The credit risk rating agency Fitch Ratings assessed that Nicaragua, under the administration of Daniel Ortega and Rosario Murillo, continues to be a high-risk country to access international credit, for which reason it decided to maintain its B- rating, the lowest it grants. the expert house, so low that it is considered a “junk” category.
However, the agency considered the change in “outlook” pertinent, which it reassessed from “stable to positive”, taking into account the impact that remittances have had on the economy. In other words, the migrants who have fled the country’s political and social crisis improved the credit perspective of the Ortega-Murillo regime.
Fitch Ratings recognized that the Ortega-Murillo administration has shown fiscal discipline, but took into account that the important lifeline for the national economy to move has been remittances, not the generation of wealth as a result of micro or macroeconomic strategies implemented by the Government.
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The news of the reassessment of the credit perspective has generated triumphalism in the Ortega-Murillo administration, to the point that they ordered the publication, with display in their official propaganda media, of a press release from the Central Bank of Nicaragua (BCN), trying to make it look like a great achievement to stay in the junk rating, but with a positive outlook.
The Fitch report indicates that this rating could be downgraded if “political events occur that severely impair trade and investment flows, external financing and growth prospects.” One of those mishaps for the Ortega-Murillo dictatorship could be “the tightening of international sanctions.”
Another risk of Nicaragua’s rating going all the way to the bottom again is that there is a policy deviation that results in the “depletion of financial reserves and increased macroeconomic vulnerabilities.”
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Whereas, if Ortega wants to pull Nicaragua’s credit rating out of the trash can, he must generate continued economic growth, entrench macroeconomic stability, and reduce inflation.
And something important: “diversification of sources of external financing, as well as improving the business climate, reduction of political risks, to the downside due to the reduction of international tensions, and the dismantling of sanctions.” A difficult task for the dictatorship that every day sinks deeper into its international relations.
