The Ortega-Murillo regime used 110 million dollars of the 329 million obtained from excess tax revenue in 2024 to fulfill the advance payments demanded by the Chinese company CAMC Engineering Co. Ltd. (Camce) to begin work on the projects it will carry out in the country. The funds allocated through the budget reform are for the expansion of the runway and the construction of the new Punta Huete International Airport, as well as for the Improvement and Equipment of the National Emergency Response System (Sinarem) project.
Two days after closing the XL Legislature, the deputies of the National Assembly held a special session on December 17 to approve the reform to the 2024 General Budget of the Republic, which the Executive had sent with urgent processing.
The reform incorporated 12,067 billion córdobas into the General Revenue Budget for the 2024 fiscal year. According to the Budget Modification Law, with this addition, total revenues reached 150,701 billion córdobas, which represents an 8.7 percent increase compared to the initial target and an 8 percent increase compared to the amount collected last year.
The priorities of the budget
According to the Law Modifying the Annual Law of the General Budget of the Republic 2024, the resources from the excess tax revenue, amounting to 329 million dollars, will finance the priorities of the budget. “In particular, greater public investment in road infrastructure, airports, sports facilities, potable water, and electricity, as well as addressing other urgent needs that have demanded additional resources in various institutions, for the provision of goods and public services to the population,” states the law.
Among these priorities is the allocation of 3,706.4 billion córdobas, which at the official exchange rate is equivalent to 101.20 million dollars, to the Ministry of Transportation and Infrastructure (MTI) for the final studies and the commencement of works on the project for the reconstruction, expansion, and improvement of the Punta Huete International Airport in Managua. “The resources correspond to the counterpart of the Government of Nicaragua, in accordance with the Credit Facility Agreement signed with the company CAMC Engineering Co. Ltd.,” states the law.
The contract signed by the MTI, as the executing entity, stipulates that the company CAMC Engineering Co. Ltd. (Camce) will design and execute the project, which involves the use of foreign labor, as well as materials, machinery, and equipment brought from China. Additionally, as a requirement to begin the works, the company demanded that the Ministry of Finance and Public Credit (MHCP), which is listed as the counterpart in the agreement, make an advance payment of 20 percent, excluding taxes, of the nearly 400 million dollars the project will cost.
The counterpart payments exceed 20% of the value of the works
The 20 percent established in the contract would amount to about 80 million dollars; however, the allocation is for 101 million dollars. This contract was signed in February of this year, when the budget had already been approved; therefore, the allocation was included only now, and the excess tax revenue was used to meet the requirement demanded by Chinese companies to begin the works.
Another priority to be covered with the excess tax revenue is the counterpart of about 9 million dollars for the execution of the project to Improve and Equip the National Emergency Response System (Sinarem), which is being carried out by the National System for Disaster Prevention, Mitigation, and Response (Sinapred).
The project will cost about 33 million dollars, and according to the contract, the counterpart required by the company Camce as a condition, to be paid in a single advance payment, is 20 percent of the project’s value, which would amount to nearly 7 million dollars. However, the allocation assigned in the budget reform is equivalent to 8.50 million dollars.
The budget reform prioritizes the PIP (Public Investment Program
According to the reform, to begin the works, the Government of Nicaragua will provide the counterpart, along with transfer expenses, amounting to 311.5 million córdobas, which at the official exchange rate is equivalent to 8.50 million dollars. “This fund will be invested in the development of the project design, as well as to make advance payments to foreign suppliers for the purchase of hardware and software for the project,” details the law.
Another priority of the Public Investment Program (PIP) is the construction of the Bluefields Port, a project that the MTI signed a few weeks ago with the company CAMC Engineering Co. Ltd. (Camce) without revealing the cost of the work.
Sin embargo, un estudio del Banco Centroamericano de Integración Económica (BCIE) de 2023, estableció que esa obra requerirá una inversión de 594 millones de dólares. La reforma presupuestaria destinó el equivalente de 4.33 millones de dólares a este proyecto, y los usarán para actualizar los estudios de factibilidad y diseño de ingeniería básica del puerto.
The payment of pensions to retirees is also a priority
At the end of 2023, when the General Budget of the Republic for 2024 was approved, the government did not include the Budgetary Support allocation provided to the Nicaraguan Institute of Social Security (INSS) since 2022, when it paid off the State’s historical debt of about 500 million dollars and began ensuring its operation through the budget.
During 2024, the government covered the financial deficits of the INSS with donations, mostly from properties confiscated from exiled political prisoners, thereby turning financial gaps into small surpluses. However, the budget reform, which incorporated the excess tax revenue for the year, allocated the equivalent of 85 million dollars to the INSS. Most of these funds, 79 million dollars, were provided as Budgetary Support, and the remaining 6 million dollars were allocated under the name of State Contribution.
According to the Budget Modification Law, the allocated amount represents 21.9 percent of the net increase in primary spending. The Budgetary Support allocation is intended to ensure the payment of pensions to retirees and cover expenses related to medical benefits.
