The NICA Act is legislation proposed by Ted Cruz (R-TX) in the U.S. Senate (a version has already passed in the House) that would require the U.S. representatives at multilateral institutions to vote against new loans for Nicaragua (at the World Bank and IMF that means a veto). The NICA Act is in response to U.S. “concerns” over electoral manipulation by the Sandinistas, and would require suspension of assistance until democratic reforms are undertaken.
We feel certain that there will be a rush to get this passed in the wake of the violence in Nicaragua last week. The NICA Act already has some Democrats as co-sponsors. This was a bad piece of legislation when introduced and still is, even after this past week of conflict.
The result of this legislation will simply be to punish those already on the economic margins.
Suspension of loans will reduce government revenue, while also raising Nicaragua’s cost of borrowing from other sources. The IMF estimates that the fiscal shock of the NICA Act would increase annual public sector deficits from 2% of GDP to over 6% of GDP by 2022. Predictably, the only way the IMF sees to offset this outcome is fiscal adjustments - meaning cuts to social programs and ending exemptions under the current VAT (Value Added Tax) formula. And then, only if the INSS solvency issue is solved.
The NICA Act, will thus usher in a period of economic instability that will simply lay the groundwork for further political polarization. Such polarization is probably the goal of the bill's sponsors. We need to stop it.
This is particularly true since an effort to establish a process of national dialogue is underway in Nicaragua, to be mediated by the Catholic Church. Passage of the NICA Act would constitute a major disruption to these talks.
Call the Capitol Switchboard (202) 224 - 3121 to connect with your member of Congress and tell them No NICA Act!