The new president of the Central American Bank will stop granting loans to Nicaragua and El Salvador

Three months after Gisela Sánchez replaced Dante Mossi as president of the Central American Bank for Economic Integration (CABEI), the new head of the organization, of Costa Rican origin, has announced substantial changes in the loan portfolio of the regional financial entity. Her purpose is to redirect the questioned course that her predecessor was taking: the official announced that she will stop loans to Nicaragua and El Salvador, two countries governed by presidents accused of committing human rights violations and authoritarianism.

In an exclusive interview with Editorial Regional, a consortium of independent Central American mediaSánchez said “brakes are coming” for funds to Nicaragua and El Salvador to “give more balance to the portfolio” and “correct the course of the previous administration.”

The new president of CABEI told Regional Editorial Board that she “rules out” that her management follows a course like Mossi's. Sánchez even remembers that Nicaragua and El Salvador “have already exceeded the limits of the credits they can receive.” That support for these countries must be stopped to achieve a more diversified and balanced portfolio. One bets that she, she emphasizes, “is one of her commitments.”

“We have a two-limit policy: a soft limit and a hard limit that must not be crossed. We have an action plan to regain those limits and ensure the diversification of the portfolio. We want to continue serving all countries, but we want to have the responsibility of serving them in a more balanced way than what has been done,” said the president of CABEI.

Sánchez relieved Mossi as president of CABEI last December, after the Honduran economist was not re-elected by the bank's governors to continue in office, largely due to multiple criticisms of his management: an unjustified increase in the administrative expenses of the entity by 30%, the drop in profits by 84 million dollars, and “abuses” at the top of the entity, such as excessive salaries.

However, what hurt Mossi the most was the nickname he earned: “The banker of dictators”, due to the monetary support granted to authoritarian regimes such as that of former president Juan Orlando Hernández in Honduras, Nayib Bukele in El Salvador, and, above all, that of Daniel Ortega and Rosario Murillo in Nicaragua, without caring about the destruction of the institutions, the opacity in the management of resources and the serious violations of human rights reported in those countries.

Concentrated portfolio

Mossi concentrated CABEI's loan portfolio in Nicaragua and El Salvador. In total, a little more than 25% for El Salvador, followed by Nicaragua with around 22%. Meanwhile, third place is occupied by Honduras with 17%; then, Costa Rica (10%) and Guatemala (5%). These are the data at the end of 2023.

Inequality in the portfolio was criticized during Mossi's administration, without having much echo in CABEI. The Nicaragua governed by Ortega and Murillo was the most emblematic case, especially due to the relationship between Mossi and the Sandinista leader, to such an extent that in March 2022, a modern headquarters of the bank, valued at 16.5 million, was inaugurated in Managua. Dollars. The former president of CABEI used to promote the Ortega-Murillo couple's relationship with the Administration as “a model to follow.”

Nicaraguan opponents insisted that CABEI “has been and continues to be one of the greatest pillars of support for the dictatorship, by continuing to approve disbursements to the State of Nicaragua with 3.5 billion dollars in projects since 2017, even though the country's population is smaller. than that of Guatemala and Honduras, but it has received almost 26% of the bank's loan portfolio.

Regarding the concentration of CABEI's portfolio, Sánchez maintained that its objective “is to protect the exposure limits per country, diversify the portfolio, make the bank's expenses more efficient and therefore be able to transfer the benefits to the countries we serve.” . “It is a little less attractive to have a reform agenda like the one we bring, but it is the right thing to do. It is part of my responsibility, even as a woman, and thus be able to open more doors to more women, to be able to demonstrate that we will act with absolute technical rigor, leaving behind all those questions that could have arisen in the past,” promised the Costa Rican official, an industrial engineer. and with an MBA with an emphasis in Finance and Strategy.

“I do have a very critical reading of the things we have been doing backwards, with the spirit of being able to improve and strengthen them. It is a fact that we currently have a higher level of portfolio concentration, with El Salvador and Nicaragua being the countries that receive the most funds. My goal is for us to have a more diversified portfolio. Beyond being able to give explanations, because for that I believe that the former president of the bank could explain the reasons why this concentration of the portfolio occurred, I do have a commitment to seek greater diversification,” explained the new president of the bank.

To achieve these changes, Sánchez emphasized that he has the support of CABEI's extra-regional partners: Taiwan, Korea, Spain, Mexico and Colombia. “CABEI is not the same as it was 15 years ago or 60 years ago. It has 15 members of which the main partner is Taiwan, followed by the five Central American (countries) and then Korea, Spain, Panama, the Dominican Republic… I have found that fertile land in the directory and, especially, I would say in the extra-regional countries, to that we take the bank to the level it deserves,” he explained.

They suspend Ortega's fund of 116 million

One day after Regional Editorial published the interview with Sánchez, the Green Climate Fund (GCF) terminated the Funded Activity Agreement for the Bio-CLIMA project: Integrated climate action to reduce deforestation and strengthen resilience in the BOSAWÁS and Río San Juan Biospheres, in Nicaragua. The Ortega Government was going to receive 116 million dollars to execute it.

The organization argues “non-compliance with policies and procedures on environmental and social safeguards (ESS)” by the “Accredited Entity”, that is, CABEI. The project was approved in November 2020 and in June 2021 indigenous and Afro-descendant communities filed a complaint with the Independent Redress Mechanism (IRM) of the Green Climate Fund, which initiated an independent investigation. According to the investigation, CABEI, then in charge of Mossi, omitted key information about the situation of violence experienced in the indigenous communities of the Caribbean Coast of Nicaragua and, with that omission, allowed the Ortega Government to obtain the million-dollar loan. .

Follow all the information from El PAÍS América in Facebook and xor in our weekly newsletter.