Last Update: November 2020
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Nicaragua is a presidential republic with a powerful executive branch. There are significant concerns that the relatively weak Supreme Electoral Council (CSE) and the Supreme Court of Justice (CSJ) have become increasingly politicized, particularly since President Daniel Ortega’s re-election in 2016. This is especially connected to the rising profile of First Lady/Vice-President Rosario Murillo, and Ortega’s violent repression of anti-regime protests since April 2018. Yet President Daniel Ortega is likely to remain in power over the next year despite continuing anti-government actions demanding his resignation and early elections. Ortega’s lack of action to mitigate the spread of the coronavirus disease 2019 (COVID-19) virus is likely an effort to avoid further damage to Nicaragua’s economy but is unlikely to be successful. Instead, the issue is expected to increase protest risks in the next year.
Nicaragua’s economic and political outlook will be influenced by the United States’ reaction to political disruption in Latin America. US sanctions including certification that Nicaragua has not met NICA Act minimum standards extend the probability of US opposition to new multilateral loan approvals, limiting the probability that Nicaragua can receive financing from multilateral institutions such as the International Monetary Fund (IMF) and World Bank to support COVID-19-virus-related relief measures. GDP for 2020 is expected to steeply decline because of a sharp downturn in private consumption, investment, exports, tourism, and investment. The IMF estimates that Nicaragua’s GDP will fall by 5.5% in 2020 and by 0,5% in 2021. Similarly, currency devaluation risks are driven by persistent capital outflows while continuing deposit withdrawals indicate deteriorating and increasingly severe liquidity issues in the banking sector.
Nicaragua is the only country in Central America that has not imposed measures aimed at preventing the spread of coronavirus disease 2019 (COVID-19). Contagion levels are expected to rapidly grow amid a highly deficient healthcare system and a lack of comprehensive and transparent testing. A curve increase in daily infections is expected in early 2021 (IHME), which will compound the already dire situation of the healthcare system.
Given that Nicaragua does not have social distancing measures in place, opposition parties and civil society representatives have called for stringent measures to contain the pandemic. However, First Lady/Vice-President Rosario Murillo has, on several occasions, minimized the impact of COVID-19 and attributed the calls for measures as evidence of the opposition planning a coup d’état against the Ortega administration. Due to the government’s inaction, several businesses and citizens have taken their own containment measures; however, public gatherings, the movement of individuals, and business operations remain largely unaffected by the pandemic.
Opposition to Ortega’s regime has escalated since April 2018 due to the regime’s disproportionate response to protests triggered by the reform of the National Security Institute (INSS). Further protests led by university students and grassroots organizations have grown to include public discontent with the continued erosion of democracy since Ortega took office in January 2007. A National Dialogue between the regime and the Civic Alliance for Justice and Democracy (which includes representatives of student and "campesino" movements, and the private sector) was convened in May 2018 by the Episcopal Conference (CEN) – the official leadership body of the Catholic Church in an effort to resolve the crisis. A further iteration of the Dialogue began in February 2019 but failed to reach a resolution by the end of the year. While a new national dialogue remained a possibility in December 2019, the issue has disappeared from public discourse in favor of demands for stringent measures to contain the COVID-19 pandemic.
Protests disrupting business operations and delaying supply chains have not taken place since April–September 2018. Police and paramilitary containment operations with repeated use of lethal force resulted in at least 325 deaths and over 3,000 injuries; most of the 700 political prisoners were released in June 2019. Anti-government opposition groups disputing unresolved political issues have taken protests online during the COVID-19-virus outbreak and are organizing to stand in the 2021 election.
The center-right Constitutional Liberal Party (PLC) and the leftist FSLN dominated the political system prior to 2006. The political arena is characterized by short-term, pragmatic alliances of convenience ahead of electoral processes rather than ideology. The consolidation of the FSLN as the dominant player in Nicaraguan politics has extended its grip on power, with executive decisions rarely challenged.
Ortega had largely maintained legal and regulatory continuity, with his government abiding by International Monetary Fund (IMF) directives regarding the continuity of macroeconomic stability. However, 2018 saw the development of a political crisis calling for the dismissal of both Ortega and Murillo. The government has responded to anti-regime demonstrations with widespread police violence. Although Ortega has retained a pro-investment stance, foreign businesses cannot rely on the country’s justice system, as it is vulnerable to political meddling, with the court and regulatory rulings being unpredictable and subject to political interference. Ortega has publicly stated that expropriation might be a solution to make houses available at lower prices, while he has said on numerous occasions that privatizations in the energy and telecommunications sectors were to blame for the lack of investment and infrastructure developments in these sectors.
Nicaragua is considered an Authoritarian Regime in the 2020 Democracy Index, developed by The Economist Intelligence Unit (EIU), where the country ranks 123 out of 167 countries scored.
The country ranks 126 at the 2019 Human Development Index developed by the United Nations Development Programme.
While the country has not imposed any official restrictions for inbound travelers, most air carriers have suspended services to Nicaragua. Domestic opposition, neighbouring countries, and regional authorities have expressed disapproval of the government's reluctance either to impose COVID-19-related measures or to provide transparency regarding the situation in the country.
Hurricane Eta between 3 and 8 November caused significant operational disruptions in the country, mainly related to service interruption and critical infrastructure damage. Recovery is likely to be a protracted process, which implies that businesses will face heightened disruptions at least for the next two-to-three months.
Nicaragua suffers from weak government institutions, corruption at all levels of government, and deficiencies in justice procurement, which can represent hurdles for foreign businesses operating or seeking to operate in the country. Corruption among officials, cronyism, and connection-dependent contract negotiations often result in discrimination against firms lacking political connections, as well as regulatory and judicial delays. This has worsened over the last two years as the government has consolidated control over public institutions following national anti-government protests that also served to disrupt business operations. Labour strike risks remain limited in 2020 as COVID-19-related disruptions limit employee-related disputes. Poor-quality infrastructure, transport networks, and utilities are tested regularly by protests, transportation strikes, and severe weather events.
Despite years of steady economic growth, Nicaragua remains an impoverished country. As such, transportation, electrical, medical, and tourist infrastructure is lacking, particularly outside of cities, and is highly vulnerable in the event of natural disasters. The government has made credible efforts to improve the overall state of infrastructure, but it will remain a major hurdle for the foreseeable future.
Overall, Nicaragua ranks 142 out of 190 countries scored at the 2020 Doing Business Index by the World Bank and 159 out of 198 at the 2020 Corruption Perception Index by the Transparency International Organization.
Nicaragua's official homicide rate decreased over 2019 to 7.5 per 100,000 from 11 per 100,000 in 2018 when public protests overstretched police coverage in Nicaragua. In 2019, politically motivated murders and related disappearances appeared to have decreased, although the exact numbers are difficult to confirm because of poor government reporting. Reported homicide incidents were concentrated in the departments of Jinotega, Matagalpa, Chinandega, and Rio San Juan, and over 85% of cases were located in rural areas. Incidents of robbery by intimidation, including violent armed robbery, remain high.
Since April 2018, the government has violently repressed anti-regime protests with the help of the PNN and paramilitary forces. In addition, several armed groups are known to operate in the country, including the Co-ordinating Council of Nicaraguan Guerrillas (CGN), the Nicaraguan Resistance (RN), and the People’s Army of the National Salvation Armed Forces (FASN-EP). Although the government has failed to fully dismantle them, a crackdown by security forces on these groups has resulted in attacks being isolated and they do not threaten government stability.
In the context of the coronavirus disease 2019 (COVID-19) virus outbreak in Nicaragua, opposition groups have moved protests and demonstrations online and increased efforts in political organizing ahead of the 2021 election. Once transmission rates slow, it is likely that smaller demonstrations and protests will resume, particularly in Managua. Here, flashmob-like protests occur occasionally in shopping malls, private universities, or even churches. This strategy is used to avoid violent confrontations with police and paramilitary groups that have previously resulted in injuries and occasional deaths. Periodic cargo disruption is likely between Rivas and Penas Blancas on the border with Costa Rica.
Territorial disputes with Costa Rica and Colombia are unlikely to lead to armed conflict. A ruling on a maritime border dispute with Costa Rica from the International Court of Justice (ICJ) resulted in modest fines against Nicaragua in 2018. A lack of diplomatic resolution of a territorial dispute with Colombia increases the likelihood that fishing vessels will be seized, and offshore oil concessions in the Caribbean may occasionally experience delays, but relations have improved since the removal of a 35% trade tariff on Colombian imports in March 2017. Colombia has a greater military capacity, reducing open-war risks.
No terrorist groups are operating in Nicaragua. A group identifying itself as the Nicaraguan Patriotic Alliance (APN) claimed responsibility through social media for 'military actions' after explosions caused minor damage to the San Isidro Bridge to Puerto Corinto on 22 September 2019 in an ongoing political dispute with the incumbent administration of President Daniel Ortega, but such actions are likely to remain relevantly isolated through 2020. Anti-government armed groups like the right-leaning 're-Contras' have typically been the main sources of armed violence in Nicaragua but the Contras have committed to non-violence as they join the opposition to challenge Ortega's administration.
Overall, Nicaragua ranks 135 out of 163 within the 2020 Global Peace Index by the Institute for Economics and Peace.
Nicaragua is not currently among the most cyber-attacked countries in the world according to Kaspersky cyber threat map.
The regime’s control over the media has made it increasingly difficult to understand the situation in the country regarding COVID-19 and related impacts on the security landscape. The state controls the majority of Nicaragua’s radio and print media outlets, while opposition outlets are routinely censored, threatened, or smeared.
No vaccinations are required to enter the country.
Opposition groups have reported that, in an effort to contain the spread of information about the virus in the country, Ortega’s authoritarian government has threatened and fired doctors involved in treating COVID-19 or who spoke out about the disease’s impact on the country. Some medical professionals claimed that they were arbitrarily fired because they had previously signed a document requesting personal protective equipment from the government.
Nicaragua ranks 73 out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU).
No vaccinations are required to enter the country.
Opposition groups have reported that, in an effort to contain the spread of information about the virus in the country, Ortega’s authoritarian government has threatened and fired doctors involved in treating COVID-19 or who spoke out about the disease’s impact on the country. Some medical professionals claimed that they were arbitrarily fired because they had previously signed a document requesting personal protective equipment from the government.
Nicaragua ranks 73 out of 195 within the 2019 Global Health Security Index, a project of the Nuclear Threat Initiative (NTI) and the Johns Hopkins Center for Health Security (JHU), developed with The Economist Intelligence Unit (EIU).
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