The new Nicaraguan government has decided to accept assistance of the International Monetary Fund to help resurrect the bankrupt country it inherited one month ago.
If an agreement is signed, Nicaragua is likely to receive the substantial balance of payments assistance it desperately needs. A pact with the IMF, which implies living up to an internationally acceptable set of rules, will also boost the new leadership's credit-worthiness to the apprehensive international financial community.
In the eyes of Western analysts, who reacted to the decision with relief, this is further evidence of the pragmatism of the Sandinista revolution and a crucial step in consolidating its ties with the West.
The so-far secret negotiations between the IMF in Washington and the Sandinista appointed government began two weeks ago and were confirmed by the president of the Nicaraguan Central Bank, Arturo Cruz.
"IMF assistance was offered to us in July and we are ready to accept. It's now just a matter of agreeing on the language and the conditions," Cruz said in an interview. "We are fully aware we have to work with the IMF and submit to a certain discipline. We don't want to be the mavericks of the world."
Western diplomats here appeared surprised that the revolutionary government would be willing to swallow some political pride at this early stage.
Although the IMF last fall postponed a loan requested by Somoza, Sandinista leaders were outraged when the IMC granted a loan of more than$30 million to the shaky government. They said this money would finance and prolong the war, and the decision set off angry demonstrations at IMF headquarters in Washington.
Cruz said that in the first stage the new government is negotiating "the assistance without conditions offered by the IMF. We cannot accept conditions now because we are in an emergency situation. But then we will negotiate a multiyear program."
An early agreement would give Nicaragua fast access to foreign exchange for its empty treasury via special standby arrangements and money from the compensatory funds from which member countries can draw when they have suffered serious setbacks through drops in exports or disasters.
The country also would receive immediate help in rescheduling its foreign debt which for this war torn nation of 2.5 million people is immense.
Of the total foreign debt of $1.5 billion contracted by the fallen Somoza government, Cruz said $660 million is due to payment by the end of this year.
When the war ended one month ago, the Sandinista-backed government found only $3 million in reserves in the Central Bank. "By managing to stop $2 million worth of checks from Somoza officials and getting a $20 million Venezuelan loan through the Inter-American Development Bank," a Nicaraguan official said, half-jokingly, "We now have some petty cash."
"Our cash problem is still overwhelming, but we're getting by little by little," said Cruz, who left his job at the Inter-American Development Bank in Washington to join the Sandinista government.
Cruz said that some funds from the U.S., West Germany and French governments may already be in the pipeline and Nicaragua has appealed for more funds to the Organization of Petroleum Exporting Countries, which sent a delegation several days ago.
The Inter-American Development Bank is presently working out a long term soft loan program of $200 million for Nicaragua, but all of these funds, the government fears, may take some time to be disbursed.
Western observers here agree that the government so far is taking a "remarkably pragmatic attitude" as the Sandinistas are shifting from a military to a more civilian government and technocrats are working out policies and plans.
Despite its bankruptcy, the Central Bank started to lend working capital to the private sector a week ago, mainly to large farmers to get agriculture started up again and to allow export-oriented industries to pay for salaries and vital imports.
According to well-informed sources the ruling junta also may lift some of the restrictions placed on the three foreign banks operating here. Although the nationalization of the local private banks, for which the owners will be remunerated, has been accepted as a necessary measure to protect investors and depositors, the foreign banks have signaled that they could not stay just to funnel foreign money into the country.
The sources said the government was now looking for ways to permit local currency deposits, at least on e a corporate level.
A team of experts from the U.N. Economic Commission for Latin America finished its report on the damages of the last two years of insurrection that led to Somoza's overthrow.
Their main conclusion, according to a team member, is that the biggest losses do not come from the destruction caused by the war, "but from the standstill of the country in the last year and the total pilferage of the economy by Somoza and his supporters."
Junta member Daniel Ortega said the U.N. report predicts a 25 percent drop of the gross product for 1979. He said, "In per capita terms this puts us back to the level we were 17 years ago."