Central Bank Paralyzed After String of Resignations

May 16, 2008

Nicaragua’s Central Bank is looking to fill three empty seats on its board of directors after a wave of resignations left the bank paralyzed and without a quorum to direct the country’s monetary policy.

“It’s a matter of time” before new board members are appointed said Central Bank spokesman Martin Urcuyo.

Chairmen Enrique Salvo, Evenor Valdivia and Javier Morales all turned in letters of resignation at the end of April. Parts of one of the letters, published in the daily El Nuevo Diario, said the scandal surrounding negotiation of Nicaragua’s internal debt made the job “untenable.”

The resignations came days after the Nicaraguan government was chided by the international credit agency Fitch Ratings for its failure to pay private banks treasure bonds known as CENIS, totaling $20.6 million. The government had set aside the payment in the 2008 budget to make payments as part of the ongoing bailout of private banks following a 2001 banking system collapse.

“The government’s actions in the CENIS case have been erratic,” said economist Aldolfo Acevedo. “That creates uncertainty.”

Though the Ortega administration started to negotiate a deal to renegotiate its debt to the banking system, it failed to make payment last month.

Meanwhile, the Comptroller’s office has asked the Prosecutor’s office to launch an investigation into the legality of the CENIS debt, which the Sandinistas call “the robbery of the century.”

Though the Central Bank has been without a functioning board of directors for about three weeks, Acevedo said it hasn’t caused any harm to the country yet, and it won’t if the Central Bank can fill the seats quickly.

He said in another country, the Central Bank shakeup might have made a bigger splash, but in Nicaragua, a country paralyzed by infighting in the Legislative Assembly over elections in the North Atlantic Autonomous Region (RAAN), a nationwide transportation strike and electricity rationing, the Central Bank scandal is an afterthought.

“Maybe in another country this would matter more,” he said. “Right now, the situation here is complicated.”

 

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