 million of the 2029 bond, 48.2% of the total are included. Click for more information
CABEI approves a $150 million loan increase for Fovial. The Central American Bank for Economic Integration (CABEI) approved an increase of $150 million in a loan for the Fondo de Conservación Vial (FOVIAL). The financial entity informed that the objective of the financing is to support the government in the conservation of El Salvador’s road infrastructure. “The financing will be used to meet the working capital needs of the autonomous, with which the credit line reaches the amount of up to $250 million.” Click for more information
Public investment exceeded $1.5 billion in 2023. The execution of public investment exceeded $1.57 billion in 2023, 60.3% of the programmed amount, according to the Ministry of Finance. The Annual Public Investment Program (PAIP) amounted to $2.617 billion in December 2023, consisting of 331 projects. Of these, $1.579 billion was executed, a figure that increased by $662.81 million (72%) with respect to the $916.53 million in 2022. Click for more information
El Salvador and China begin negotiations for a Free Trade Agreement (FTA). El Salvador has initiated negotiations for a Free Trade Agreement (FTA) with China, according to the Minister of Economy, María Luisa Hayem, who assured that a complete and integral treaty is being sought that could boost the country’s economic development. Both countries have committed to establish a working table to define the General Framework for Negotiations. This treaty will strengthen economic relations and cooperation between both nations, and will also enhance investment opportunities in the country. Click for more information
El Salvador could have its first world surfing reserve and be part of 12 destinations, located in different parts of the world, connected to the World Surfing Reserves (WDR) program, administered and implemented by Save The Waves Coalition. “Oriente Salvaje” is the destination that has been provisionally nominated by Save The Waves Coalition, a tourist route that goes from Las Flores Beach, in San Miguel, to the Gulf of Fonseca and the islands of La Unión. The document states that, after being nominated, this region will have to undergo a planning and certification process in order to be officialized as a reserve by the end of 2024. Click for more information
“We see this year with optimism.” The president of the Association of Exporters of Guatemala (AGEXPORT), Gabriel Biguria, explains in an interview the business environment that is envisioned in 2024. To summarize the executive: “Last year we did not manage to grow exports as we expected. We believe that we have had good support from the international community and that is important. We still have challenges to solve in order to continue strengthening the attraction of investment. The country’s image is key, because it facilitates or complicates the desire of all actors to do business here. Therefore, it is very important to have a favorable business climate, with clear rules.” Click for more information
Benefits for the Northern Triangle outlined. During the Conference on Social and Environmental Impact of Private Investment in Central America’s Northern Triangle, the organizers presented the investment benefits that could reach Guatemala, El Salvador and Honduras. The president of Think Huge, Juan José Daboud, explained that private sector companies have invested in communities and respected the environment. They would benefit from new investments in infrastructure. Companies are investing up to 40 percent in projects, with some $5 billion, which will generate 150,000 new jobs, he estimated. Click for more information
Family remittances to Guatemala continued to increase in March. Last month, $1.686 billion was received (higher than the $1.665 billion in the same period of 2023), more than the $1.468 billion of January 2024 and the $1.527 billion of February, according to data from the Central Bank. This Central American nation received $2.996 billion in family remittances from January to February 2024, an estimated growth of 8.3 percent compared to the same two-month period of the previous year. Click for more information
Guatemala’s apparel and textile exports will grow in 2024. We are moderately optimistic and we want to be careful, but at the same time we are happy, said Carlos Arias, president of the Association of the Apparel and Textile Industry. He stressed that the last result was influenced by the 19 percent drop in imports from the United States, so they expect a better 2024 for the economy of that country. Click for more information
Green light for the AA Ratification by the Council of the European Union marked the final step in the establishment of the Association Agreement with Central America. Bi-regional trade will be expanded and diversified in accordance with the WTO and this agreement. A close and long-term link is ensured in all areas. The agreement provides for the elimination of most import tariffs. In addition, it creates a dispute settlement mechanism and a mediation mechanism for disputes over non-tariff barriers. The AA aims to promote and encourage investment in the digital, climate, energy, education, transportation and health sectors, among others. Click for more information
President Castro agrees with the head of CCIC on a joint plan to benefit the economy. The Honduran president received at the Presidential House the president of the CCIC, Karim Qubain, where they agreed to establish a joint plan to work hand in hand for the benefit of the country’s economy. They also agreed to work for the generation of jobs and to confront disinformation. Click for more information
Interoceanic railroad promises to be an engine of growth for Honduras and the region. The U.S. Undersecretary of State for Economic Growth described the interoceanic railroad project as promising, after the presentation made by a delegation of the government of Xiomara Castro at the beginning of a tour of Washington to promote the project. Click for more information
IDB launches a “one-stop shop” to promote financial inclusion in Latin America. The Inter-American Development Bank (IDB) launched a “one-stop shop” to promote financial inclusion by ensuring that the most vulnerable people in Latin America and the Caribbean can access the financial services they need. Called FINLAC, it will support governments and businesses and promote innovation in the development and implementation of policies, reforms, and practices to create inclusive financial markets, the IDB said in a statement. Click for more information
Honduran public external debt drops by 2.7 % in February and totals more than $9 billion. Honduran public external debt totaled $9.354 billion in the first bimester of 2024, lower by 2.7 % with respect to the same period of 2023, informed the Central Bank of Honduras (BCH). Public external debt between January and February decreased by $257 billion with respect to the first two months of 2023 ($9.611 billion), the state-issuing bank indicated in a report. The BCH pointed out that of the total indebtedness at the end of February, $8.490 billion (90.7%) is owed by the general government, $692.2 billion (7.4%) by the monetary authority, $155.3 billion (1.7%) by non-financial public companies and $16.3 billion (0.2%) by financial public institutions. Click for more information
Finance has placed 5,517.7 billion lempiras in domestic debt. The Ministry of Finance (SEFIN) has resorted to the issuance of domestic public debt to finance the 2024 revenue budget. As of April 4, 5,517.7 billion lempiras in domestic bonds have been issued. The approved amount for this fiscal year is 23,980.9 billion lempiras plus 7,994.2 billion in remaining budget bonds 2023, for a total of 31,975.1 billion. The report of the Ministry of Finance publishes that 10- year bonds were placed at 925 billion lempiras at 9.75% and L115 billion at 7 years with 8.60% interest. Click for more information
They deepen on the benefits of the Free Trade Agreement with the Republic of China. The deputies of the Foreign Affairs Committee deepened their knowledge on the Free Trade Agreement between Nicaragua and the People’s Republic of China, which came into force in the early hours of 2024. This treaty is a great opportunity for Nicaraguans. The country must guarantee the quotas that are established for export products, which allows an effective compliance and the strengthening of our economic growth. A valuable provision of the treaty is that insecticides and fertilizers, important for the strengthening of Nicaragua’s agricultural activity, will be acquired with zero tariffs. Click for more information
Microfinance institutions closed 2023 with a portfolio of $416.58 million. As part of an ordering process to continue operating, MFIs must be registered in CONAMI’s national registry by the first week of May. The loan portfolio of Microfinance Institutions (MFIs) registered an 18 percent growth compared to 2022. More than half of these loans were concentrated in personal and commercial credit. Although the number of borrowers decreased, especially due to the closure of three MFIs, the number of loans granted grew. Click for more information
Water improvement contract between Nicaragua and Japan is moving forward. Joint visits have been made with specialists from the Japanese companies to the sites where the works will be executed, which begin next June and will be completed in December, with priority given to the installation of pumping equipment and leak reduction. The initiative complements the national hydraulic and energy systems optimization plan and also involves the replacement of pipelines and improvements to pumping systems, as well as wells to increase supply times from 18 to 24 hours, since several areas of Managua suffer restrictions. Click for more information
“The new multipolar order is already a reality,” says the Government of Nicaragua. The Nicaraguan Minister of Foreign Affairs of Nicaragua, Denis Moncada Colindres, said that “the new multipolar order is already a reality,” and assured that both China and Russia play a “transcendental” role in cooperation. In a message delivered virtually at the Summit of the Future, organized by ECLAC, the Nicaraguan Foreign Minister said that they see in this new multipolar world “a reconfiguration of international relations that must be based on the sovereign equality of peoples.” 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 | 504,07 | 4,88% | 5,25% | B | B2 | BB | -1,19% |
| El Salvador | – | 6,40% | Not available | B- | B3 | B- | – |
| Guatemala | 7,77 | 3,56% | 5,00% | BB- | Ba1 | BB | 4.18% |
| Honduras | 24,66 | 6,16% | 3,00% | BB- | B1 | No rating | 4.76% |
| Nicaragua | 36,62 | 3,30% | 7,00% | No rating | B2 | B- | 5,60% |
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