NicaNotes: Nicaraguan Government Works to Maintain Economic Stability

Nicaraguan Government Works to Maintain Economic Stability

By Nan McCurdy

The Nicaraguan government developed and honored a tripartite decision-making system when it came to anything about workers. Since 2007 that system worked well, especially for determining the minimum salary in different sectors every six months. The workers, the large businesses and the government met twice a year, sometimes for over a month to come to agreements. In late 2017 and early 2018 they were using the same mechanism to make necessary changes in a financially foundering social security system that had been especially plundered under the presidencies of Arnoldo Aleman and Enrique Bolanos.

The IMF and the big business sector wanted the people to bear the pain increasing retirement age from 60 to 65 and doubling the number of work weeks necessary to receive a pension. The age of death in Nicaragua is such that with these changes few workers would get to take advantage of a pension.

The government and the workers thought all sectors should contribute. They proposed a small increase for the workers up to 7%, an increase for the government and a larger increase for the businesses of 3.5% to be applied gradually. Retirement age would remain at 60 years old and the number of work weeks would remain at 750 to get your retirement.  But big business wouldn’t agree as their profits would be affected, the tripartite system broke down and the government and workers went forward with the adjustments.

The big business sector called for protests and the students who had been training for regime change obliged. Since then too many died for nothing and the coup failed. But the economy was affected to the point that the government had to reform the budget. Now they still have budgetary problems and the social security system is in a crisis.

Monday the National Assembly rolled out a series of proposed changes to the tax system as well as changes to the social security system which provides pensions at age 60, health care to workers and for pensioners. The changes come to protect social programs and services like free health and education, poverty reduction programs, social investment and more.

The proposed INSS changes will go to a national consultation with a majority of sectors.

It is likely that the big business sector most of whom were involved in the coup, will call for protests again.

Below is a summary of the news from five Nicaraguan sources.

Tax Bill in the National Assembly and Proposed INSS Law for Consultation around the Nation

Monday the Minister of Finance and Public Credit, Ivan Acosta, presented the bill to reform the Tax Concertation Law that seeks to protect employment, economic growth, welfare and social security of Nicaraguan families. Acosta explained that the initiative establishes no new tax and seeks to reduce the economic impact generated to the country by those sectors that attempted a coup d’état. “We propose a reform to the tax coordination law keeping in mind the poorest, the workers, the peasants, and economic equity”.

The bill would raise taxes on medium businesses from 1% to 2%; on 400 large businesses from 1% to 3%; micro and small businesses continue at 1%.  Taxes will increase on cigarettes, alcohol and sodas, hopefully improving the health of the citizens. Taxes on Casinos will also increase.

The bill maintains constitutional exemptions, such as school materials, medicines and the main household consumer goods, such as food, including rice, corn, wheat, beans, onions, tomatoes, cabbage, banana potatoes, beef, chicken and pork, cane sugar, vegetable oil, live chickens, eggs, tortillas, butane gas, electricity consumption under 300KW and others.

“This list protects workers’ salaries and the diet of Nicaraguans, it is a consistent list: the one who earns the most pays the most,” he said.

Tax exceptions continue for production of agricultural goods, raw material inputs, intermediate goods for the primary production of final goods.

The proposal was submitted to the Production, Economy and Budget Committee for consultation.

Proposed Changes in Social Security to promote well-being of insured and pensioners through healthcare and pensions.

Dr. Gustavo Porras, president of the National Assembly announced Monday that the

executive will promote a series of changes to the Social Security Law (INSS) to guarantee social projects and the welfare of workers and pensioners. This will go through a consultation process before being sent to the National Assembly.

Porras detailed changes to the law and its objectives, including ensuring the stability of INSS.

“These measures will assure payment of all pensions. The changes will assure medical consultations, hospitalizations, medicines, radiation and chemotherapy for people with cancer, hemodialysis for more than 3,200 people, cardiac surgeries, medical attention for workers, pensioners and elderly adults.

Employers’ contributions will increase by 2.5 to 3.5 percent depending on the size of the business. Workers’ contribution will increase from 6.25% to 7% (0.75 %)”. The State will increase their contribution for workers/pensioner’s health care by 1.5%.

In the last 12 years, pensions have been paid to a total of 323,238 people. Currently, 266,713 pensions are paid, representing an annual expense of C$17 billion cordobas. He argued that with the payment of these pensions, social security reduces the country’s poverty levels by 4%.

Last year, 31,189 pensions were paid to war victims, of which 11,462 are pensions to mothers of heroes and martyrs. These sectors were abandoned during the three neoliberal governments from 1990 to 2006.  Those same governments abandoned health care for pensioners and insured through privatization that put the money in the hands of businesses.

“The Sandinista Government began to provide comprehensive health services, including treatment of illnesses that had previously been totally neglected”.

Among the benefits that the insured and their families receive are medical consultations, hospitalizations, medications, special exams/tests, early detection of cancer in women, comprehensive care for people with cancer, among others.

Dr. Porras recalled that in the last twelve years 61 million medical consultations were provided, 149 million prescriptions were filled and 1.4 million hospitalizations were carried out. Social Security health programs include active cancer screening of insured women workers through workplace visits. Since 2007, 10,722 people with cancer have been treated. Of those treated, 5,033 have been cured and 2,633 are under treatment, which means that Social Security has managed to save 74% of the insured people who suffered cancer in twelve years. This figure includes more than 225 children with leukemia or lymphoma.

During this same period, 3,905 insured patients suffering from chronic renal insufficiency were treated with hemodialysis and 3,200 people are receiving their treatments. (Radio La Primerisima, 19 Digital, El Nuevo Diario, Revista en Vivo, 1/28/19)


Law for a Culture of Dialogue, Reconciliation, Security, Work and Peace
Law No. 985 was published in Monday’s official newspaper La Gaceta. The purpose of this law is to establish the general legal framework that guarantees a Culture of Dialogue, Reconciliation, Security, Work and Peace. It regulates how the State Policy can be defined as the set of values, attitudes, traditions, worldviews, rights and duties, behaviors and lifestyles that allow individuals, families and communities to achieve human development inspired by Christian values, socialist ideals, solidarity, democratic and humanist practices, while considering the culture and identity of Nicaraguans. (Informe Pastran, 1/28/19)

Valuable Cooperation from Many NGOs
Nicaragua Foreign Minister Denis Moncada highlighted the valuable work of more than 100 Non-Governmental Organizations (NGOs) legally registered in the country. During a meeting last Thursday with NGOs representatives, Minister Moncada said, “The government recognizes their outstanding efforts in favor of peace, security and well-being of Nicaraguan families. The government reiterates its firm commitment to continue to support their work and strengthen a constructive relationship of cooperation.” (Nicaragua News, 1/28/19)

Prisoner Human Rights Respected
Nicaraguan Human Rights Ombudsman and member of the Truth Commission, Dr. Adolfo Jarquín, said the National Penitentiary System is guaranteeing full respect for human rights of those involved in the failed coup attempt. “The Commission has verified that the Nicaraguan government is guaranteeing respect for the human rights of prisoners, ensuring they receive medical attention as well as visits of relatives, spouses and friends,” Jarquín said.  (Nicaragua News 1/23/19)

Nicaragua Sent Costa Rica a Note Related to Police Massacre
The Nicaragua Foreign Affairs Ministry sent a Diplomatic Note to the Costa Rican government demanding greater protection along the shared border. “The Nicaragua Government demands from the Government of Costa Rica the fulfillment of its international commitments to provide guarantees in the protection of the border from the Costa Rican side, in order to avoid criminal activities by groups operating from Costa Rica in Nicaragua territory,” the Diplomatic Note states.  This was in response to the massacre of four police by a gang that operates from Costa Rica. They also kidnapped a policeman. (Nicaragua News 1/23/19)

Nicaragua Wins International Housing Contest
The Vice President of the World Bank – Latin America and the Caribbean Division, Jorge Familiar, announced that Nicaragua was awarded the Resilient Homes Challenge prize. The Nicaragua firm ANTU won the World Bank international competition on resilient housing and climate change, presenting an innovative design “that can withstand earthquakes, hurricanes and landslides,” Mr. Familiar said. (Nicaragua News 1/23/19)

At UN Security Council Nicaragua demands Respect for Sovereign Decisions of Venezuela
The Government of Nicaragua demanded before the UN Security Council that the sovereign decisions of the Venezuelan people, who elected for the second consecutive term Nicolás Maduro as their legitimate president, be respected. Dr. Paul Oquist, Nicaragua’s representative to the Security Council, indicated that Nicaragua “participates in this meeting of the Security Council to reaffirm our commitment to peace and reiterate our solidarity with the Government and people of the Bolivarian Republic of Venezuela and its legitimately elected president Nicolás Maduro Moros.” He said that Nicaragua “considers that Venezuela in no way represents a threat to international peace and security, so we demand that the sovereign decisions of the Venezuelan people be respected.” (Tu Nueva Radio Ya, 1/26/19)


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