The U.S. House of Representatives has unanimously approved the Nicaraguan Investment Conditionality Act of 2017, known as the NICA Act, which will now move on to the Senate for debate.
The NICA Act aims to cut the government of Nicaragua off from loans by international financial institutions.
The announcement was made on Twitter by Representatives Albio Sires and Ileana Ros-Lehtinen, Cuban-American politicians who have been among the most outspoken legislators in the U.S. to push for laws targeting socialist and left-leaning governments in the hemisphere.
Analysts say the introduction of the act has already put a chill on foreign direct investment into the Nicaraguan economy, having a knock-on effect on local lending activity and private investments. The move is widely interpreted as meant to cripple an ally of the Venezuelan government.
According to the act, “The president shall instruct the United States Executive Director at each international financial institution to use the voice, vote, and influence of the United States to oppose any loan for the benefit of the Government of Nicaragua.”
Critics warn that the act poses a serious danger to the Central American nation’s economy and could result in a humanitarian crisis and waves of economic refugees that would flee toward the U.S. border, joining waves of migrants from Honduras, Guatemala and El Salvador.
“The Nicaraguan government uses foreign assistance from the international financial institutions to support social spending on health and education which have become an ever larger proportion of the national budget,” said the Alliance for Global Justice in a petition that circulated last week. “As an example, in the 2016 budget, 57 percent was dedicated to social spending with education spending rising to US$436 million from US$109 million in 2006.”
“Important infrastructure projects included the completion of the paved road linking Bluefields in the South Caribbean Autonomous Region to the Pacific side of the country, and construction of new hospitals in Managua and Bilwi, Puerto Cabezas.”
“The NICA Act is as good as approved,” Bosco Noguera, the head of the American Chamber of Commerce of Nicaragua said. “The main focus is to avoid economic sanctions beyond the NICA Act, such as those applied to Venezuela.”