-The U.S. sponsored decision of the International Monetary Fund to delay a requested loan for the Nicaraguan government is driving the beleaguered Somoza government dangerously close to bankruptcy and seriously affecting the U.S. organized political mediation here.
The IMP decision came on Wednesday as the member countries in Washington voted to postpone for "two or three weeks" a $20 million credit that Nicaragua could claim under the socalled Compensatory Finance Scheme.
The decision, which came as a surprise to local and foreign financial circles here and is expected to dry up most other outside sources of financing, has provoked a fierce official reaction.
In a strongly worded statement, Roberto Incer, president of the Central Bank, said the vote represented a "flagrant violation" of the fund's principles and aims. The decision, based "only on political reasons" and "made at the request of the U.S." he said, means that for the first time the fund is openly "introducing political criteria in its operations." He hinted that as a result Nicaragua might not be able to meet its foreign debts or pay for its imports.
The Washington vote also sparked immediate political reaction as the U.S. organized with Gen. Anastasio Somoza for the first time in a week. At its last meeting the team, made up of emissaries from the United States, Guatemala and the Dominican Republic, handed the general a request from the opposition coalition that Somoza resign and leave the country.
Sources close to the team, which remained tight-lipped, said that as a result of the IMF vote Somoza "hardened his position considerably." The sources did not give any details, but they added that at the same time it has deepened the growing split among Somoza's supporters in the National Guard and the Liberal party.
"The IMF action shows that the U.S. means business and wants to get rid of Somoza and that message is getting through," the sources said.
American officials are known to believe that a political solution to the Nicaraguan conflict can be reached within several weeks.
Although the IMF earlier postponed a vote on the Nicaraguan request, the government here was coming on a positive outcome this time. As a developing country that has experienced a drop in its export earnings, Nicaragua would have a virtually automatic right to the loan, and no other instance of the IMF suspending this type of loan is known.
"I never thought the IMF would establish such a precedent," said one foreign financial analyst here, "as a contributing member of the IMF this is virtually Nicaragua's own money."
The IMF decision comes at a time that the Nicaraguan government is anxiously seeking all financial help it can get to avert bankruptcy. More than one-third of the national budget is already known to be uncovered.
According to Central Bank figures, close to $100 million has fled the country's tiny economy in the past year, while its foreign reserves have fallen by 33.2 percent.
As a result of a year of guerrilla attacks, two nationwide strikes and a short civil war in September, many businessman have incurred great losses and investment has come to a standstill. This in turn led to a drastic cut in government income in September as private and corporate taxes were due.
Because the IMF serves as a barometer to private foreign banks, its decision is expected to make raising short-term cash abroad even more difficult than it has been for the last six months. At the same time, however, Somoza has announced he will double the National Guard, the main pillar of support of his government.
To pay for that he has cut out other government expenditures including the funds of the university, which is expected to close down. Referring to the recent rebellion and the ensuing economic damage, Somoza said at a recent press conference, "We are all going to have to pay for this party."