Nicaragua’s National Assembly on Tuesday approved a drastic cut to the national budget because of the economic impact of months of anti-government unrest.

The lawmakers adopted a 9.2 percent reduction of the 2018 budget, projecting $180 million less in spending to partly make up for a drop of $220 million in government income.

It was the steepest cut seen in the past 11 years that President Daniel Ortega has been in power. 

The minister for finance and public credit, Ivan Acosta, blamed the reduction on protesters accused of trying to stage a “coup” against Ortega’s government.

The demonstrations against Ortega began in April in anger at moves to cut back social security. But when security forces cracked down, they quickly spread to become marches demanding Ortega’s ouster. 

More than 300 people have died and thousands of Nicaraguans have fled what they say is harsh repression and persecution.

After operations against protest hubs in July, the president claimed the unrest was over and the country was getting back to normal. But demonstrations are continuing.

Contraction possible

Acosta said that before the protests, the economy had been expected to grow 4.3 percent this year. The government has now lowered that target to 1 percent, although some independent analysts say a contraction of 3.5 percent could be in the cards.

The minister told the National Assembly that the fallout from the unrest had forced 8,700 small businesses to close, leaving 71,000 people without work. The important tourism sector has lost $235 million, he said.

The private sector estimates that 200,000 people were left unemployed by the continuing crisis.

Acosta said the budget cuts would not affect social spending, public investment or the level of government employment.

“This reform is tough,” he said. “Right now we are working on the premise that the country is returning in the direction of normality and stability.”

Fiscal and tax reform was needed to make up for the diminished growth, he added, warning that “those who must pay will be made to pay.”

That warning appeared to be aimed at Nicaragua’s business owners who have abandoned Ortega because of the deadly violence ordered against the protesters.
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