“We Must All Demand the Restructuring of the Domestic Debt”
In a talk given at the envío offices. this committed economist
explained where the money that Nicaragua saved when much of its foreign debt was pardoned through the HIPC Initiative has ended up. He also proposed a national campaign to restructure the domestic debt.
When we in the Civil Coordinator began to research and reflect on the national budget, some found such macroeconomic issues too complicated and not very interesting. Some of our members were mainly interested in the issue of children, others the issue of health, others rural production and access roads, others violence against women and so on. This often happens when we try to get into major economic topics, but this perception changes when we discover how all these and other social themes are interwoven with the complex issue of the budget and the macroeconomy.
With so little concern for education,Let’s look at the issue of children and youth, to take one example. Nicaragua has the highest school-aged population in Latin America. Over half of all Nicaraguans are 16 or younger. On average, 30% of the population in Latin America is of school age, whereas here it is 55%. And of the just over three million children and adolescents who make up that 55%, nearly a million end up not enrolled in school each year. In other words, six out of every ten school-age children and adolescents are not studying anything. The average education level in Nicaragua is 4.6 years of schooling. And that’s even more serious than it sounds when you consider that one needs an average threshold of four years of school to achieve and retain minimum literacy. Worse yet, the education level in the countryside is even lower—only two years. And let’s not forget the pathetic quality of education in both urban and rural public schools in Nicaragua. The educational gaps are widening with every passing year regarding both years of schooling and quality of education. With the quality we have in Nicaragua, six years wouldn’t be equivalent to two years or even one in most other countries.
what future does Nicaragua have?
So when somebody who says, “I’m interested in the issue of children and adolescents because they are the country’s future” learns about these data, the reflection takes a new turn: does this country even have a future? And the question becomes even more serious considering that 90,000 new working-age youths enter the job market every year and most don’t find jobs, at least in part because they have so little education.
With this drama before us, we can now begin to talk about the budget. Just for starters, the annual per-student spending of the Ministry of Education fell from $84 in 2000 to $73 in 2005. Just over three quarters of Nicaragua’s public schools do not meet the most basic requirements to function as learning centers.
Human capital vs. physical capitalEducation is a key factor for reducing poverty. Each additional year of schooling notably increases the possibility of not being poor. According to the United Nations’ Economic Commission on Latin America (ECLA), the minimum threshold for having a 90% probability of not being poor is at least a full secondary school education. And to get a well-paid job in today’s world, or at least one with a decent salary, you even need a university degree and are increasingly asked for a graduate degree. A huge gulf is being produced between the few with access to the highest skills and all the rest. When I talk about this to business people, to those with the most money, I no longer mention how important education is to reducing poverty, because I know they don’t really care. They always respond, “Oh poor little things, social spending has to be increased, but there just aren’t any resources.”
Instead, I begin to explain the problem in the language they understand best: the economic importance of education. Economics has come up with the concept of “human capital” as distinct from “physical capital,” which includes businesses, land, material infrastructure… For a long time it was thought that economic growth was based on the accumulation of physical capital. We now know that human capital is one of the most important sources of an economy’s growth. The human factor is what explains how an economy can keep growing even when its physical capital is not. This human capital, such a determining factor in economic growth, is defined as knowledge, skills, accumulated educational levels, all of which contributes to the capacity to assimilate new knowledge and technologies. A lot has been invested in physical capital in Latin America, but the growth of the economies has been mediocre at best, and this is explained by the low skills level of Latin America’s human capital.
Two main indicators are currently used to measure the level of a country’s human capital: the level and quality of education. It is now generally accepted that a country that doesn’t invest in human capital compromises its economic growth. Similarly, it is assumed that countries, regions and individuals that don’t develop a minimal capacity to assimilate and develop knowledge and technologies in the coming decades will be left behind. With its current tendencies, Nicaragua is one of the countries that will be left out. Today, Nicaraguans who don’t find opportunities in their country are going to the United States and Costa Rica to do work that the populations of those countries are no longer willing to do. Within 30 years, we won’t even be able to aspire to those jobs if we don’t start raising our schooling levels and improving the quality of our education.
When Mario Arana was minister of the economy, he said: “We shouldn’t say that our labor force is cheap; it’s better to say that it’s competitive.” The fact is that our labor force is now “competitive” only because it’s cheap, not to mention malnourished and with a low level of skills. Within 30 years, these shortcomings will no longer be regarded as competitive. Already in 2005, when the world’s textile market has been fully liberalized and the US market has opened up to Chinese textiles, we find ourselves having to compete with a far cheaper labor force. Given our country’s circumstances, our only choice is to reduce the price of our labor force even more.
The only way to have a different perspective within 30 years is to start investing in human capital now. The famous Millennium Goals for education are to reach primary level education for all boys and girls by 2015. This is a target that Costa Rica hit 35 years ago, South Korea 40 years ago and the developed countries over a century ago. But here in Nicaragua, this goal has a $50 million budget shortfall for 2005. We’re lagging way behind and that lag is growing exponentially because the population keeps growing while the quality of education continues deteriorating. And even if we did achieve primary education for all, would our education have the same quality as in Costa Rica, where even children in rural primary schools are learning to use computers.
The same story in healthAnd the issue of health is no more encouraging. Let’s look at some indicators. Only 40% of the Nicaraguan population has access to even essential medicines. The average ranges between 70% and 80% in the rest of Central America, and it’s 90% in Costa Rica. In Nicaragua, families rather than the state assume two thirds of the cost of medications, and this is an absolute tragedy in a country like ours, where 80% of the population struggles to survive on under $2 a day, 43% of those on less than $1 a day and 12.5% on less than $0.50 a day. It is in this context of extreme poverty, the worst in Central America, that people are being forced to pay for medicines out of their own empty pocket. And if they can’t, they simply die. This is only going to get worse because the Central American Free Trade Agreement with the United States is going to start closing the door to generic pharmaceuticals, which are four, five, sometimes ten times cheaper than the brand name medicines that will soon dominate the market.
and in the countryside
As for the rural issue, let’s talk about rural access roads, which account for 80% of Nicaragua’s road network. Annual repair of these roads costs approximately $50-70 million. The fact that rural roads are falling apart for lack of maintenance means that entire communities are becoming increasingly isolated and marginalized. With over 2 million people still living in rural areas, but rural roads returning to nature for lack of maintenance, entire communities are becoming increasingly isolated and marginalized, creating pockets of greater poverty, greater misery. And what is the government’s official response? That those zones are poor because they “have no potential” so it would be a huge burden on the state’s scarce resources to invest in incorporating them into the country’s development. And by “incorporate,” all that is meant is repairing the roads, providing clean water and electricity and offering education and health care. The idea is that it’s better to abandon these people, forcing them to migrate to areas “with potential.” Perhaps they want to replicate the model used in Honduras’ Sula Valley, where rural zones were depopulated and infernal urban settlements created to furnish the maquilas with a handy labor force.
No matter what social problems we look at today, we always end up at the budget. Whatever the problem—salary increase for teachers, credit access for producers, you name it—the only resolution is through the budget. We’re not very accustomed to this in Nicaragua because, until recently, a large part of the state’s resources weren’t allocated through the budget and the figures were seldom visible. Resource assignment was negotiated with the government, sometimes aboveboard and sometimes under the table, but not within sight of the legislative branch, which must approve the budget. Now that has changed; any public expenditure has to appear in the budget. The struggle for a more equitable society, where children have access to school, where we all have access to medicines, where income is distributed a little less unfairly, is waged on the battleground of that economic instrument called the budget. If we don’t invest in human capital through the budget, the nation’s mechanism for assigning resources and establishing priorities, and we don’t make a superhuman effort in the coming decades to achieve a minimum threshold of human capital, Nicaragua won’t be able to go anywhere; it will remain on the sidelines.
Where did the HIPC relief go?What trends can we observe in the national budget today? The main one, that servicing the domestic debt will increase in the coming years, is very worrying. Not only that, but the service on the foreign debt will go up a little as well. We’re going to be paying almost $400 million annually to service those two public debts, nearly three quarters of which corresponds to the domestic debt. On top of this, the state will have to assume the fiscal cost of the social security reform. After that, what resources will remain to assign to education and health? The obvious answer is that investment in human capital will deteriorate even more.
Between 1994 and 1998, Nicaragua’s average annual service payment on our foreign debt was $284.5 million. Since 2003, when we finally entered the HIPC initiative and a large part of that debt was written off, we started paying $98 million, a relief of nearly $200 million a year. This amount should have appeared in the budget, and according to the HIPC initiative’s “principle of additionality,” should have been added to what was already being spent on poverty alleviation. But upon examining the 2004 budget, we found that the amount of money being allocated to the poverty reduction programs was $7 million less than the previous year rather than $200 million more.
So where did the HIPC relief go? Where are the funds that should have been used to close the $50 million gap in the Ministry of Education and similar gaps in the Ministry of Health and in rural road repair? Even more worrying, the HIPC relief wasn’t the only increase in available resources that year; there was also roughly another $200 million in increased fiscal income. So with all that money, why was social spending on poverty reduction even lower than the year before? Where did all the money go? The answer is clear: it went to make payments on the domestic debt. At the very moment foreign debt servicing was reduced through the write-off, service on the domestic debt shot up. Back when we were paying $284.5 million annually to service the foreign debt, that amount was considered unsustainable. The government argued that it was preventing any increased spending on health and education and promised that such spending would increase with the HIPC relief. But that hasn’t happened. Investment in human capital only decreased, because for the coming years we’re going to be paying $100 million on the foreign debt, plus $300 million on the domestic debt. If $284.5 million was unsustainable, what do we call $400 million?
Serve the debt or serve the people?Government functionaries constantly say, “The problem is that there are no resources, we have no resources...” But why is that? It’s because the absolute first priority for this government is to assign any available resources to pay on the domestic debt, even though a large part of that debt is illegal and only serves to make the wealthiest even wealthier.
Nicaragua has one of the most unjust distributions of wealth in Latin America, which as a whole has the worst distribution on the planet. To be more specific, Nicaragua has the seventh worst income distribution in the world, with the richest 20% of the families appropriating 64% of the national income and the poorest 20% scratching out a living with barely 3% of that income. That is an unconscionably huge gap, particularly in such a poor country. And to make matters worse, most of those with the greatest income don’t pay their fair share of taxes, and in fact often don’t pay anything at all. The tax burden in Nicaragua falls disproportionately on the people at the bottom of the income scale, mainly because the chief source of fiscal income is value-added tax, which is the same rate whether you earn a dollar a day or a hundred dollars a day, and at 15% is over twice as high as in the United States. To narrow that gap, our social spending should redistribute income toward the lowest income sectors, but what we have is quite the opposite. Per-capita investment in social spending is deteriorating while the priority is to pay the domestic debt, thus enriching the bankers and others who already concentrate the majority of the income.
We should follow Argentina’s leadThe government of Nicaragua promised both the international community and the people of this country that it would use the additional resources freed up through the HIPC initiative to increase social spending, but it has violated that pledge without so much as an apology or an explanation. We should follow the example of Argentine President Néstor Kirchner who declared when unveiling his plan to renegotiate the debt—a bold and ultimately successful operation—that he had two debts to pay: one to the creditors and the other, even larger one, to his own population. He added that, while he was very sorry, his first priority was to pay the debt to the Argentine population. Nicaragua’s government is doing exactly the opposite.
It took tremendous effort to free up resources by entering the HIPC initiative, and the only we can invest them in human capital is by restructuring the domestic debt, just as Kirchner is doing. The first step is to legalize the illegal part of the domestic debt, because we have no business paying an illegal debt. By legalizing it, we have to assume the commitment to pay it, but with a 30-year repayment schedule and an interest rate similar to international rates instead of paying it now and at the outrageous interest rates (20%) assigned to the CENI bonds, which make up the bulk of the debt. The other part of the debt should be restructured, as is being done in Argentina, through a “voluntary” debt-for-bonds swap. The “voluntary” part of this operation consists of the bondholders (mainly a couple of banks) accepting that the debt cannot and will not be paid in the terms originally established. Once that is recognized, various options open up: pay it in 30 years, fewer years, many fewer years… or don’t pay it at all. The creditors can choose the option they prefer. Again, this is what President Kirchner did. It’s not the IMF’s business to oppose the restructuring of a domestic debt. The logic behind such a proposal is that two parties are responsible for a debt becoming unpayable: an irresponsible debtor and an irresponsible creditor.
The foxes in the henhouseIn our case, the irresponsible debtor is not the Nicaraguan people, but the Central Bank and the government. I suspect that the CENI bond operation—which is not only the most substantial part of the domestic debt but also the illegal part—has been the largest sacking of the public treasury in Nicaraguan history. Let’s look at what happened. When BANIC, INTERBANK, Banco de Café and other banks got into financial problems due to fraudulent practices over the course of 1999-2001, during the Alemán administration, who handled their subsequent bankruptcies? The main decision-makers were Central Bank president Noel Ramírez, who also sat on the board of the Superintendence of Banks and was a shareholder in BANPRO; Treasury Minister Esteban Duquestrada, on the board of both the Superintendence of Banks and the Central Bank and today a fugitive of justice; and Foreign Minister Eduardo Montealegre, with interests in BANCENTRO. In other words, we let the foxes guard the henhouse.... Not surprisingly, BANPRO and BANCENTRO bought up the bulk of the CENI bonds, issued by the government to pay for bailing out these irresponsible bankruptcies. And when Eduardo Montealegre negotiated the current agreement with the International Monetary Fund in his new capacity as treasury minister in Enrique Bolaños’ government, he got the IMF to agree that paying on the domestic debt should be the first priority, including by diverting the HIPC poverty relief funds. This particular fox, with his button-down banker’s style and sincere eyes, is currently leading the polls as the Liberal presidential hopeful for 2006, even though the followers of PLC caudillo Arnoldo Alemán want nothing to do with him.
Other facts that reveal this pillage are that Noel Ramírez, now a PLC legislator and member of the National Assembly’s Economic Commission as well as another presidential aspirant, is today one of the top shareholders of BANPRO, which bought up 90% of the CENIs. After INTERBANK and BANIC went under, BANPRO gobbled up the assets of both banks, which at that time were the two largest in the national financial system, putting BANPRO at the top of the list. BANPRO’s name also pops up in all the money laundering cases involving former President Alemán. Meanwhile BANCENTRO, where Montealegre has his interests, wanted to acquire the Banco Mercantil (BAMER), a smaller bank also in trouble at the time. To hasten its collapse, the Nicaraguan Social Security Institute (INSS), whose deposits can make or break a bank, pulled out its deposits. INSS president Martín Aguado—today also a fugitive—was a former BAMER employee and was being sued by BAMER for fraudulent practices. The operation went down like this: INSS withdrew its money from BAMER, BAMER collapsed, the Superintendence of Banks liquidated it and allowed BANCENTRO to appropriate it without paying a cent. Once the operation had been completed, INSS put its funds in BANCENTRO, which also bought up the CENI bonds that had been issued to cover the Central Bank funds used to protect depositors in such bank collapses, since at that time Nicaragua had no bank deposit insurance system. The bankers that caused these bankruptcies emerged without a scratch, those who acquired all the non-liquid assets of the collapsed banks got them for a song then bought up the CENIs issued to pay for this swindle, and the unsuspecting population got saddled with the entire bill now that the CENIs are reaching maturity.
This operation has all the marks of a mafia operation. The CENIs have no legal basis, as established in a resolution issued by the legal department of the Comptroller General’s Office, and the members of the liquidation boards of the collapsed banks were also named illegally. In other words, the whole operation was illegal from start to finish. And afterwards, who in Nicaragua was aware that the country was beginning to receive some debt relief from HIPC even before it had reached the culmination point? I’ll tell you who: the president of the Central Bank, the foreign minister and the treasury minister, in other words, the same three men. If I were inclined toward conspiracy theories, I would say that this operation was planned precisely to appropriate that relief, which has cost the Nicaraguan people so much sacrifice.
Nobody wants to touch the banksNational Assembly representatives occasionally speak out against the domestic debt and bankers’ privileges, but they never do anything. Noel Ramírez is the most distinguished figure on the Assembly’s Economic Commission, together with several other legislators linked to the banking world. In the case of the PLC, the complicities are public thanks to Bolaños’ corruption war focused on that party. In the FSLN’s case, an electoral strategy of wanting to appear moderate toward capital makes it unwilling to tangle with the domestic debt issue, although personal interests are also involved; for example, several shareholders in BANPRO’s Pension Administration Office acted as straw men for an FSLN legislator.
Nicaragua’s private banks are favored in the budget not only through the prioritized payment of the domestic debt. They also owe millions of dollars in back income taxes due to years of illegal exonerations, as do the sugar refineries after going eight years without paying because, despite their huge earnings, they always declared losses. When we in the Civil Coordinator denounced the millions that the banks owed, the Association of Bankers arrived in force to meet with us. They explained that they hadn’t paid because they were paying on other legal commitments that they had as well, to which I retorted, “That’s like me saying I’m not going to pay my taxes because I have to pay my electricity bill.” They had no solid argument but they were very upset about our charge. To calm themselves down after meeting with us, they went off to talk to Daniel Ortega, and left there at peace with themselves because “the comandante says we’re right.”
There is so much complicity. When the government’s General Tax Division (DGI) decided to charge the banks the millions they owed in back taxes, President Bolaños himself prohibited it from following through. The DGI’s decision would have set an important precedent, but President Bolaños halted it in clear violation of the Constitution even though his first mandate is to respect the Constitution and the laws and ensure that his subordinates enforce them. The Civil Coordinator then filed a charge with the Comptroller General’s Office to get it to order the DGI to charge the banks. But our suit was shelved because the two majority political forces, the PLC and the FSLN, control the Comptroller General’s Office. More complicity: a finding issued by the Comptroller’s legal department establishing that the CENI bonds are illegal and thus null and unredeemable was also shelved because it doesn’t serve the interests of either the PLC or the FSLN.
Taxes in Nicaragua are totally regressiveThe complicity and injustice just keep mounting. Personal income tax in Nicaragua falls exclusively on the income of salaried workers and freelance workers who provide professional services, because it is withheld from their remuneration. It doesn’t affect those who have more resources because income on bonds and capital gains are exempt. The technical commission for the 2003 tax reform proposed taxing CENI income, but the government rejected the proposal and the National Assembly backed it. It’s an issue of basic justice. How can those who rejected it explain that salaried workers have their income tax withheld when the payroll checks are made out yet those receiving a 20% return on their investment in the CENIs pay nothing? The only new profit tax imposed at the time was on those who have bank deposits of over $5,000. But that’s also unjust, because a middle-class family could have a deposit of $6,000, which is their entire savings, yet the interest it earns is charged the same 10% as a huge financial investor who has a $600,000 account and earns a higher interest rate to boot.
It is a huge injustice because the most basic principle in taxing people’s income is to do it progressively. Four fifths of all deposits in Nicaragua are over $15,000. Why not establish the ceiling at $10,000 and thus leave the savings of the middle-class sectors free of taxes, then establish a progressive scale for deposits of over $10,000? The resources required to begin to invest in human capital can be generated by doing all these things, by doing justice. But the tendency is such that even if we managed to apply all the HIPC relief to social spending, it still wouldn’t be enough. As long as the richest sectors concentrate so much income and don’t pay their fair share of taxes, we’ll never have enough resources to attain skilled human capital.
The tax burden in European countries is more than double ours, and I don’t mean only now. They didn’t decide to double the taxes once they had developed; they did it in order to develop. But in those countries, direct taxes represent two thirds of the total, especially personal income tax because it is people that concentrate income. When a company is taxed, it can transfer that tax, so you need to tax the individuals who end up with the final distribution of the income. In Europe, most income tax—which represents the bulk of all taxes—is on individual income. Even in the United States, before Bush’s tax reform reduced the tax on the rich, the wealthiest 10% of families paid 30% of their income in personal income taxes. In Nicaragua, they pay zero, because the main income sources for the wealthiest families—financial income, stock dividends, earnings on the CENIs—are tax exempt. In the 2003 tax reform, the tax rate went up on company income, but not on individual income because it would have affected many of the legislators and their cronies. Every one of us here pays more taxes on our personal income than this country’s wealthiest families, and this won’t change because the legislators belong to those very families.
The National Assembly has all the Only the National Assembly can resolve all the issues we’ve talked about here. When the Civil Coordinator met with the Assembly to discuss the 2005 budget, we explained all this to them. Nonetheless, the legislators left 600 million córdobas (approximately $37 million) worth of social spending unfinanced, and this caused a huge national controversy, with tense accusations and delays in the approval of the budget. It even sparked the strike by the teachers who were quite justifiably demanding an increase in their pitiful salary. No one understands why the legislators left the 600 million shortfall when they had all the legal instruments they needed to cover it. They could have legalized the debt in bank CENIs, simultaneously establishing a 30-year payment schedule with low interest. They also could have applied the budget law, which establishes that any surplus in the Treasury as of December 31 attaches to the next year’s budget as income. In 2004, the Treasury surplus was $79 million, which is more than twice the 600 million-córdoba shortfall. FSLN legislative representative Bayardo Arce first responded to this proposal by saying it wasn’t in the law, and when we showed him that it was, his answer was that it had never been applied. But is that any reason not to respect the law?
tools it needs but doesn’t use them
The legislators could have done other things as well. Why didn’t they apply a progressive interest rate on deposits? Why didn’t they charge a 30% profit tax on the CENI interest? Why are maquila plants that change their company name to sneak in another ten years of tax exonerations not sued for tax fraud? The legislators had all the legal instruments they needed to avoid that huge under-financing and didn’t use any of them. Why not?
Cooking the books to the In 2004, the Civil Coordinator charged that the national budget was being managed with dual accounting: the projected tax income that the government had presented to the IMF and got approved was 1.1 billion córdobas greater than the projection that appeared in the budget approved by the National Assembly. We discovered this and were able to demonstrate it. We also discovered that the difference, roughly equivalent to $69 million, ended up in the Central Bank to pay on the domestic debt. We began denouncing this, but the media refused to pick up on it because of the confrontation between President Bolaños and the National Assembly. They told us that attacking Bolaños’ budget would play into the hands of the FSLN-PLC pact in the national Assembly. But whose hands would we be playing into if we didn’t denounce what had happened and what we had discovered? It took the media a long time to believe that 1.1 billion córdobas could go missing in the budget with no other economist saying anything about it. But we persevered and they ultimately came around. When we finally got the issue on the national agenda, various sectors took it up, demanding the resources based on what we had detected. We drove the government officials nuts.
tune of 1.1 billion córdobas
Finally we decided to take our claim to IMF headquarters. A Civil Coordinator delegation made up of Violeta Delgado, Néstor Avendaño and myself traveled to Washington to demand two things of the IMF in the name of the Nicaraguan people: first that they stop keeping two budget books, and second that savings from the HIPC relief be recorded in the budget and used in the poverty reduction program. When we decided on this trip, we encountered massive skepticism. Everybody told us that we weren’t going to get anywhere. But we went, and without political support from any agency, although the Quakers financed our flights, room and board. What were the results of this effort? The IMF mission that came to Nicaragua in September 2004 told us that the double accounting would not be repeated in the 2005 budget. And Treasury Minister Eduardo Montiel told us: “Your insistence on transparency helps us. The same thing won’t happen again in the 2005 budget.” And true enough, it didn’t; the tax income projection in the 2005 budget is fundamentally correct.
Restructuring the domestic debt The problem of the foreign debt was out of our control for ten years, as was its write-off. It’s different with the domestic debt, where we have total control. The disproportionate burden of the domestic debt is the most serious problem facing our economy today and it’s within our reach to resolve it. It’s up to the National Assembly, the Comptroller General’s Office and the government. How can we drive the government nuts this time to demand the restructuring rather than prompt repayment of the domestic debt? Our success in revealing the dual accounting and the disappearance of the 1.1 billion has encouraged us to undertake this new campaign. The restructuring of the domestic debt is an issue that has to be put at the center of the debate.
must be put at the center of the debate
The January 12 agreements between Bolaños and Ortega included the integral application of the HIPC relief to reduce poverty. We have already gotten this issue on the debate agenda, although not a single word has been said about it in the tripartite dialogue. There’s a lesson for us in that silence. We have to be quite clear that the changes we need in order for justice to be done, to achieve equity so that investment is made in human capital, is not going to come out of the political system or any governmen or any of the many presidential candidates now throwing their hat in the ring. These changes will only come from a strong citizenry. ECLA’s recent report on democracy, which defends the shift from a purely electoral democracy to one based on civic participation, rightly notes that where there is low-intensity citizenry, there is low-intensity democracy.
There are sufficient resources in Nicaragua to deal with social demands. The problem is that they are being invested in paying off the domestic debt. There’s no question that the government is totally responsible for what is happening, as are the political parties and the IMF. But so are we, Nicaragua’s citizens.
Civic empowermentWe must build citizenship, which means giving people economic information, sharing it and reflecting on it with them. Information is power. Building citizenship means empowering. It means making people conscious of the fact that they, the citizenry, are the owners of their nation’s sovereignty in a republic and a democracy. In absolute monarchies, the monarch was the sovereign. There was no such thing as citizens with rights, just vassals and subjects who at best could beg favors from the sovereign. The French revolution established the principle of popular sovereignty in which the people became the sovereign and delegated the administration of their power and resources to some officials.
The first thing that’s wrong in Nicaragua is that we don’t even know what’s going on. In economics, that’s called “informational asymmetry.” The same thing happens in the huge corporations: the executives, who are the administrators, do what they want and the shareholders, who are the owners, don’t have a clue. The corporate executives lie to them about the accounting statements and the shareholders don’t realize it.
It also happens in government: those we have delegated to administer our interests pander to their own and we do nothing about it. We need to be informed, to control those we have delegated, to demand that they be accountable to us and listen to us. With this civic consciousness, we should join our voices in a national campaign to demand the restructuring of the domestic debt. Renegotiating it will leave a fabulous legacy for the next generations of Nicaraguans.
Adolfo Acevedo is an economist who works with the Civil Coordinator, an umbrella grouping of nongovernmental organizations, social movements, community groups and individual activists.