Title: Nicaraguan Foreign Debt Reaches $14.8 Billion in Q1 2023, Equivalent to 94.6% of GDP
The Central Bank of Nicaragua has reported that the country’s foreign debt has reached $14,831.9 million to the first quarter of 2023, accounting for 94.6% of the Gross Domestic Product (GDP). This substantial debt is a cause for concern as it puts considerable pressure on Nicaragua’s economy.
Breaking down the figures, it was revealed that the public sector’s share of the debt amounts to $8,216 million, representing 55.4% of the total, while the private sector’s debt stands at $6,615.9 million, accounting for 44.6% of the total.
However, there is a silver lining as the total external debt decreased by $78.8 million compared to 2022. This reduction was primarily attributed to a decline of $172.1 million in private external debt, which was offset by a $93.3 million increase in public external debt.
In the first quarter of 2023, Nicaragua acquired loans totaling $556.5 million. Of this amount, 72.9% came from private creditors, while the remaining portion was obtained from bilateral official creditors. Notably, $415.7 million went to the private sector, whereas $140.8 million reached the public sector.
The funds disbursed were primarily directed towards various economic activities, with trade leading the way at 36%, followed by financial intermediation at 20.1%, and construction at 18.9%. Other sectors such as mining, electricity, gas and water, manufacturing industry, public administration, and other sectors also received allocations.
The report also sheds light on the external debt service, which amounted to $772.1 million in the first quarter of 2023. Out of this total, $692.2 million were principal payments, while $79.9 million were allocated to interest and commissions. Notably, the debt service was primarily shouldered by the private sector, accounting for 83.9% of the total, with the public sector accounting for the remaining 16.1%.
The increasing foreign debt poses significant challenges for Nicaragua’s economy, requiring prudent financial management and strategies to reduce dependence on external borrowing. The government must ensure that borrowed funds are effectively utilized to promote sustainable economic growth and lay the groundwork for future stability.