TUESDAY, SEPTEMBER 08, 2009
Nicaragua Network Hotline (September 8, 2009)
1. Consultations on tax reform: “Those who have more should pay more.”2. Debtors in north demand moratorium
3. National Police honored on the 30th anniversary of its founding
4. Public Defender announces increased support for women victims of violence.
5. UN recognizes advances against hunger
Topic 1: Consultations on tax reform: “Those who have more should pay more.”
Last week the government began consultations on proposals to reform the nation's tax system with economists and other experts. Officials will continue meetings this week with religious leaders, representatives of civil society organizations and business groups that are not a part of the Superior Council of Private Enterprise [with whom the government has already met], according to Bayardo Arce, economic advisor to President Daniel Ortega.
At the Sept. 4 meeting, Arce said that the government did not just want to solve the short term problem of 2010 but rather take the first step in a major reform process to change the nation's tax system. “This proposal is not written in stone,” Arce said, “In the long term we want a new system in which we take ownership of Nicaragua and develop a progressive tax system where those of us who have more pay more.” He said, “As for what has been called the ‘hole of 2010,' we definitely need to increase tax collections which have been depressed by the impact of the international financial and economic crisis; we have to do that in order to fulfill the economic program and achieve the support of the IMF.”
Government budget expert Ovidio Reyes said that the government's tax reform proposal attempts to compensate for a sudden drop in tax receipts of more than US$250 million. But he said that at the same time it seeks to make changes in the nation's tax system so that those who have never paid taxes but who have substantial capital gains begin to pay. He said that all exemptions would not be eliminated but that they would have time limitations so that abuses do not occur. He emphasized that the idea was to set up a new tax system based on agreement among the different national economic sectors.
Opposition figures spoke out against the tax reform. National Assembly Deputy Eduardo Montealegre said that the tax reform was not necessary. Rather, he insisted, the government should reduce bureaucratic expenditures and clarify the results of the 2008 municipal elections, where fraud was alleged, so that suspended international aid would resume.
At the same time the office of President Ortega announced that a national consultation would begin on Sept. 8 on the country's budget for 2010. Rosario Murillo, coordinator of the Council on Communications and Citizenship, said that the process would involve consultation by government ministers with citizens in all the departments (provinces) and municipalities of the country. Murillo said that this process would be an example of the development of the model of direct democracy in Nicaragua. She emphasized that the role of citizens would be to decide how the money would be spent and later to oversee how well it is spent.
Topic 2: Debtors in north demand moratorium
Debtor protests in seven municipalities have caused concern on the part of financial institutions that lend money to small farmers and business people in the country. The president of the Association of Microfinance Institutions (ASOMIF), Julio Flores, said that his organization is making great efforts to guarantee the flow of funds into Nicaragua in spite of the uncertainty caused by the Movement of Farmers, Merchants and Micro Businesspeople of the North, better known as the No Pago [Won't Pay] Movement. Only some micro lending is based on the Grameen Bank model and many micro lenders in Nicaragua charge usurious interest rates to poor people.
On Sept. 3, debtors in Rio Blanco in the Department of Matagalpa threatened to burn the local offices of 12 finance companies if the Economy Committee of the National Assembly and the lenders did not respond to their demands for a moratorium on debt payments. In reply ASOMIF and the Nicaraguan Association Private Banks (ASOBANP) announced they would make no new loans in the municipalities of Ocotal, Jalapa, Rio Blanco, Sebaco, El Rama, Nueva Guinea and Camoapa. The No Pago Movement reportedly includes 14,000 borrowers who are behind in their payments, including 4,500 in Rio Blanco alone. They reportedly owe a total of US$20 million. They are demanding loans be extended 10 years at 8% interest. Nicaraguan micro-finance borrowers are currently paying 18.8%.
The Economy Committee on Sept. 1 heard from representatives of the No Pago Movement but members of the committee agreed that it would be impossible to declare a moratorium on debt payments because “it would put at risk the credit of thousands of producers in the country.” The committee chair, Sandinista Deputy Walmaro Gutierrez, said there were “serious” accusations against the microfinance companies and he promised to call representatives of ASOMIF to testify. Gutierrez mentioned one farmer who received a loan of US$13,000, made a payment of US$5,000 but, because the payment was late, had a surcharge applied to his account of US$12,500. Liberal Deputy Freddy Torres agreed that the denunciations of the debtors against the companies had to be investigated because “they cannot continue to bleed them like this!”
Nestor Treminio, coordinator of the No Pago Movement, said, “This can turn into a disaster; what happened in Spain where they burned the banks could happen here.” He said that if, after the meeting his group had scheduled for Sept. 8 with ASOMIF and the Economy Committee of the Assembly, their demand for debt restructuring is not answered they will take drastic measures.
Topic 3: National Police honored on the 30th anniversary of its founding
The Nicaraguan National Police celebrated the 30th anniversary of its founding with a rally and parade on Sept. 5. National Police Commissioner Aminta Granera said, “We are a modern police force, professional, apolitical and non-partisan… in strict accordance with the constitution.” She added, “Our identity and our institutionality tell us what we are and what we are not and, above all, what we can never permit ourselves to become…. We can never become a reincarnation of the Guardia [National Guard of Somoza],” which she described as a force that was “hated and repudiated by society.”
President Daniel Ortega spoke of the challenges of organized crime and drug trafficking, saying, “We see how drug trafficking tries not just to penetrate and destroy polices forces but to take whole countries. We are seeing true wars against drug traffickers in Mexico and in Guatemala. Thank God in Nicaragua this has not come to pass but my call is that we must be alert against this decomposition and not let it carry us away.” Ortega added that there is a campaign in the media against the stability of the country. He noted that “The FSLN never called for war against Violeta Chamorro or against Arnoldo Aleman or Enrique Bolaños; on the contrary we worked for pacts or agreements to improve governability. But look at the opposition now, at how they yell that the government should be overthrown.”
Tomas Borge, Minister of the Interior under the revolutionary government and founder of the Sandinista Police, said in an interview marking the anniversary, “The Police were able to survive the attempts of the right to turn it into a repressive force. There was a point when they forcibly put down a student demonstration, killing one student, but they were not able to change the essence of the Police and the Police continue to be good in spite of all the efforts to transform them; they continue to demonstrate the Sandinista mystique.”
Humberto Ortega, former head of the Sandinista Army and President Ortega's brother, noted that Granera has been criticized for not using force to stop violence of groups supporting the government said, “In reality, it's not so easy to find where the line is and it's harder when the type of political gatherings in the streets are highly polarized such as we have in the country now. I think that while the Army and the Police show maturity, the political class with their leaders have to work to make our parties and institutions function in a mature manner.”
Topic 4: Public Defender announces increased support for women victims of violence
The Public Defender's Office has increased its free legal services in the areas of legal rights for women and families in the cases of women who are victims of violence in 12 municipalities. Those municipalities are: El Castillo, San Miguelito, San Carlos, San Juan de Río Coco, El Almendro, Villa Sandino, Condega, Posoltega, Muelle de los Bueyes, El Viejo, El Realejo and Santo Tomás.
Edson Carvajal, spokesperson for the Public Defender's Office, explained that those rural and semi-rural municipalities, with poor channels of communication, have little access to basic services. The majority of women in these areas suffer unequal opportunity, discrimination due to machismo, and from abandonment by the fathers of their children. The Public Defender's Office will offer women services principally in the areas of child support, domestic violence, divorce, and other family legal issues.
The national office in Managua will also increase its capacity to serve female victims of violence. Law and psychology students from the National Autonomous University will give assistance and physical accompaniment to women victims through all the required processes such as medical attention, the police, and the judicial system. These new services are being put into place because of the alarming increase in domestic violence, Carvajal said.
Topic 5: UN recognizes advances against hunger
Olivier De Schutter, U.N. Special Rapporteur on the Right to Food, recognized Nicaragua for legal, institutional, and programmatic advances in the area of nutrition. He praised Nicaragua for reducing infant malnutrition by 6%, although he noted that one in five children are still affected. Gero Vaagt, a representative of the UN Food and Agriculture Organization (FAO) reported that Nicaragua has a “worrisome” level of malnutrition of 25%. Although the level of malnutrition has been lowered over the last two years, he said better results will be realized with the implementation of the recently passed Law for Food and Nutritional Sovereignty and Security, and urged all political actors to cooperate in writing the implementing regulations for the law which was passed in July.
The new law establishes the conditions to improve food production and its availability to the population through short, medium and long term programs marshalling the forces of several ministries of government. Sandinista Deputy Dora Zeledon praised the law saying, “With this law we have a system that will coordinate human and material resources, finances, and technical know how to avoid dispersion of energy and create a synergy to improve food availability, to produce more, and to educate us.” The regulations are expected to be adopted by the end of September.
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