Skip to: Content
Skip to: Site Navigation
Skip to: Search


Venezuela's Chávez bankrolled Nicaragua with $1.6 billion since 2007

Nicaragua's Central Bank released a long-awaited report Wednesday that reveals the government's growing dependency on the oil largesse of Venezuelan President Hugo Chávez.

By Tim RogersCorrespondent / April 7, 2011

Venezuela's Finance Minister Jorge Giordani (r.) and Central Bank President Nelson Merentes attend a news conference in Caracas, Venezuela, on April 7.

Jorge Silva/Reuters

Enlarge

Managua, Nicaragua

Venezuela upped aid to Nicaragua last year by 15 percent to $511 million, more than making up for diminishing aid flow from other countries, according to a report released Wednesday from Nicaragua's Central Bank.

Skip to next paragraph

Since President Daniel Ortega returned to power in 2007, Venezuelan President Hugo Chávez has provided his comrade with $1.6 billion in total aid, according to a Monitor tally of Central Bank figures. That growing pool of petro-dollars has supported Mr. Ortega's political programs and perhaps even saved his nation's fledgling economy from collapse, according to opposition analysts and the president himself.

The Venezuelan aid, managed privately by President Ortega and his inner circle, has given the Sandinistas access to more discretional funding than any other government in Nicaragua’s history and also helped the economy grow by 4.5 percent last year, faster than any other Central American economy except Panama.

Despite the encouraging numbers, some worry that NIcaragua is increasingly putting its eggs in one basket. The new report reveals Nicaragua's growing dependency on a tenuous financial arrangement that is contingent on revolutionary ideology and the tight political friendship between Ortega and Mr. Chávez.

The International Monetary Fund (IMF) last October insisted that Nicaragua open the books on Venezuelan aid amid growing concerns about the possible effects that it could have on the country’s economy. The government’s answer came in the form of this week’s Central Bank report on foreign aid that was quietly posted to its website Wednesday.

The report provides more questions than answers for economists, journalists, and opposition politicians who have been eagerly awaiting its release. It provides detailed and line-item expenses on all foreign aid except that from Venezuela.

“In the case of Venezuela, we find – once again – only large sums of money listed under generic titles," says economist Adolfo Acevedo. "It’s obvious no one can verify any of this data."

For example, while the report mentions certain amounts of Venezuelan funding earmarked for special Sandinista social programs, most of the aid use if listed under vague titles such as “food security” ($19.4 million), “humanitarian assistance” ($15.4 million), or the more ambiguous “other projects” ($35.5 million). Meanwhile, aid given by the US and 20 other foreign donors is detailed in line-item format for specific programs.

The IMF has not yet commented.

Nicaragua’s growing dependence on Chávez

Although peppered with ambiguities, the Central Bank report does offer some new insights about Nicaragua’s increasing dependence on Venezuela. As other countries continued to reduce aid to Nicaragua by hundreds of millions of dollars last year – some due to concerns over the government’s commitment to democracy, while others due to internal restructuring of foreign aid programs – Venezuela has more than covered the difference.

Overall, donations to the Sandinista government from traditional donors was down 37 percent last year, while bilateral aid for Nicaragua dropped by 25 percent, according to the report.

Permissions

Read Comments

View reader comments | Comment on this story