WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 70 
  
 IV. TRADE POLICIES BY SECTOR 
(1) OVERVIEW  
1. Agriculture (including livestock breeding, forestry and fishing) remains a sector of key 
importance for Nicaragua's economy as it helps to generate close to 19 per cent of GDP, accounts for 
three quarters of goods exports a nd employs one third of the labour force.  During the period under 
review, the agricultural sector's share of GDP in creased as a result of positive export performance.  
In value terms, green coffee (café oro) is Nicaragua 's leading crop and accounted for 22.3 per cent of 
the value of production in real terms in 2010, follo wed by sugar cane (11.8 per cent).  As a general 
rule, products for export show highe r yields and productivity.  The average MFN tariff protection in 
the agricultural sector (major division 1 of ISIC Rev. 2) was 8.3 per cent in 2011, as compared with an 
average tariff of 6.2 per cent.  There are tariff p eaks for some products, for example, chicken thighs 
(164 per cent), milled rice, and milk (60 per cent). 
2. Nicaragua has notified the WTO that it did not  grant any export subsidies for agricultural 
products during the period under review and that the domestic support given to agricultural producers 
falls within the green box.  The support provide d over this period focused on food security and 
training and technological development, and corr esponded to 2 per cent of the annual value of 
agricultural production. 
3. Since 1997, when the electricity system ceased to be exclusively State-owned, the sector has 
been open to private investment, including foreign investment.  The State still has a monopoly on 
electricity transmission, but its generation is mos tly in private hands;  in 2011, the private sector 
generated 78.5 per cent of the electricity.  Nicar agua is encouraging the generation and use of 
renewable energy and is providing a number of ta x concessions for this purpose, for a period of up 
to 15 years, in order to promote the use of renewable energy sources to generate electricity.  It has a wholesale electricity market, which basically operates as a contracts market to meet distributors' energy purchasing commitments, or as a secondary mark et for balancing out energy shortfalls and 
surpluses.  Nicaragua participates in the Centra l American Regional Electricity Market, created 
in 1998 under the Framework Treaty for the Ameri can Electricity Market, in which Costa Rica, 
El Salvador, Guatemala, Honduras and Panama also take part. 
4. The manufacturing sector's share of GDP grew during the period under review, in part as a 
reflection of the positive effects of implementati on of the CAFTA-DR.  In 2010, the manufacturing 
sector accounted for close to 20 per cent of Nicaragua's GDP.  Over 50 per cent of this sector is 
composed of industries producing foodstuffs and beverages and three quarters of the exports of 
manufactures are processed meat, dairy and sugar ag ricultural products.  The average MFN tariff on 
manufactures is 6.1 per cent, with rates ranging from 0 to 170 per cent.  The average for non-agricultural products (WTO definition) is 5.2 per cent.  Tariff protection is higher than the 
average for clothing (14.8 per cent);  textiles (8.1 pe r cent);  leather, rubber, footwear and travel goods 
(7.3 per cent). 
5. Services are the largest sector in terms of sh are of GDP (58.4 per cent in 2010) and jobs 
(55.8 per cent in 2010).  During the period under re view, performance in most services activities 
improved and the relevant legisla tion and regulations were updated .  Nicaragua's financial sector 
weathered the 2008-2009 global crisis without any serious problems, partly as a result of tighter 
financial supervision based on Basel II.  As at  December 2011, there was a sufficient level of 
capitalization of the financial system, with a capital adequacy ratio of 14.7 per cent, compared to the 
minimum requirement of 10 per cent.  Moreove r, under the Deposit Guarantee Fund (FOGADE), Nicaragua WT/TPR/S/274/Rev.1 
 Page 71 
 
 
 savings deposits are guaranteed for up to US$10,0 00 per depositor.  Foreign banks may operate in 
Nicaragua by establishing a branch or as sharehol ders in banks already in existence or to be 
established in the country.  Foreign banks and financial institutions may also open agencies 
in Nicaragua. 
6. Since 1996, the insurance market has been ope n to competition, including the establishment 
of foreign companies;  private insurance compani es may now offer insurance, reinsurance and capital 
investment services.  Branches of foreign insuran ce companies established in Nicaragua do not need 
to have a board of directors resident in Nicaragua.  They can be managed and legally represented by a 
manager resident in the country.  During the peri od under review, insurance legislation was amended 
with the adoption of the 2010 General Law on In surance, Reinsurance and Bonds, which updated 
the legal, supervisory and prudential framework, im posing new capital requirements that have to be 
updated at intervals of not more than two years or whenever a company is at risk. 
7. The telecommunications sector has continued to grow rapidly and the market has been 
stabilized, even though competition remains fairly limited, which is partly a reflection of the 
small size of the market.  Since 2006, there ha ve been two fixed telephony operators holding 
concessions for 20 years.  These two companies al so offer mobile telephony services under licences 
valid for 20 years, which expire in the same  years as the concessions for the basic service. 
8. Nicaragua allows foreign investment in some segments of maritime transport, for example, 
the registration of vessels and the setting up of a sh ipping company.  Although Nicaragua restricts 
domestic traffic and cabotage to Nicaraguan-register ed ships operated by Nicaraguan shipowners, its 
legislation provides that if no Nicar aguan or Central American vessel is available, foreign ships may 
be authorized.  The National Port Authority (EPN), a decentralized body attach ed to the Ministry of 
Transport and Infrastructure (MTI), is responsible  for managing the six major ports.  The EPN has 
authority to enter into contracts for up to 25 y ears, granting concessions for various port services. 
9. In 2006, Nicaragua enacted a new civil aviati on law, which created a new body responsible 
for civil aviation matters and air transport in general, namely, the Nicaraguan Civil Aviation 
Institute (INAC).  The general thrust of Nicaragua 's civil aviation policy is to apply open skies 
policies on the basis of reciprocal bilateral concessi ons.  In principle, cabotage passenger and freight 
services may only be provided by Nicaraguan natu ral or legal persons.  Nevertheless, INAC is 
empowered to authorize foreign companies to prov ide such services on an ex ceptional basis when the 
general interest is at stake. 
(2) AGRICULTURE AND RELATED ACTIVITIES  
(i) Main features 
10. The agricultural sector, according to the de finition in Nicaragua's national accounts 
(agriculture, livestock, fishing and forestry) acc ounted for 18.8 per cent of Nicaragua's GDP in 2010 
(9.9 per cent for agriculture).  Th e agricultural sector's contribution to  GDP was higher in 2011 than at 
the beginning of the period review ed in 2006 (16.5 per cent), ther eby confirming that this sector 
continues to be one of key importance for Nicaragua 's economy.  Likewise, the sector remains one of 
the major sources of employment, providing close to  one third of jobs ( 32.2 per cent in 2010). 
11. In 2010, 21.7 per cent of the area under cultivation was used for export crops 
and 78.3 per cent for crops for the local market (Tab le IV.1).  The two most traditional crops, maize 
and beans, are grown on 64.9 per cent of the area unde r cultivation.  If the value of production is taken 
into account, however, Nicaragua's most important cr op is green coffee, yielding 22.3 per cent of the WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 72 
  
 value of production in real terms in 2010, followed by sugar cane (11.8 per cent) 
and rice (11.5 per cent).1  As a general rule, products for expor t show higher yields and productivity, 
and accounted for 45.7 per cent of the value of agricultural production in 2010, for 21.7 per cent of the area under cultivation. 
Table IV.1 
Agriculture:  area, pro duction and yields, 2005-2011 
(thousands of hectares and thousands of metric tonnes) 
  2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
Export products : Area 313.23 290.56 316.20 314.62 309.92  315.73  
Coffee (green) Area 181.97 163.77 181.97 166.20 170.21  163.04  
 Production 2,100.00 1,550.00 2,200.00 1,671.06 1,957.42  1,793.44  
 Yield 11.54 9.46 12.09 10.05 11.50 11.00 
Sesame (natural) Area 16.49 13.16 13.14 11.86 11,18 18.50 
 Production 129.27 144.55 103.02 109.27 111.46  188.70  
 Yield 7.84 10.98 7.84 9.21 9.97  10.20  
Sugar cane (tonnes 
of cane) Area 66.48 72.61 77.12 77.63 78.55  80.00  
 Production 4,198.23 4,955.54 4,928.96 4,735.34 5,159.43  5,484.00  
 Yield 63.15 68.25 63.92 61.00 65.68  68.55  
Sugar 2/ Production 9,391.96 11,043.28 10,542.63 11,064.82 11,508.08  12,500.00  
Bananas (boxes) Area 1.56 1.12 1.04 1.05 1.02 1.04 
 Production 2,614.61 2,233.98 2,325.23 1,900.63 2,440.71  2,491.20  
 Yield 1,676.03 1,998.19 2,240.10 1,811.85 2,390.51  2,400.00  
Havana tobacco 
(unmanufactured) Area 2.66 2.57 2.60 2.54 2.64  2.65  
 Production 65.85 60.99 62.40 62.43 64.94 65.97 
 Yield 24.79 23.77 24.00 24.55 24.60  24.89  
Groundnuts (natural) Area 44.08 37.33 40.34 55.33 46.31  50.50  
 Production 2,672,26 2,243,07 2,413,89 3,063,86 2,570,26  3,045.15  
 Yield 60.63 60.08 59.84 55.37 55.50  60.30  
Products for domestic 
consumption : Area 1,168.41 1,012.48 1,013.55 965.83 967.45  1,134.50  
   
Rice Area 137.22 125.94 98.03 102.07 105.78  115.00  
 Production 4,529.00 4,569.83 3,859.12 4,076,44 4,783.58  5,230.00  
 Yield 33.01 36.28 39.37 39.94 45.22  45.48  
Total beans Area  387.60 336.39 332.10 343.01 319.57  394.00  
 Production 4,661.96 3,983.53 3,749.86 3,886.41 3,979.78  5,397.80  
 Yield 12.03 11.84 11.29 11.33 12.45  13.70  
Maize Area 568.31 492.16 506.65 456.70 493.95  547.00  
 Production 12,223.09 11,041.57 10,706,78 9,325.38 11,909.45  13,208.50  
 Yield 21.51 22.43 21.13 20.42 24.11  24.15  
Sorghum Area 71.50 56.39 75.38 61.77 45.85  73.50  
 Production 2,009.58 1,609.38 2,367.74 1,641.73 1,364.68  2,489.50  
 Yield 28.11 28.54 31.41 26.58 29.77  33.87  
                                                      
1 Percentages calculated by the WTO Secr etariat based on information provided by 
the Nicaraguan authorities. Nicaragua WT/TPR/S/274/Rev.1 
 Page 73 
 
 
   2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011
Soyabeans Area 3.79 1.59 1.39 2.29 2.30  5.00  
 Production 123.66 50.08 45.59 70.46 69.00 150.00 
 Yield 32.63 31.42 32.75 30.84 30.00  30.00  
Total Area 1,481.64 1,303.03 1,329.75 1,280.45 1,277.36  1,450.23  
Source: Ministry of Agricu lture and Forestry. 
12. Bovine meat accounted for 36 per cent of the value of livestock production in 2010, poultry 
for 30 per cent and dairy produce for 26 per cent. 
13. Since the previous Review, exports of agricultura l products have grown ra pidly (Table IV.2).  
They rose by 72.1 per cent over the period 2006- 2011, from US$385.6 million to US$663.7 million.  
The increase in the value of exports of coffee and groundnuts was particularly noteworthy, whereas there was a drop in exports of bananas, live cattle and beans.  The main destinations 
for Nicaragua's exports are the Un ited States and Central America. 
Table IV.2 
F.o.b. exports of goods by principal product, 2006-2011 
(US$ million) 
Product 2006 2007 2008 2009a2010a 2011b 
Total agricultural 
products 385.6 406.2 549.9 462.8 570.4  663.7  
Coffee 207.1 188.1 278.3 236.8 341.6  429.3  
Groundnuts 43.0 56.0 90.2 65.9 61.8  96.1  
Live cattle 39.3 42.2 26.8 17.8 21.5  18.6  
Beans 37.0 39.9 79.8 61.5 59.4  30.2  
Bananas 9.6 9.9 9.6 11.7 6.6  2.4  
Unmanufactured tobacco 5.0 4.8 5.3 5.1 6.7  6.3  
Mangoes 2.4 3.0 2.0 2.7 2.2  3.4  
Coco yams 6.1 7.7 8.0 9.2 7.5  6.7  
Watermelons and melons 6.0 7.6 2.4 0.8 1.2  1.7  
Sesame 4.4 6.9 6.6 6.5 7.4  6.3  
Ferns 1.1 1.1 1.3 1.5 1.2  0.0  
Other 24.6 39.1 39.4 43.3 53.3  62.6  
a Preliminary figures. 
b Estimated figures. 
Source : Information provided by the authorities. 
(ii) Policy developments 
14. The Ministry of Agriculture and Forestry (MAGFOR) is responsible for formulating, 
implementing, monitoring and evaluating Nicaragua's agricultural and forestry policy.  It also has to 
promote and ensure economic, social, environmental and productive improvement  in the situation of 
Nicaragua's population through development plan s and strategies for small- and medium-scale 
producers and domestic and foreign investors by im plementing programmes and projects to permit the 
sustainable development of this sector.2  Other bodies involved in the formulation and implementation 
of agricultural policy include the Nicaraguan Ag ricultural Technology Institute (INTA) and the 
Ministry of Finance and Public Credit (MHCP). 
15. The Development Strategy for the sector is b ased on three major national plans:  the 
National Food Programme;  the Forestry Plan;  and the Strategic Framework for the Promotion of Agribusiness.  There are also a number of subpr ogrammes at the national level, for example:  the 
                                                      
2 Online information from MAGFOR.  Viewed at:  http://www.magfor.gob.ni/vision.html. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 74 
  
 Food Production Subprogramme ( SPPA);  those on Basic Inputs for Production;  Urban and 
Peri-urban Agriculture;  Strengthening Safety a nd Health Services;  Collection and Marketing;  
Production of Powdered Milk at the Regional Level;  Innovation and Technology;  Livestock 
Breeding Conversion;  Irrigation;  Coffee;  Cocoa;  Organic Produce;  Roots and Tubers;  and Fruit 
and Vegetables.3 
16. The overall goal of the National Food Progra mme, launched in 2008, is to boost the 
generation of jobs and incomes and to raise the production, productivity and quality of food by 
providing effective and appropriate strategic publ ic services throughout the agrifood and basic 
consumption value chains:  rice, beans, maize, so rghum, as well as other agricultural products such 
as meat, (beef, pig and poultry meat), milk, cocoa, co ffee, fruit and vegetables.  The aim is to catalyse 
the rural sector, placing associated small- and medium-scale producers at the centre.  Among the objectives are the generation of over 300,000 permanen t direct jobs, an increase of over 80 per cent in 
production in both volume and valu e terms, an annual increase of US$400 million in export earnings, 
with savings of US$200 million obtained each year by substituting imported goods.  This programme 
is mainly being implemented through the SPPA. 
17. The SPPA was introduced for a period of five years in April 2007 with the objective of 
eliminating poverty.  It consists  of 75,000 Food Production Vouchers (BPAs) for an equal number of 
beneficiary families.  The main tool for this subpr ogramme, the BPA, is intended to act as a means of 
helping poor farming families with organization, cap italization, training and technical assistance.  
The BPA is an agricultura l package composed of a list of items that includes animals, equipment for 
facilities, seeds, plant material, fruit and forest plan ts, a revolving line of credit, training and technical 
assistance in various areas (health and animal feed ing, cooperative associations, the environment, 
marketing, inter alia ).  In the Pacific and Central territories, the maximum value of the BPA 
per family is US$1,500, with a minimum of US$600, including 16.5 per cent for operating costs.  On the Atlantic Coast, because of transport costs, the value of the BPA per family is US$2,000.
4  
The domestic support provided through the SPPA  since it was introduced in 2007 accounts for 
over 90 per cent of all domestic support. 
18. The authorities have indicated that agriculture in Nicaragua is facing a number of problems, 
which include:  the scant coverage and quality of  the services needed for production (electricity, 
telecommunications, drinking water, transport, sup port services), the low level of education among 
producers, lack of an organizational and "associa tionist" culture, the small size of local markets, 
inadequate institutional presence, insufficient de velopment of small- and medium-scale rural 
agribusiness, the poor administrative and business capac ity of producers, lack of knowledge of market 
mechanisms, difficulty of obtaining loans, contradi ctory information, low level of organization and 
not enough understanding of technology.5 
19. In order to respond to such concerns, atte mpts are being made through the Strategic 
Framework for the Promotion of Agribusiness, also drawn up in 2008, to develop agribusiness and to 
set up market-related rural enterprises in order to increase the value of agricultural production and 
create more jobs, raise incomes and boost food secur ity.  The strategic vehicles for achieving these 
objectives are:  strengthening of human capital;  promotion of technological development and 
innovation;  development of the agribusiness infr astructure and support services;  encouragement of 
                                                      
3 Online information from MAGFOR.  Viewed at:  http://www.magfor.gob.ni/prorural/planes 
Nacionales.html. 
4 MAGFOR (2008b). 
5 Idem (2008a). Nicaragua WT/TPR/S/274/Rev.1 
 Page 75 
 
 
 agricultural processing;  and better access to local, dom estic and international markets.  It is also 
hoped to reinforce the regulatory framework for developing agribusiness in Nicaragua. 
20. During the period under review, Nicaragua est ablished a legal framework to boost organic 
agricultural production.  The aim of Law No. 765 of 5 July 2011on the Promotion of Agro-ecological 
or Organic Production is to develop agro-ecologi cal or organic production systems by regulating, 
promoting and boosting production activities, practices and processes that are environmentally, 
economically, socially and culturally sustainable,  help restore and conserve ecosystems, and 
contribute to sustainable management of the land.   The implementing regula tions for this Law are 
found in Executive Decree No. 02-2012 of 25 January  2012 (General Implementing Regulations for 
Law No. 765). 
21. Nicaragua has notified the WTO that it did not grant any export subsidies in 2005, 2006, 2007 
or 2008.6 
22. Nicaragua did not make any specific commitments during the Uruguay Round to reduce 
financial support for agricultural producers.7  Each year since 1995, Nicaragua has notified the 
green box support it gives its agricultural producers.  Table IV.3 provides a summary of the sectoral 
projects under which Nicaragua provided support for its agricultural sector during the 
period 2005-2009 and which were notified to the WTO.  Of the 15 projects mentioned, three 
concerned disasters or sanitary or phytosanitary risks;   six related to food security;  and six concerned 
training and technological development.  Accordi ng to Nicaragua's notifications, total domestic 
support between 2005 and 2010 amounted to US$32. 46 million, or an annual average of 
US$5.41 million.  This represents 2 per cent of th e value of agricultural production.  The support 
given during the period under review was lower than  that reported in the previous Review for the 
period 1999-2004, which averaged  US$9.653 million per year. 
Table IV.3 
Agricultural support programmes notified to the WTO, 2005-2010  
(US$ thousand) 
(a)  General services  
Pest and disease control  
Improving agricultural and forestry health services 
Ensure that the main animal, plant, and forestry products comply with the health requirements, rules 
and standards used in domestic and international trade by improving the quality of animal and plant 
health and agrifood safety services through training in Good Agricultural Practices and Good 
Manufacturing Practices and  upgrading of the equipment of vete rinary diagnostic and biological 
residue analysis laboratories. 138.81 
  
 
 
Programme for the prevention of exotic diseases 
Maintain national territory free from exotic diseases by means of epidemiological surveillance, 
including screwworm surveillan ce, in livestock areas.  310.52 
Screwworm eradication programme 
Control and eradicate the screwworm fly by means of th e establishment and maintenance of a control barrier 
and the release of sterile screwworm flies in Nicaragua from the plant in operation.  Prevent foot-and-mouth 
disease and exotic diseases through sampling and the treatment and inspec tion of 40,000 animals. 328.69 
                                                      
6 WTO document G/AG/N/NIC/22, of 26 August 2009. 
7 Section I of Part IV of Schedule XXIX of 15 April 1994;  WTO document G/AG/AGST/Vol.2;  and 
Article 15, Article 9.4 and Article 7.2(b)  of the WTO Agreement on Agriculture. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 76 
  
 Training services   
National Agricultural Technology a nd Technical Training Programme 
Provide technical assistance and training to ensure a more integrated agricultural technology system by 
means of a joint approach to  research by universities and producers' associations.  471.01 
  
Agricultural technology  project:  Phase II 
Provide rural households and communities with broad access to management and innovation services in 
the fields of agriculture and natural resources  in order to increase agricultural productivity. 416.01 
Support for introducing the proper conditio ns for exporting agrifood products 
Inform producers of all sanitary and phytosanitary standa rds and train them in how to apply these so as to 
strengthen and develop exports of Nicaragua's agri cultural products to the European Union market, 
particularly bovine meat, farm ed shrimp, cocoa and coffee. 42.50 
Improvement in the situation of small- and medium -scale coffee producers in the San Juan River basin 
Develop a classification system able to exploit the quality poten tial of Nicaraguan coffee, through 
training in production techni ques, quality improvement and marketi ng (Apanás zone), with a view to 
ensuring consistent compliance with the quality  requirements of the international market. 183.67 
Support for the implementation of agrifood export conditions 
Make all sanitary and phytosanitary standards ava ilable to producers so as to strengthen and develop 
exports of Nicaragua's agricultural products to the European Union market, particularly bovine meat, 
farmed shrimp, cocoa and coffee. 163.16 
 
Modernization of agricultural, lives tock and plant health services 
Ensure that the major producers of goods of animal and plant origin comply with the requirements, 
rules and standards used in domestic and internati onal trade by bringing the qua lity of plant and animal 
health services and food safe ty services up to standard. 546.81 
 
Strengthening of local capacities in watershed manageme nt and prevention of natu ral disasters and training 
of human resources 
Help reduce vulnerability to natural disasters and im prove the quality of life of  the Nicaraguan people.  
Provide training for pr oducers, municipal authorities and INTA tec hnicians in watershed management issues. 37.68 
 
(b)  Domestic food aid   
Protracted relief and recovery operation 
Supplementary food for vulnerable groups (pregnant wo men, nursing mothers and children up to 36 months). 
Food-for-asset-creation and/or food-fo r-work schemes in the regions of Matagalpa and Jinotega and the 
Autonomous North Atlantic Region (RAAN). 134.67 
 
 
Food and nutrition security programme 
Supplementary food for vulnerable groups (pregnant wo men, nursing mothers and children up to 36 months).  
Food-for-asset-creation and/or food-for-work sche mes in the Madriz and Nueva Segovia regions. 153.97 
Seed agrifood programme (PAS) 
Improve the food security of rural households, promote and strengthen the organization of the 
beneficiaries and encourage the production of stap le grains (maize, beans, rice and sorghum). 66.12 
Food production programme - PPA (also known as SPPA) 
Eradicate hunger, chronic malnutrition, extreme poverty and unemployment.  The programme aims to assist 
80,000 poor rural households in the period 2007/2011 by  means of a quantitative and qualitative increase in 
production and the consumption of protein foods, wh ile encouraging a reduction in firewood consumption 
through the use of other cooking methods, biogas, more modern stoves, etc. 26,303.56 
 
Support for rural families in zones affected by drought and flooding 
Establish programmes aimed at resolving problems of  extreme poverty and environmental degradation in 
areas affected by recurring natural disasters (d rought and flooding) through food distribution. 1,682.34 
 
Food aid for persons affected by disasters 
Help to prevent the exacerbation of malnutrition among highly food-insecure children and families 
exposed to recurring adverse climatic events.  1,482.54 
  
TOTAL  32,461.99 
Source:  Information provided by the Nicaraguan authorities according to their notifications to the WTO. Nicaragua WT/TPR/S/274/Rev.1 
 Page 77 
 
 
 23. Nicaragua also has Law No. 217 of 1996, th e General Law on the Environment and Natural 
Resources, Official Journal of 6 June 1996, which contains provisions requiring the Ministry of the 
Environment and Natural Resources (MARENA) to  determine quotas for the export of threatened 
species of fauna, game or catches. 
24. The average MFN tariff protection in the agricultural sector (major division 1 of ISIC Rev.2) 
was 8.3 per cent in 2011.  The average for chapters  1-24 of the HS, corresponding to the agricultural 
sector, was 12.3 per cent in 2011.  Much higher tariffs are imposed on some agricultural products 
such as rice, milk and chicken cuts.  The highest ta riff of 164 per cent applies to thighs of chickens 
and other birds (HS 0207.1393, 0207.1394, 0207.1493 and 0207.1494).  A tariff of 60 per cent applies 
to milled rice and milk (other than evaporated milk ).  The average tariff a pplied in the agricultural 
sector, according to the WTO definition, was 11. 8 per cent in 2011.  By group of products, 
the average tariffs are higher for:  sugar a nd confectionery (30.9 per cent);  dairy produce 
(25.1 per cent);  animals and products of animal orig in (19.6 per cent);  coffee and tea (13.1 per cent);  
and fruit and vegetables (11.8 per cent), while imports of cotton are duty free. 
25. Nicaragua notified the WTO that it did not invo ke the special safeguard mechanism provided 
in the WTO Agreement on Agriculture either during the period 2005-20088 or in 2009 or 2010.9 
26. In accordance with the commitments made dur ing the Uruguay Round, Nicaragua may apply 
import quotas of 193.2 thousand quintals for maize (HS 1005.90.20 and 1005.90.30);  3.48 million pounds for bovine meat (HS 0201 a nd 0202);  1.88 million pounds for chicken 
(HS 0207.10.00 and 0207.31.00,);  13.41 million litr es and 7.76 million litres for milk (HS 0401, 0402 
and 0403);  53.1 thousand quintals for beans (HS 0713.3);  109.6 thousand quintals 
and 107.10 thousand quintals for rice (HS 1006.10.90 and 1006.30.00);  138 thousand quintals for sorghum (HS 1007.00.90);  1.89 million litres for oil (HS 1507, 1511 and 1512.2);  and 48.3 short 
tonnes for sugar (HS 1701).  Nicaragua has notified the WTO that it only applies quotas to milk and rice.  These quotas were 10.18 million litres for milk in 2010 and 106.55 thousand quintals for 
rice.
10  The tariff in effect applies to all imports of other products subject to quotas, but since it is 
below the levels bound in Part I, Section I-B, of Nicaragua's Schedule XXIX the quotas do not 
apply.11 
(iii) Fisheries 
27. The share of fishing and aquaculture in Nica ragua's GDP was 1.9 per cent in 2010, although 
there is much greater fishing potential given that Nicaragua has coastlines both on the Pacific Ocean 
and the Caribbean, in addition to lakes, and that wa ter covers 7.8 per cent of its total surface area.  
Shrimps (both farmed and from the sea) accounted  for 69.2 per cent of fisheries production in 2010, 
followed by fish (17.6 per cent) and lobsters ( 13.2 per cent).  The average MFN tariff on fish 
is 11.6 per cent, with rates of up to 15 per cent, mainly on live fish. 
28. In 2011, US$124.4 million of fisheries produc ts were exported, of which shrimps, 
mostly farmed shrimps, accounted for US$78.9 milli on and the rest were lobsters, fresh fish and 
other products. 
                                                      
8 WTO document G/AG/N/NIC/21 of 25 August 2009. 
9 WTO document G/AG/N/NIC/26 of 27 May 2011. 
10 The milk quotas were 11.89 million litres in 2006;  11.14 million litres in 2007;  
and 4.46 million litres in 2008.  For rice, the figures were 109.6 thousand quintals in 2006;  107.88 quintals 
in 2007;  and 107.8 thousand quintals in 2008.  WTO document G/AG/N/NIC/23 of 26 August 2009. 
11 WTO document G/AG/N/NIC/25, of 27 May 2011. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 78 
  
 29. Fisheries policy is formulated and implemente d by the Nicaraguan Fishing and Aquaculture 
Institute (INPESCA), which is also responsible for granting fishing and exploitation permits.  
INPESCA was set up in 2007 by Law No. 612 of  2007, the Law reforming and supplementing 
Law No. 290 on the Organization, Competence and Procedures of the Executive, as a decentralized 
autonomous entity under the sectoral supervision of the Office of the President of the Republic.  
INPESCA took over the responsibilities previously  exercised by the National Fishing and 
Aquaculture Authority and the Directorate-General of  Natural Resources, both part of the Ministry of 
Development, Industry and Trade (MIFIC), in  the sphere of fisheries and aquaculture.12 
30. Law No. 489 of 2004 on Fishing and Aquaculture, published in Official Journal No. 251 
of 27 December 2004, regulates the fisheries sector.  The Law provides for two types of fishing:  
industrial and small-scale fishing.  Only Nicaragua n nationals may engage in  artisanal or small-scale 
fishing.  The Law also provides that all fisher ies and aquaculture production for export must be 
processed in authorized facilities est ablished in Nicaragua;  MIFIC has the authority to issue special 
permits for the marketing or export of output that cannot be processed in Nicaragua because of limited 
capacity in processing plants. 
31. The Law specifies two regimes for the right to engage in commercial fishing:  freely 
accessible resources and resources with limited access.  The freely accessible regime allows fishermen freely to exploit hydr obiological resources that are al ready being exploited or are 
under-exploited.  The limited access regime gives rest ricted access to exploitation of those resources 
that are already being fully exploited in order to c ontrol fish mortality, defining an annual global catch 
quota for each fishing unit and controlling fishing by  setting a limit on the num ber of vessels.  The 
annual global catch quota is determined on the basi s of catches deemed biologically acceptable and 
changes from year to year. 
32. Fishing licences are issued by ministerial decision from MIFIC after the annual global catch 
quota has been defined.  They are valid for five y ears and may be renewed.  Applications for renewal 
must be submitted two months before the licence expi res.  Applicants for fishing licences who are not 
the owners of the vessels for which they are requesting a licence or are not in possession of a 
chartering agreement must make a cash deposit e quivalent to US$10,000 in cordobas for each licence 
requested.  If the licence is granted but within three months no catches have been unloaded, this 
deposit is definitively transferred to the Fisheries Development Fund (see below). 
33. The requisite licence, which is valid for five y ears for each vessel, together with a small-scale 
fisherman's permit identifying the holder as such a nd granted by MIFIC, must be obtained before 
engaging in small-scale fishing. 
34. Any Nicaraguan or foreign natural or legal pe rson may engage in commercial or scientific 
aquaculture.  To exercise this activity, an aqu aculture concession has to be obtained from INPESCA 
for an exclusive area, measured in hectares.  The aquaculture concession granted by ministerial 
decision from MIFIC is valid for 20 years and is renewable for further ten-year periods.
13  
No provisional concessions are granted.  Approval is subject to the conduct of an environmental 
impact assessment and to obtaining an environmental permit from MARENA.  Holders of aquaculture concessions have 12 months in which to  begin operations.  If they fail to do so, 
the concession is annulled. 
                                                      
12 Online information from INPESCA.  Viewed at: http://www.inpesca.gob.ni/index.php?option= 
com_content&view=article&id=13&Itemid=28. 
13 The requirements to be met for such concessions can be found on INPESCA's website at:  
http://www.inpesca.gob.ni/images/RE QUISITOS%20ACUICULTURA.pdf. Nicaragua WT/TPR/S/274/Rev.1 
 Page 79 
 
 
 35. The Law provides that the Nicaraguan fishing fl eet shall be regulated by MIFIC, as regards 
the number, conditions and capacity of the crew on board, at least 90 per cent of whom must be 
Nicaraguan nationals.  The captains must also be of Nicaraguan nationality.  The Law on Fishing and 
Aquaculture provides that the exploitation of fisher ies resources by foreign-registered vessels must 
comply with the conditions and restrictions impos ed by the international agreements and treaties 
ratified by Nicaragua.  A special authorization is given to foreign-registered vessels for scientific or game fishing.  A licence granted by INPESCA must  be obtained for commercial fishing of freely 
accessible resources.
14  The Law specifies that, under no circumstances, is commercial fishing of 
limited access resources authorized (an annual quota is  fixed for lobsters and shrimps).  The Law also 
provides that special licences may be granted to  Nicaraguan vessels or foreign-registered vessels 
leased or chartered with or without a purchase op tion if Nicaraguan natura l or legal persons are 
involved or to Nicaraguan companies with foreign par ticipation.  There is also a provision in the Law 
giving exemption up to 30 June 2010 for the import and sale of raw materials, intermediate goods and 
capital goods to be used for small-scale fishing or aquaculture. 
36. The fisheries and aquaculture subsector is chiefly controlled through a series of licences, 
formalities and quotas.  Fishing licences include the following:  1,381 hectares of brackish land in 
the Padre Ramos Estuary and 20,362.72 hectares in  the Real Estuary.  The following are the 
current quotas under the annual global catch quota sche me:  lobsters (2.7 million pounds of tails), 
Caribbean shrimps (3.8 million pounds of tails), P acific shrimps under the sen tinel fishing regime as 
fishing is already partly closed and tuna (5,300 m3).  No quotas are fixed for species that are the 
subject of commercial fishing as they are deemed to be freely accessible resources and are regulated 
by minimum catch sizes. 
37. Nicaragua still imposes a ban on the export of  lobsters in their reproductive phase or 
spawning lobsters (with eggs), in the shell (with a sperm receptacle) or moulting, and estuary shrimps 
in the larval or juvenile phase.  It is also permanen tly prohibited to catch, process, store or sell lobsters 
in their reproductive phase or spawning lobsters (with  eggs), in the shell (with a sperm receptacle) 
or moulting (soft shell).  A closed season lasting four months (each year) is determined at the 
regional level. 
38. The Law on Fishing and Aquaculture set up th e Fisheries Development Fund financed from 
the income received from the payment of fishing and exploitation rights for licences, permits and 
concessions, fines and contributions from any other Nicaraguan or international entity.  The Fund is 
intended to carry out regulatory, promotion, resear ch, monitoring, supervis ory and control activities 
and projects in the fishing and aquaculture subsector .  It is managed by a governing board composed 
of MIFIC, the MHCP, MARENA, and a representative of each of the Regional Councils of the Autonomous Regions of the Atlantic Coast. 
(iv) Forestry 
39. In 2010, forestry contributed 1 per cent of Nicaragua's GDP.  Woodland covers an area 
of 5.6 million hectares (44 per cent of the land area), and another 3.5 million hectares can be used for agroforestry or pasture.
15 
40. It is MAGFOR's responsibility to formulate and evaluate forestry policy and to follow up and 
analyse performance in the area of forestry, proposing measures, mechanisms and regulations.  
                                                      
14 The requirements to be met for such concessions can be found on INPESCA's website at:  
http://www.inpesca.gob.ni/images/requicitos%20 juridicos/REQPARALIC ENCIASDEPESCA.doc. 
15 MAGFOR (2008a). WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 80 
  
 MAGFOR also chairs the Committee to Regul ate the National Forestry Development Fund 
(FONADEFO).  This Fund was set up to attract an d manage financial resources for the development 
and financing of forestry and agroforestry progr ammes and projects and to develop the market for 
payment of woodland-related environmental services,  which are among the promotional objectives in 
Law No. 462, the Forestry Law (see below).16  FONADEFO allocates reimbursable financial 
resources to forestry investment projects and/or  sustainable management initiatives for forestry 
and agroforestry ecosystems, giving priority to small- and medium-scale producers.  Over the period 2006-2011, it disbursed resources am ounting to C$35.3 million (US$1.5 million). 
41. There is a 6 per cent tax on forestry activities ca rried out in natural woodland.  This tax is 
calculated on the basis of reference prices determined annually by MAGFOR.  The average 
MFN tariff on forestry products is 1.8 per cent, with rates of up to 15 per cent. 
42. Presidential Decree No. 69-2008 approved the National Policy for the Sustainable 
Development of Nicaragua's Forestry Sector w ith the aim of:  updating the legal framework for 
forestry, and the fiscal concessions for the sector , paying particular attention to small- and 
medium-scale forestry producers, encouraging integr ation of the value chain;  and formulating and 
implementing financing mechanisms for the forestry  sector such as the development of markets for 
payment of environmental services.  The Policy also  covers the capitalization of FONADEFO and the 
National Environment Fund. 
43. The forestry sector is chiefly regulated by  Law No. 462, the Law on the Conservation, 
Promotion and Sustainable Development of the Forestry Sector, Official Journal No. 168 
of 4 September 2003, and its General Implem enting Regulations No. 73-2003, published 
in Official Journal No. 208 of 3 November 2003.  Th is Law specifies that Ni caragua's forested areas 
may be the subject of concessions or contracts fo r their rational exploitation, and establishes the 
National Forestry Commission, at the same time as granting a number of tax concessions.  The special 
tax concessions for this sector are:  (i) for planta tions registered during the first ten years from the 
date of entry into force of the Law, exemption fro m payment of 50 per cent of the municipal sales tax 
and 50 per cent of the tax on profits earned from for estry activities;  (ii) exemption from payment of 
the real estate property tax on property where forest s are planted and areas where forests are managed 
according to a Forestry Management Plan, during the first ten years from the date of entry into force 
of the Law;  (iii) for the purposes of income tax, de duction of the cost of 50 per cent of the investment 
in forest plantations;  (iv) exemption from paymen t of tariffs on the import of machinery, equipment 
and spare parts for processing co mpanies, excluding saw mills, which upgrade their wood processing 
technology;  and (v) priority in government pr ocurement for the purchase of goods made of wood 
bearing a forestry certificate from the National Forestry Institute (INAFOR);  they may be given a preference margin of up to 5 per cent in procurement bidding or competitions. 
44. Pursuant to Decree No. 104-2005, natural or le gal persons may deduct up to 100 per cent of 
investment in the promotion of reforestation or in th e creation of forestry plantations from income tax.  
In order to receive this concession, a Forestry Initiative must be submitted to INAFOR describing 
the forestry investment and the activities to be  carried out, and a Forestry Endorsement has to 
be obtained. 
                                                      
16 FONADEFO's capital is made up of:  (i) an allocation granted under the General Budget;  
(ii) national and international dona tions;  (iii) resources under nationa l and international conventions and 
agreements;  (iv) 50 per cent of th e forestry revenue collected from right s, fines and auctions as a result of 
violations of the Law;  and (v) sp ecial lines of credit, payments for environmental services, programmes 
and projects. Nicaragua WT/TPR/S/274/Rev.1 
 Page 81 
 
 
 (3) ELECTRICITY  
45. Nicaragua's nominal electricity generating capacity  is 1,093.7 MW in the national grid (SIN), 
with total national capacity of 1,108 MW and peak demand of 571 MW in May 2011.  
Gross electricity generation in 2011 amounted to 3.82 million MWh.17  In 2011, 66 per cent of 
Nicaragua's electricity was generated by oil-fired thermal power stations.  Other sources of generation 
were:  sugar cane bagasse (11.6 per cent);  hydroel ectricity (9.8 per cent);  geothermal power 
(7.1 per cent);  and wind power (5.5 per cent).  During the period under revi ew, Nicaragua continued 
to make efforts to utilize its energy resources more  efficiently.  The aim is to lessen dependence on 
external sources of energy and use renewable source s so hydroelectric, geothermal and wind power 
projects are being developed.  In support of this, new legislation has been introduced to regulate and 
promote hydroelectric and geothermal generation (see below).  The authorities have stated that it is 
expected that 50 per cent of energy will come from renewable sources in 2013. 
46. In 2011, sales of electricity (SIN + stand- alone systems) generated 2.69 million MWh and 
earned total revenue of C$10,630 million.  The average price per KWh was C$5.41.18 
47. The principal legislation on the electricity sector is to be found in Article 105 of the 
Constitution, which makes the State responsible fo r promoting, facilitating and regulating the supply 
of basic public energy, communications, water, transport, road infrastructure, port and airport services to the population;  in Law No. 272, the Law on the Electricity Industry, published in Official Journal No. 74 of 23 April 1998, and in the amendments thereto;  in Law No. 443, Law on the Exploration and Exploitation of Geothermal Resources,  published in Official Journal No. 222 
of 21 November 2002, and in the amendments thereto
19;  in Law No. 467 of 9 July 2003, Law on the 
Promotion of the Hydroelectricity Subsect or, published in Official Journal No. 169 
of 5 September 2003, and the amendment thereto, Law No. 531 of 13 April 2005;  in Law No. 532 on the Promotion of Renewable Electricity Genera tion, published in Official Journal No. 102 
of 27 May 2005;  in the Law on Energy Stability, La w No. 554, published in Official Journal No. 224 
of 18 November 2005, and amendments thereto;  and in Decree No. 45-2010 of 5 August 2010, 
Implementing Regulations for the Law on the Explor ation and Exploitation of  Geothermal Resources, 
published in Official Journa l No. 152 of 11 August 2010. 
48. The Ministry of Energy and Mining (MEM ) has responsibility for formulating and 
implementing policies in the electricity sector.  It is in charge of granting definitive permits for 
exploration and transmission.  The Nicaraguan Energy Institute (INE) was set up in 1979 and is 
governed by Decree No. 87 of 23 May 1985, or the Or ganic Law on the INE, a nd is responsible for 
regulating the energy sector.  It is an autonomous body, with its own legal status, set up for an indefinite duration, with its ow n assets and full authority to acquire  rights and make commitments.  
Until 1994, INE acted as the operator of Nicaragua's electricity sector and the regulatory body for the 
energy sector, and supervised domestic energy policy.  It was in charge of managing energy 
resources, whether domestic or imported.  At th e end of 1994, by means of Legislative Decree 
No. 46-94, the Government created the Nicaraguan El ectricity Company (ENEL) in order to generate, 
transmit, distribute and market electricity, thereby c onfining INE's tasks to the formulation of policies 
and regulation of the sector.  Law No. 271 of 1998, Law ame nding the Organic Law on the 
                                                      
17 National Energy Institute (2011). 
18 Ibid. 
19 Contained in:  Law No. 594, Law on the Revision and Amendment of Law No. 443 (Law on the 
Exploration and Exploitation of Geothermal Resources), published in Official Journal  No. 173 of 
5 September 2006;  Law No. 656, published in Official Journal  No. 217 of 13 November 2008;  and Law 
No. 714, published in Official Journal  No. 14 of 21 January 2010. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 82 
  
 Nicaraguan Energy Institute, clearly defined these tasks and gave INE responsibility for regulating, 
supervising and controlling the en ergy sector and for implementing the energy policies determined by 
the National Energy Commission. 
49. INE is administratively and financially independent  and, in the case of the electricity industry, 
is financed through a charge for the regulatory service amounting to up 1.5 per cent of the invoices for 
the activities carried out by holders of concessions or distribution permits.  The regulatory charge 
is paid by consumers.  INE also receive s resources from the regulation and taxation of 
hydrocarbons-related activities in the form of a ta x of US$0.06 per barrel of oil or byproducts sold. 
50. INE'S objectives include the promotion of compe tition in order to give consumers lower costs 
and higher quality in the medium te rm.  It is responsible for appr oving and monitoring rates for sales 
to final consumers and related services (charges).  Some of INE's other responsibilities are to develop 
and adopt the measures required to prevent practices that restrict competition, to impose sanctions in 
the cases covered by the legislation and regulations , and to settle disputes between economic agents 
involved in the electricity industry. 
51. Until 2007, pursuant to the Law on the Electricity Industry, the main task of the National 
Energy Commission (CNE) was to formulate the objec tives, policies, strategies and general guidelines 
for the energy sector as a whole, as well its indicative planning.  It was responsible for drawing up the Indicative Plan for Expanding Generation.  Fo llowing the enactment of Law No. 612, the law 
amending and supplementing Law No. 290 on the Or ganization, Competence and Procedures of the 
Executive, published in Official Journal No. 20 of 29 January 2007, MEM was created as the 
successor to the CNE and as the govern ing body for Nicaragua's energy and mining sector, some of its 
chief responsibilities being to revise, update and regu larly evaluate the strategic plan and government 
policy for the energy sector, particularly aspects related to the energy equilibrium, supply and demand, energy conservation, pricing policies and subs idies for the electricity service, and policies on 
electricity coverage in Nicaragua.  MEM is no w also responsible for authorizing provisional 
generating and transmission permits and distribution concessions. 
52. In 2010, by means of Ministerial Resolution No. 02-03-2010, MEM decided to set up the 
National Energy and Mining Commission (CNEM) as an  advisory body, with the involvement of the 
private sector, giving it responsibility for periodic revi ew of problems in the energy and mining sector 
and making recommendations to MEM.  The CN EM's electricity subcommission specifically 
addresses the electricity sector. 
53. Since 1997, when the electricity system ceased to be exclusively State-owned, the sector has 
been open to private investment, including forei gn investment.  The privatization programme was 
mainly implemented up to 2002.  Currently, th e State still has a monopoly on the transmission 
of electricity, but power generation is mainly in private hands;  the private sector accounted for 78.5 per cent of the total electricity generated in 2011.
20  Through ENEL, the Government has a 
share in the Santa Barbara and Centroamérica (form erly Hidrogesa) hydroelectric power stations, the 
Managua and Las Brisas (formerly GECSA) thermal power stations and the Momotombo 
(formerly GEMOSA) geothermal power station.  Ot her electricity is generated in thermal power 
stations belonging to four private companies, which have been given concessions for geothermal 
energy generation, using two sugar cane-fired plants and a number of small thermal plants together to 
supply 32 stand-alone systems.  Some 98.8 per cent of  the electricity is distributed through networks 
connected to the national grid (SIN) and onl y 1.2 per cent through stand-alone systems. 
                                                      
20 WTO Secretariat calculations based on informati on from INE.  Viewed a t:  http://www.ine.gob.ni/ 
DGE/estadisticas/2011/anual/Resumen_2011_actMar12.pdf. Nicaragua WT/TPR/S/274/Rev.1 
 Page 83 
 
 
 54. Law No. 583 of 16 November 2006, published in Official Journal No. 04 of 5 January 2007, 
or the Law Creating the National Electricity Transmission Company (ENATREL), provided for the dissolution of the National Electricity Transmissi on Company S.A. (ENTRESA), and the creation of 
ENATREL.  Pursuant to the Law on the Electricity Industry, this company belongs to the State and is 
a government-owned (decentralized) co mpany under the control of the Office of the President of the 
Republic.  Law No. 583 stipulates that ENATREL ma y not be privatized and individuals may not 
hold any shares in its assets under any circumstan ces.  It has a monopoly of transmission and is 
responsible for operating the SIN, as well as ma naging the National Electr icity Market and all 
activities related to the Regional Electricity Ma rket through the Nati onal Load Dispatching 
Centre (CNDC). 
55. A number of incentives are given to promote the use of renewable energy to generate 
electricity.  The Law on the Promotion of the Hydroe lectricity Subsector and the amendments thereto 
contain provisions to promote the generation of elect ricity using water resources.  The Law provides 
several incentives that are only applicable to new pr ojects to generate hydroelectricity using dams or 
on water courses.  These incentives are for 15 years as of the date of entry into force of the Law, 
irrespective of the date construction commences or ope rations under the project start.  The benefits 
granted include:  (a) exemption from payment of import tariffs and VAT on machinery, equipment, 
materials and inputs to be used solely for pr e-investment work and for the building of the 
infrastructure needed to generate hydroelectricity a nd to build the transmission line to carry electricity 
from the power station to the SIN;  (b) exemp tion from payment of income tax and definitive 
minimum payment of income tax specified in Law No. 453, Fiscal Equity Law, for a maximum period 
of seven years as of the date the project starts commercial operations;  (c) exemption from all municipal taxes applicable during the constructio n of the project and for a maximum period of 
ten years as of the date the project starts commercial operations (75 per cent exemption for 
the first three years and 50 per cent for the fo llowing five years, then 25 per cent for the 
last two years);  (d) exemption from stamp duty (ITF)  that may apply to the construction or operation 
of a project, for a maximum of ten years;  and (e ) exemption from all taxes that may apply to the 
exploitation of natural resources.  The Law also au thorizes MIFIC to grant permits for the utilization 
of water resources to public or private natural or le gal persons in order to generate hydroelectricity 
of 1 to 5 MW in a specific basin and subject to  consultation with the local authorities concerned.
21 
56. Nicaragua has a wholesale electricity market, whic h started operating in 2000, with a total of 
nine participants, three of which are government-o wned producers that belonged to the former ENEL.  
This market mainly operates as a contracts market in  order to meet distributors' energy purchasing 
commitments, or as a secondary market in order to  balance out energy shortfalls and surpluses.  
Electricity is allocated by means of bilateral contracts that must be approved by INE and MEM.  The market's activities are managed by ENATREL through the CNDC.  Electricity is also imported if 
necessary to meet demand.
22  There are sizeable distributio n losses:  in 2011, these amounted 
to 729,294.5 MWh for the SIN plus the sta nd-alone systems (for the SIN alone, the losses 
were 709,785.8 MWh) or 20.6 per cent of net generati on.  The losses are mainly to be found in the 
distribution segment.  Only 8 per cent of the total are technical losses, the remainder are commercial 
losses caused by illegal connections.  The authorities ha ve indicated that the cost of these losses was 
estimated to be US$60 million in 2011.  The situa tion is even worse if transmission losses are taken 
                                                      
21 The water resources utilization permit is a right grante d to the holder by the State, through MIFIC, in 
order to generate hydroelectricity in a specific place and for a maximum period of 30 years, which may be 
renewed.  This permit, which may be assigned with MIFIC's approval, gives the holder the right to request the easements necessary to develop the activity in accord ance with the Law on th e Electricity Industry. 
22 According to data from INE, 9,927 MWh of elect ricity were imported in 2011, representing barely 
0.3 per cent of total supply. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 84 
  
 into account as these were equivalent to 2.14 per cent of supply in 2011.  It is estimated that one third 
of the losses are attributable to technical causes and two thirds to  non-technical causes (those relating 
to commercial losses include administrative errors in  invoicing, calibration of meters, fraud and theft). 
57. Nicaragua participates in the Central American  Regional Electricity Market, created in 1998 
under the Framework Agreement on the Central Ameri can Electricity Market, in which Costa Rica, 
El Salvador, Guatemala, Honduras and Panama also  take part.  The Agreement governs the Regional 
Electricity Market (MER) through a Central American regulatory body, called the Regional 
Electricity Interconnection Commission (CRIE), an d a Regional Operator (EOR).  The authorities 
have indicated that regional transactions are currently rare and only occur in exceptional 
circumstances.  They have also pointed out that at present Nicaragua has contingency generating 
capacity of 30 per cent. 
58. The CRIE regulates the regional market, has its ow n legal personality and public international 
law status.  It must comply with the Framework Ag reement and its protocols, and with its regulations 
and other supplementary instruments, ensure the de velopment and stability of the market, monitor its 
transparency and proper operation and promote competition among those involved in the market.  
MER operates on a permanent basis either through short-term exchanges or through medium- or 
long-term contracts among agents.  The latter may be companies engaged in the generation, 
transmission, distribution and marketing of electric ity, as well as large consumers.  Agents may freely 
buy and sell the electricity produced by any of the generators in the electricity schemes belonging to MER which are authorized as agents.  The EOR, in  coordination with national bodies, deals with the 
dispatching of electricity.  The company owning the network (EPR, also known commercially as the 
Owner of the Electricity Transmission Line S.A.) is  responsible for the mana gement, construction and 
maintenance of the transmission network.  The EPR was set up in 1998 and operates from San José, 
Costa Rica. 
(4) M
ANUFACTURING SECTOR  
59. The manufacturing sector contributed a relativel y larger share of GD P during the period under 
review, in part a reflection of the positive effect s of implementation of the CAFTA-DR, which gave 
exports of Nicaraguan manufactures easier acce ss to the United States market.  In 2010, 
the manufacturing sector accounted for 19.9 per cent of  Nicaragua's GDP, compared to 19.1 per cent 
in 2006.  As can be seen from Table IV.4, over 50 per cent (52.5 per cent in 2010) of this sector is 
composed of industries that meet the WTO's definition of agriculture.23 
Table IV.4 
Value-added in the manufacturing industry, 2006-2010 
(millions of 1994 córdobas ) 
Category 2006 2007 2008a 2009a 2010b 
Total industry 6,287.1  6,753.3  6,812.4  6,710.2  7,179.3  
Foodstuffs, beverages and tobacco 3, 243.5 3,470.0  3,573.4  3,623. 7  3,770.2  
  Meat and fish 539.0  594.0  634.0  680.3  733.3  
  Sugar 488.4  567.7  542.2  562.0  605.9  
  Dairy produce 401.6  475.6  531.2  558.0  610.4  
  Other foodstuffs of industrial origin 963.4 919.0  942.0  924.8  947.9  
  Beverages 804.9  866.9  880.5  857.1  830.2  
  Tobacco 46.3  46. 9  43.4  41.7  42.5 
Textiles, clothing and l eather 1,774.1  2, 020.4  2,000.2  1, 880.2  2,218.6  
                                                      
23 According to Article 2 of the WTO Agreement on  Agriculture, processed agricultural products are 
considered to be ag ricultural products. Nicaragua WT/TPR/S/274/Rev.1 
 Page 85 
 
 
 Category 2006 2007 2008a 2009a 2010b 
Wood products, furniture or the like 339.8  331.6  321.6  305.6  294.1  
Paper products, printed matter or the like 105.0  105.0  106.5  100.1  100.1  
Refined petroleum products 168.6  161.2  146.2  166.0  169.3  
Chemicals, plastic and rubber 200.3  213.0  209.8  212.9  212.9  
Non-metallic products, including gla ss 316.0  306.8  305. 5  272.5  262.6  
Basic and processed metal products  110.3  118.7  122.2  122.2  124.2  
Machinery and equipment 29.5  26.7  27.0  27.0  27.3 
a Preliminary figures. 
b Estimated figures. 
Source : Calculations based on data from the BCN. 
60. The average MFN tariff on manufactures (major division 3 of ISIC Rev.2) is 6.1 per cent, 
with rates ranging from 0 to 170 per cent.24  The average for non-agricultural products 
(WTO definition) is 5.2 per cent.  Tariffs are higher than the average for:  clothing (14.8 per cent);  textiles (8.1 per cent);  leather, rubber, footwear and travel articles (7.3 per cent);  wood, wood pulp, 
paper and furniture (6.2 per cent);  and transport e quipment (6.1 per cent).  Tariffs are lower than the 
average for:  mineral and metal products (3.4  per cent);  chemicals and photographic products 
(2.5 per cent);  non-electrical machinery (1.5 per cent);  and electrical machinery (3.6 per cent). 
61. Exports of manufactures amounted to US$1,11 1 million in 2011, of which US$879 million 
were food products, especially meat (US$427 milli on) and sugar (US$156 million).  The principal 
non-food manufactures exported by Nicaragua in 2011 were:  beverages and rum (US$29.5 million);  
chemicals (US$27.9 million);  leather and footwear  (US$18.6 million);  refined petroleum products 
(US$15.2 million);  and tobacco products (US$11.9 million). 
(5) S
ERVICES  
(i) Main features 
62. Services are the largest sector in terms of sh are of GDP (58.4 per cent in 2010) and jobs 
(55.8 per cent in 2010).25  Trade is the main activity in Nicaragua's services sector;  other important 
activities include:  government, transport and co mmunications services and personal and business 
services (Table IV.5).  Nicaragua is a net im porter of services, and had total exports of 
US$$471.5 million in 2010 with to tal imports of US$693.7 million, giving a deficit of some 
US$222.2 million.26 
Table IV.5 
Services and central government, 2010 
 Share of PIB 
(%) 
Services: 58.4 
  Personal and businessa  7.4 
  House owners 6.4 
  Transport and communications 8.0 
  Trade, hotels and restaurants 16.6 
  Financial intermediation and related services 3.4 
                                                      
24 The 170 per cent tariff applies to certain chicken cuts (HS 0207.13 and 0207.14). 
25 BCN (2012). 
26 Ibid. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 86 
  
  Share of PIB 
(%) 
  Electricity, water and sanitation 2.3 
  Construction  2.4 
Central government 6.4 
a Includes market-led education and health serv ices, community, business and domestic services. 
Source : Calculations based on data from the BCN . 
63. Nicaragua made commitments under the GATS in five of the 12 services sectors.  These are:  
business services;  communications services;  financial services;  tourism and travel-related services;  and transport services.
27  Most of Nicaragua's market access commitments were in modes 3 
(commercial presence) and 1 (cross-border supply), a nd it did not make any commitments (apart from 
horizontal commitments) under mode 4 (presence of na tural persons).  As regards the subsectors in 
which Nicaragua made commitments, these were in ge neral broader for communications and transport 
services, and less so for informatics and related ser vices.  Nicaragua did not make any commitments 
in subsectors such as legal services;  accounting services;  architectural services;  engineering 
services;  advertising services;  construction services;  distribution services, with the exception of 
energy;  educational services;  or social and health services. 
64. Nicaragua registered an exemption from MFN treatment for financial services, pursuant to 
Article II of the GATS, in order to comply with its CACM commitments.28  It took part in the 
WTO negotiations on financial services;  the Fi fth Protocol to the GATS came into force 
on 21 September 1999.29  Nicaragua remained an observe r at the WTO negotiations on basic 
telecommunications.  In August 2005, it submitte d its initial offer in the ongoing negotiations 
on services.30 
(ii) Financial services 
65. Financial intermediation and related services acc ounted for 3.4 per cent of Nicaragua's GDP 
in 2010, a level similar to that indicated for 2004 at  the time of the previous Review (3.3 per cent).  
In 2010, 3.1 per cent of the working population was employed in financial or insurance institutions.31  
Nicaragua's financial institutions performed relativel y satisfactorily during the global financial crisis 
because of their high levels of capitalization. 
66. The Supervisory Authority for Banks and Other Financial Institutions (SIBOIF), created by 
Law No. 125 of 1991, and currently governed by Law No. 316 of 1999, Law on the Supervisory Authority for Banks and Other Financial Institutio ns, is responsible for regulating the financial 
system.
32  SIBOIF regulates and/or supervises a nd grants licences for banks, non-banking 
finance companies, insurance companies, ge neral deposit warehouses, the Nicaraguan Stock 
Exchange (BVDN), securities excha nges and investment and securities fund management companies.  
SIBOIF is an autonomous State institution with full authority to acquire rights and make commitments.
33  It has four departments, each of which supervises its respective sphere of 
                                                      
27 WTO document GATS/SC/63, of 15 April 1994. 
28 WTO document GATS/EL/63, of 26 February 1998. 
29 WTO document WT/LET/309, of 30 September 1999. 
30 WTO document TN/S/O/NIC, of 8 August 2005. 
31 BCN (2012). 
32 Official Journal No. 196 of 14 October 1999. 
33 Online information from SIBOIF.  Viewed at:  http://www.siboif.gob.ni/rhistorica.php. Nicaragua WT/TPR/S/274/Rev.1 
 Page 87 
 
 
 competence:  the Banking Department, the Insuran ce Department, the Securities Department and the 
Warehouses Department. 
(a) Banking services 
67. Six commercial banks are currently operating in Nicaragua (Citibank of Nicaragua S.A. 
(CITIBANK);  Banco de América Central S.A. (BAC);   Banco de Finanzas S.A. (BDF);  Banco de la 
Producción S.A. (BANPRO);  Banco La Fise Bancentro, S.A. (BANCENTRO);  and Banco Procredit S.A. (PROCREDIT));  on e development bank (Banco de Fomento a la 
Producción (Banco PRODUZCAMOS));  and three finance companies (Financiera Arrendadora Centroamericana S.A. (FINARCA);  Financiera  Fama S.A. (FAMA);  and Financiera Finca 
Nicaragua, S.A. (FINCANICARAGUA)).  In Fe bruary 2012, one bank was being liquidated 
(Banco del Éxito, S.A. (BANEX)).  Six agencies of foreign banks are also conducting business, out of 
the eight authorized (Banco de Desarrollo Económico y Social de Venezuela (BANDES);  
Banco HSBC Salvadoreño, S.A.;  Banco Internaci onal de Costa Rica, S.A. (BICSA);  HSBC Bank 
(Panama), S.A.;  Laad Américas, N.V. (LAAD AM ERICAS);  and Towerbank International Inc. 
(TOWERBANK)).
34 
68. For the fourth quarter of 2011, the financia l system (banks and financial institutions) 
reported a total of 319 branches or windows, 31 more than in December 2010.  Of all the offices in existence, 44.8 per cent were in Mana gua.  On the same date, the financial system 
had 8,020 employees.  At the end of December 2011, commercial banks' total assets amounted to C$105,315.9 million, a 14.9 per cent increase as against December 2010.  At 
December 2011, 20.3 per cent of these assets were  investments and 49.4 per cent gross loans.  
Moreover, the bank PRODUZCAMOS had assets of C$3, 233.9 million.  At December 2011, the gross 
loans portfolio was C$53,296.8 million, a 15.3 per cent increase in comparison with December 2010.  The breakdown of loans by economic purpose at  the same date was as follows:  business 
activities, 35.4 per cent;  consumption, 22.1 per cent (personal, additional credit and credit cards);  
agricultural sector 13.2 per cent;  and industry, 12.9 per cent. 
69. In December 2011, there was a sufficient level of  capitalization of the financial system, with a 
capital adequacy ratio of 14.7 per cent compared to a minimum requirement of 10 per cent.  The financial system has sufficient funds to enable it to  cover up to 225 per cent of its equity.  The share 
of A-rated loans, the highest category, rose in 2011, from 85.7 per cent in December 2010 to 89.8 per cent in December 2011.  In the same mont h, only 4.2 per cent of the loan portfolio was in 
the three lowest categories (C, D and E), a percenta ge lower than the 9.1 per cent in December 2010.  
The default rate was 2.3 per cent in December 2011, as against 3 per cent in December 2010.  
The provision coverage for the gross portfolio was 3.5 per cent, while that for the non-performing 
portfolio was 156.1 per cent.  Return on assets (R OA) was 1.7 per cent in December 2011 (1 per cent 
in December 2010) and return on equity (ROE) was 18.1 per cent (10.8 per cent in December 2010).
35 
70. The main laws governing Nicaragua's banking system are:  the Organic Law of the 
Central Bank of Nicaragua (Law No. 732, Official Journal Nos. 148 and 149 of 5 and 6 August 2010, 
respectively);  the Law on the Supervisory Aut hority for Banks and Other Financial Institutions 
(Law No. 316, Official Journal No. 196 of 14 October 1999, and amendments thereto, Laws 
Nos. 552, 564 and 576);  the Law on the Deposit Guar antee Scheme (Law No. 551, Official Journal 
No. 168 of 30 August 2005, and the amendment th ereto, Law No. 563);  and the General Law on 
                                                      
34 Online information from SIBOIF.  Viewed at:  http://www.superintendencia.gob.ni/index.php? 
cont=temp&id=8&seccion=1. 
35 SIBOIF (2012). WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 88 
  
 Banks, Non-Banking Financial Ins titutions and Financial Groups (L aw No. 561, Official Journal 
No. 232 of 30 November 2005).  Other important la ws and regulations are the Law to Promote and 
Regulate the Use of Credit Cards (Law No. 515, Official Journal No. 11 of 17 January 2005);  the Law on the Capital Market (Law No. 587, O fficial Journal No. 222 of 15 November 2006);  
and the Financial Regulations for the Centra l Bank of Nicaragua (BCN) with amendments 
incorporated (Financial Regulations published in  Official Journal Nos. 159, 160, 161 and 162 
of 21, 22, 23 and 24 August 2007, respectively).  Other rules on the financial sector include Law No. 733, General Law on Insurance, Reinsuranc e and Bonds, published in  Official Journal 
Nos. 162, 163 and 164, of 25, 26 and 27 August 2010, respectively;  and Law No. 734, Law on 
General Deposit Warehouses, published in Official Journal Nos. 201 and 202 
of 21 and 22 October 2010, respectively. 
71. Law No. 561, the General Law on Banks, Non-Ba nking Financial Institu tions and Financial 
Groups (General Banking Law) has been in force si nce the end of 2005.  Its main objectives include 
providing a proper legal framework that gives Nicar aguan and foreign deposito rs and investors legal 
certainty.  The Law was designed to facilitate ri sk-based monitoring by SIBOIF, establish the legal 
framework for the implementation of Basel II, and concentrate SIBOIF's resources on supervision of 
banks and finance companies.  The Law introd uced more stringent solvency and integrity 
requirements for entry into banking and redefined the solvency requirements in order to provide better 
coverage against any occurrence of risks, including  domestic risk assets (see below).  Under this 
General Banking Law and the Law on the Deposit  Guarantee Scheme, intervention and liquidation 
responsibilities were transferred to FOGADE.
36  The General Banking Law also contains provisions 
on the organization of financial groups and their consolidated supervision. 
72. During the period under review, rules were in troduced to reform the operations of the 
BCN, one of the main ones being the Organic Law of the Central Bank of Nicaragua, Law No. 732 
of 14 July 2010, published in Official Journal Nos.  148 and 149 of 5 and 6 August 2010, respectively. 
73. According to Law No. 551, savings deposits are guaranteed for up to US$10,000 
per depositor, including the capital and the interest  paid up to the date of commencement of the 
reimbursement procedure, through the Deposit Guarantee Scheme for Financial Institutions, 
administered by FOGADE.37  The latter was set up by Law No. 371, Law Guaranteeing Deposits in 
Financial System Institutions, published in Official Journal No. 21 of 30 Janua ry 2001, then repealed 
by Law No. 551, Law on the Deposit Guarantee Scheme, published in Official Journal No. 168 
of 30 August 2005, and amended by Law No. 563, Law Amending Law No. 551, published in 
Official Journal No. 229 of 25 November 2005.  F OGADE is a public law entity with its own legal 
status and fully operational, financial and administ rative autonomy, set up for an indefinite period, 
and is the exclusive guarantor of de posits by the public in the bodies belonging to the Fund.  Its task is 
to help to maintain stability and confidence in Ni caragua's financial system, in collaboration with 
other institutions involved in financial security su ch as the BCN and SIBOIF.  FOGADE is a member 
of the International Association of Deposit Insurers  (IADI), domiciled at the Bank for International 
Settlements in Basel, Switzerland.38 
                                                      
36 Online information from SIBOIF.  View ed at:  http://www.siboif.gob.ni/.php. 
37 Deposits by other financial institutions are not covered by the guarantee provided by this Law:  
pension fund managers, stock exchanges, securities exchanges and any other institutional investors;  government 
sector institutions;  legal companies or entities belonging  to the same economic gro up as the entity concerned, 
inter alia.  
38 Online information from FOGADE.  Viewed at:  http://www.fogade.gob/ni/index.php?option=com_ 
content&view=article&id=86&Itemid=2. Nicaragua WT/TPR/S/274/Rev.1 
 Page 89 
 
 
 74. It is FOGADE's task to guarantee the refund of deposits made by natura l and/or legal persons, 
and to intervene and supervise the compulsory li quidation of institutions be longing to the Deposit 
Guarantee Scheme.  It is for the most part fina nced by the premiums paid by banks and other 
institutions belonging to the Scheme.  When they ar e set up, financial institutions have to pay an 
initial amount corresponding to 0.5 per cent of the minimum registered capital prescribed in the 
General Banking Law.  In addition, every month they must pay the instalment of an annual premium.  
The basis used to determine the premium is the av erage monthly balance of the deposits at the close 
of the preceding financial period as shown on the liab ilities side of the balance sheet of each entity 
belonging to the Deposit Guarantee Scheme, and a fi xed rate of 0.25 per cent is applied on this 
amount, as provided by Law No. 563.  A differential amount ranging from 0 to 10 per cent is added to 
this premium depending on the risk level of  each institution, as determined by SIBOIF.39  
FOGADE also obtains resources by issuing FOGADE bonds on capital markets;  these bonds are guaranteed by the State, pursuant to Law No. 477,  General Law on Governme nt Debt, published in 
Official Journal No. 236 of 12 December 2003. 
75. The authorities consider that the reforms introduced by the General Banking Law and 
amendments thereto have reinforced the efforts de ployed by the Supervisory Authority for Banks to 
supervise, inspect, monitor and control bank s and non-banking financial institutions.  
SIBOIF's supervision involves a risk-based methodol ogy, continuously evaluating risk management 
in financial institutions.  This methodology inco rporates the recommendations of the Basel Committee 
on Banking Supervision, and its basic objective is to  determine the real financial situation and risk 
level in the financial entities regulated.  Superv ision focuses on auditing of the accounts and on the 
detection, evaluation and determination of the risks faced by the financial in stitutions supervised and 
their capacity to deal with them in an efficient manner.  Furthermore, supervision has concentrated 
above all on monitoring the situation and the financ ial status of the institutions and sounding timely 
warnings, using the tool provided by th e integrated risk assessment methodology. 
76. As regards consolidated supervision, the aim is to avoid double or multiple use of capital, 
as well as the risk of contagion among those bel onging to a particular fi nancial group.  Another 
objective is to ensure that all risks facing a fina ncial group, irrespective of where they occur, are 
assessed and controlled on a global basis so as to protect the group's integrity.  The authorities have 
indicated that consolidated and cross-border superv ision is being carried out at the regional level, 
with the conclusion of agreements or memo randums of understanding a nd the exchange of 
information among countries belonging to the Central American Council of Superintendents of Banks, 
Insurance and Other Financial Institutions (CCSBSO) at  the bilateral level and, more recently, at the 
multilateral level. 
77. The concern to maintain and increase depositors' confidence in the security of the funds they 
deposit with financial institutions led to chang es in the Law on the Deposit Guarantee Scheme, 
contained in Law No. 551 of 30 August 2005 and Law No. 563 of 25 November 2005.  The former, 
inter alia , strengthened the Asset Management and Liqui dation Unit and the latter introduced changes 
in the responsibilities of FOGADE's Governing Board. 
78. The Banking Law provides that any bank established in Nicaragua must be set up and operate 
as a public limited company.  Anyone intending to se t up a bank must make an application to SIBOIF, 
accompanied by an economic and financial feasib ility study that must address the market, the 
specifications of the institution, the planned activ ity and the conditions under which it will take place 
according to various contingency scenarios.  A depo sit amounting to 1 per cent of the total minimum 
                                                      
39 For further details on how this premium is calcu lated, see:  Resoluti on CD-FOGADE-I-ENE-2011, 
of 31 January 2011.  Viewed at:  http://www.f ogade.gob.ni/images/stories/2011/nrdr-2011.pdf. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 90 
  
 capital must also be made in SIBOIF's current account  for the application to go forward.  This deposit 
is refunded once the bank starts to operate, although if the application is rejected, the authorities 
keep 10 per cent of the amount of the deposit and, if  the application is withdrawn, 50 per cent of the 
deposit is retained.  In addition, each shareholde r owning 5 per cent or more of the capital must 
comply with certain solvency (possess consolid ated net equity corresponding to the planned 
investment) and integrity requirements.  The Superi ntendent must take a decision on the application 
within 120 days of its submission. 
79. In order to start up activities, banks must ha ve minimum registered capital fully paid up 
in cash;  80 per cent of this must be in the form  of a demand deposit with the BCN.  Foreign banks 
may set up a branch or become shareholders in banks  established or to be established in Nicaragua in 
order to conduct business there.  To establish a bran ch of a foreign bank in Nicaragua, it must be 
certified that the parent bank has been legally constitut ed in its country of origin and that it is legally 
authorized to set up branches in Nicaragua, in acco rdance with its articles of incorporation and the 
laws in its own country.  General balance sheets also  have to be submitted, together with profit and 
loss accounts and annual reports of the applicant ba nk for the previous five years.  Foreign banks 
and financial institutions may also set up agenci es in Nicaragua subject to authorization by 
the Superintendent. 
80. Early voluntary dissolution of a bank requires prior authorization by the Superintendent 
of Banks.  Mergers of financial institutions must also  be authorized by the Superintendent, who has to 
take a decision within 60 days of submission of th e relevant application.  Any purchase of shares 
corresponding to 5 per cent or more of the equity must be authorized by SIBOIF;  authorizations are 
only refused if the solvency and integrity require ments specified in the General Banking Law are not 
met.  The purchase of shares valued at less than 5 per cent of the equity does not have to be 
authorized, but must be notified to SIBOIF. 
81. There are also restrictions on asset transactions with related parties.40  The amount of asset 
transactions conducted by a bank with  all its related parties, including loans granted by the bank, the 
purchase of loan and bond portfolios, and deposits a nd investments of any type by the institution, may 
not exceed 30 per cent of the basis for calculation of the capital. 
82. The registered capital of a Nicaraguan bank or  the branch of a foreign bank must be a 
minimum of C$270 million, in the form of registered  and non-convertible bearer shares.  This amount 
is updated at least every two years.  The minimu m capital requirement for finance companies is 
C$50 million.  Banks are not allowed to invest in the capital of non-banking companies or special 
financial entities. 
83. The financial solvency requirements imposed on banks are fairly strict and go beyond the 
minimum Basel requirements.  The legislation re quires that banks maintain the capital required, 
meaning the ratio between the basis for calculation of the capital and credit and notional domestic risk 
assets, of at least 10 per cent.41  Notional risk assets are calculated according to the market risks and 
                                                      
40 The law defines related parties as shareholders which, separately or jointly with other natural 
or legal persons with which they have direct or indirect important links, own 5 per cent or more of the paid-up capital of the bank, and members of its bo ard of directors, and their relations. 
41 The basis for calculation means the total of the primary and secondary capital.  Primary capital is 
made up of:  (a) ordinary paid-up capital;  (b) permanent preferential paid-up capital with a non-cumulative dividend clause;  (c) donated capital not  to be refunded;  (d) share offering premium;  (e) sums received as a 
result of increases in capital;  (f) legal reserves;  and (g) minority shareholdings (for consolidated financial 
statements).  The book value of the goodwill purchased is deducted from the former.  Secondary capital is Nicaragua WT/TPR/S/274/Rev.1 
 Page 91 
 
 
 the operational risks.  The legislation empowers the Superintendent to increase the capital required for 
a particular institution, by means of a reasoned deci sion, if the capital by operational risk cannot be 
applied for methodological reasons even though the institu tion is exposed to this risk or if a particular 
bank or institution is highly exposed to interest ra te risks, risks to its reputation or any other risk 
specific to the institution.  The ceiling which the Superintendent may impose for the capital required 
if the latter risks apply is two percentage points above the minimum required, in other 
words, 12 per cent. 
84. Resolution No.  CD-SIBOIF-651-1-OCTU27-2010 of 27 October 2010, which contains the 
rules on capital adequacy, implements the General Banking Law as far as credit and notional risks are 
concerned.42  The Resolution, together with its ame ndments, provides that risk assets shall be 
weighted according to the following formula:  (i) 0 per cent weighting of their value:  cash, legal 
reserve deposits and other deposits with the BCN , as well as payable cash balances and locally 
transferred remittances;  investment in securities issued in Nicaraguan currency or guaranteed by the 
Government or by the BCN;  loans granted in Nicaraguan currency to the Government or the BCN or guaranteed by them;  investment in securities issued  by multilateral loan organizations;  balances of 
loans and third party cont ingent operations, guaranteed by securiti es issued by the Government or the 
BCN in Nicaraguan currency;  investment in securities issued by third parties, guaranteed by securities issued by the Government or the BCN in Nicaraguan currency and balances of loans and 
contingent operations guaranteed by  deposits with the same financia l institution and endorsed to it;  
(ii) weighting of 20 per cent:  investment in securities in foreign currency or guaranteed by the 
Government or the BCN;  loans granted in fore ign currency to the Government or the BCN;  
balances of loans and contingent operations by th ird parties guaranteed by securities issued by the 
Government or the BCN in foreign currency;  documentary letters of credit;  (iii) weighting 
of 50 per cent:  housing mortgages in Nicaraguan curre ncy;  (iv) weighting of 0 to 150 per cent:  
assets (loans, deposits and investment), endorsemen ts, bills of exchange and other contingent 
operations net of provisions, depreciation or amor tization, with Nicaragua n or foreign financial 
institutions;  loans and third-party contingent operations guaranteed by endorsements, bills of 
exchange and other contingent operations by fore ign financial institutions according to the issuer's 
long-term risk rating;  investment in securities is sued by other States or foreign central banks in 
accordance with the long-term sovereign risk rating of  the issuer by the major risk rating agencies;  
(v) weighting of 60 per cent:  housing mortgages granted in foreign currency for amounts exceeding 
US$25,000 (50 per cent for the others);  and (vi) wei ghting of 125 per cent of their value:  consumer 
credits granted in foreign currency. 
85. Banks, including branches of foreign banks, must  set aside capital reserves of 15 per cent of 
their net profits.  Each time that the reserves of a bank or branch of a foreign bank reach an amount 
equivalent to the paid-up or obligated registered capital established, as applicable, 40 per cent of these 
capital reserves are automatically converted into paid -up or obligated register ed capital, as applicable, 
                                                                                                                                                                     
composed of:  (a) donations and other non-capitalized sums;  (b) adjustments as a result of share revaluation;  
(c) other monetary reserves;  (d) aggregate balances for previous periods;  (e) current balances;  (f) secondary 
debt and hybrid capital instruments;  and (g) generic provisions.  Any outstanding adjustment and the book 
value of shares and bonds in subsidiary or associated entities are deducted from the capital calculation basis.  The share of secondary capital in th e calculation basis may not exceed 100 per cent of the primary capital.  
Likewise, the share of secondary debt in the second ary capital may not exceed 50  per cent of the primary 
capital.  The total of the secondary capital and any othe r subdivision of capital required to calculate capital 
adequacy may under no circumstances exce ed 100 per cent of the primary capital. 
42 Amended by Resolution CD-SIBOIF-662-1-ENE26-2011 of 26 January 2011, and 
Resolution CD-SIBOIF-665-4-FEB17-2011, of 17 February 2011. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 92 
  
 and for banks, new shares are issued for distribution to existing shareholders in proportion to the 
paid-up capital. 
(b) Insurance services 
86. In 2010, Nicaragua's insurance market took in  C$2,478 million in net premiums (9.9 per 
cent more than in 2009), partly because of the incr ease in the number of life, fire and compulsory 
automobile insurance policies.  In 2011, earni ngs from net premiums were C$2,765 million.  
In April 2012, five insurance companies were  operating in Nicaragua:  Assa Compañía de 
Seguros, S.A. (ASSA);  Instituto Nicaragüense de Seguros y Reaseguros (INISER);  Mapfre Seguros 
Nicaragua, S.A. (MAPFRE);  Seguros América S. A. (AMERICA);  and Seguros Lafise, S.A. 
(LAFISE).  There were also 58 registered insura nce brokers and 30 independe nt insurance brokers.  
Contrary to what was stated in the previous Report, INISER no longer dominates the market.  
During the first nine months of 2011, INISER 's share of total earnings from premiums 
was 30 per cent, AMERICA's share was 27.7 per cent, while ASSA had 17.7 per cent, LAFISE 15.6 per cent and MAPFRE 9 per cent. 
87. Since 1996, when the public sector monopoly ende d, the insurance market has been open to 
competition, including the establishment of foreig n companies;  private insurance companies may 
now offer insurance, reinsurance and capital investment services.
43  During the period under review, 
insurance legislation was amended, with the adop tion of Law No. 733 of 15 July 2010, or General 
Law on Insurance, Reinsurance and Bonds, publishe d in Official Journal Nos. 162, 163 and 164 
of 25, 26 and 27 August 2010, respectively.  Th is Law replaced the previous General Law on 
Insurance Institutions, Decree No. 1.727 of 1970, am ended by Law No. 227 of 1996.  Pursuant to the 
General Insurance Law, an authorization from the S upervisory Authority is required before setting up 
and operating as an insurance, reinsurance or bonds institution or company.  Any insurance institution 
or company set up in Nicaragua must be establishe d and operate as a public limited company with a 
single corporate purpose, in other words, it mu st be devoted exclusively to insurance. 
88. Insurance and reinsurance, as well as insurance auxiliaries and intermediaries, are regulated 
by SIBOIF and subject to its supervision.  Ther e are minimum compulsory requirements on registered 
capital for insurance companies, de pending on the type of activity.  For companies which only offer 
insurance for property or compulso ry insurance or those offering personal insurance (life, personal 
accident, health, social or retirement insurance), the requirement is C$40 million.  For companies 
which offer property or compulsory insurance, as well as life insurance, re tirement and pensions 
insurance, the amount is C$80 million.  If they  offer bonds, the requirement is C$10 million.  
For companies offering reinsurance or refinanci ng of bonds, the minimum capital is equivalent 
to 1.5 times the amounts fixed for each of the areas in which they operate.  These amounts have to be 
updated at intervals of not more than two years or whenever a company is at risk. 
89. Branches of foreign insurance companies estab lished in Nicaragua do not need to have a 
board of directors resident in Nicaragua.  They  can be managed and legally represented by an 
authorized manager, resident in the country.  If it is considered necessary, the Superintendent may 
require the presence of the employee of the foreign insurance company responsible for supervising the 
branch's activities or of a represen tative with the necessary authority. 
90. Insurance companies may not on ly offer insurance, reinsurance and bonds, but may also 
manage the sums received in the form of profits or  compensation entrusted to them by those insured 
                                                      
43 Article 14 of the Additional Provisions amending the General Law on Insurance Institutions, adopted 
on 4 August 1996, repealed Article 5 of Decree No. 107,  which reserved insurance exclusively for the State. Nicaragua WT/TPR/S/274/Rev.1 
 Page 93 
 
 
 or their beneficiaries and the reserves retained fro m entities in Nicaragua or abroad for insurance, 
reinsurance or bond transactions.  They may also  invest abroad and grant loans or credit. 
91. Investment operations by insurance companies with  related parties is subject to restrictions.44  
The amount of investment operations conducted by an insurance company with all its related parties, 
whether separately or jointly with other natural or legal persons which make up the same unit of 
interest with it because of the direct or indirect ex istence of important links or frequent assumption of 
shared risks, may not exceed 30 per cent of  the basis for calculation of the capital.45  There is also 
a 30 per cent limitation on loans to the same unrelated  natural or legal person, taken separately or 
jointly with other natural or legal persons whic h together make up the same unit of interest. 
92. The Law provides that the rates for insurance, reinsurance and bonds must be sufficient to 
cover the risks they are intended to insure and they  are reviewed and approved by the Superintendent 
in conformity with the technical criteria applicable. 
93. If an insurance company wants to enter into reinsurance contracts,  either directly or through a 
reinsurance broker, it must provide SIBOIF with information concerning the foreign reinsurer.  
Nicaraguan insurance companies, as well as bran ches of foreign insurance companies operating 
legally in Nicaragua, may only use the services of rein surers or reinsurance brokers abroad if these are 
listed in SIBOIF's register.  Reinsurers domiciled in Nicaragua must forward to SIBOIF the reinsurance contracts issued and the retrocession c ontracts concluded, which must be in accordance 
with market terms.  The Law allows insurance co mpanies to enter into re insurance contracts with 
reinsurers of which they are branches or subsidia ries or which belong to the same financial group. 
94. Insurance intermediaries and auxiliaries are subject to supervision by SIBOIF, whose 
authorization is required in order to operate in Nicar agua and this may not be assigned.  They must be 
registered with SIBOIF and update their registration every three years.  The regulatory framework for 
insurance intermediaries was updated in May 2012. 
(c) Stock market 
95. Law No. 587, the Law on the Capital Market, published in Official Journal No. 222 
of 15 November 2006, regulates stock markets, the na tural or legal persons directly or indirectly 
involved therein, the deeds or contracts related to su ch stock markets and the sec urities traded thereon.  
This Law provides that SIBOIF shall be responsible  for ensuring the transparency of stock markets, 
the proper determination of prices on the market, pr otection of investors and the dissemination of the 
                                                      
44 Pursuant to the General Law on Insurance Institutions, parties related to an insurance company are 
shareholders which, either separately or jointly with ot her natural or legal persons with which they have direct 
or indirect important links, own 5 per cent or more of the compulsory paid-up registered capital of the insurance company;  members of its board of directors;  spouses or family members who are blood relations to 
the second degree of natural persons covered by any of the preceding cases;  as well as legal persons belonging 
to the financial group to which the insurance company belongs, or with which the insurance company has direct or indirect important links (if it directly or indirectly has shares in another legal person amounting to 33 per cent 
or more of its compulsory registered capital or has voting rights equivalent to or above this percentage). 
45 The following are some of the types of investment operation that are subject to this restriction:  loans 
granted by the company;  the purchas e of loan portfolios, insurance and bonds issued by related parties;  
deposits and investment of any type by the company, including repo operations, that do not comply with the 
rules prescribed by the board of directors. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 94 
  
 information needed to ensure  that these aims are achieved.46  Pursuant to this Law, only those 
authorized by SIBOIF may offer securities to the public in Nicaragua. 
96. All natural or legal persons directly or indi rectly involved in stock markets, with the 
exception of investors, as well as the deeds and co ntracts concerning these markets and the issue of 
securities to be offered to the public, must be listed  in SIBOIF's Securities Register.  There are no 
restrictions as to nationality.  The informati on in the Register is available to the public. 
97. The Law empowers SIBOIF to take all the m easures needed for full compliance with its 
regulatory, supervisory and control responsibilities.   In addition, it may impose precautionary 
measures or sanctions on bodies controlled by it.  Th e draft articles of incorporation and regulations 
for stock exchanges, clearing houses or liquidati on companies, securities central depositories, 
investment fund management and securitization comp anies and risk rating agencies must be approved 
by SIBOIF before they can operate.  SIBOIF mu st also rule on the policies adopted by other 
institutions that have an impact on capital ma rkets and coordinate these with the Executive. 
98. Pursuant to the Law, only securities issued in ser ies and authorized by the Superintendent in 
accordance with the regulations adopted by SIBOIF's  Governing Board may be offered to the public 
on the primary market.  The issue of government securities and those of the BCN are an exception to 
this rule.  The issue of individual debt securities by  bodies subject to SIBOIF control may also be sold 
to the public, provided they are registered.  The Law stipulates that secondary  securities markets shall 
be organized by stock exchanges, subject to aut horization by SIBOIF's Governing Board, and that 
only securities listed in SIBOIF's Securities Register may be traded and sold to the public thereon.  
Transactions in stock or securities not listed in the Register are allowed, but they may not be sold to 
the public. 
99. Stock exchanges must be set up as public limited  companies, subject to authorization by 
SIBOIF's Governing Board.  Their registered capita l must be in the form of common or registered 
stock, subscribed and paid up.  A broker may not individually hold more than 20 per cent of the 
company's total equity.  Stock exchanges must always have available minimum initial capital of 
C$10 million, subscribed and paid in cash, an am ount that may be increased by SIBOIF's Governing 
Board or revised according to chang es in the official exchange rate. 
100. Stock exchanges may adopt the form of manageme nt most suitable for them, but must have a 
board of directors with at least five directors w ho are owners and a disciplinary committee responsible 
for applying the disciplinary measures provided in th e rules of procedure for each stock exchange to 
securities exchanges and brokers.  They must set up  a legal reserve fund with 15 per cent of their 
annual net profits;  this requirement no longer applies when the fund reaches 40 per cent of the 
registered capital subscribed and paid up.  The commission paid to securities exchanges and 
stockbrokers by their clients is freely determin ed, but stock exchanges may recommend minimum and 
maximum levels. 
101. Transactions on stock exchanges must be proposed  and carried out by securities exchanges.  
These must be legal persons, authorized by the re levant stock exchange, in accordance with the 
requirements specified in order to be a member of the exchange.  Securities exchanges must be set up 
as public limited companies, with registered non-c onvertible bearer shares and minimum capital of 
C$2.5 million.  Their corporate purpose must be conf ined to the activities authorized by the Law on 
the Capital Market.  They may buy and sell securitie s on the exchange on behalf of their clients or on 
                                                      
46 Online information from SIBOIF.  Viewed at:  http://www.superintendencia.gob.ni/index.php?cont= 
contenido_web&id=1&seccion=2. Nicaragua WT/TPR/S/274/Rev.1 
 Page 95 
 
 
 their own behalf, and also obtain and give their clie nts credit directly related to the buying and selling 
of securities. 
102. The Law on the Capital Market also regulates investment funds, which must be managed by 
investment fund management companies.  These mu st be public limited companies or branches of 
foreign firms whose sole purpose is to provide inv estment fund management services, and they must 
have minimum paid-up capital of C$2 million.  The management companies may only receive 
commission for managing investment funds and this must be spelled out in the fund's prospectus.  
It may be paid according to the amount invested, the return on the fund or both variables.  
Management companies may also require investor s to pay a commission upon entering or leaving the 
fund, determined according to the funds paid in  or withdrawn.  Investment fund management 
companies may not engage in the following:  invest their own capital in the funds they manage or in 
securities issued by them using resources from the i nvestment funds they manage;  grant credit using 
the fund's resources;  and guarantee a specified return to investors. 
103. At 31 December 2011, there were five securiti es exchanges:  INVERCASA, which had a total 
share of 30.9 per cent of the primary and sec ondary markets and of repos;  LAFISEVALORES, 
with 25.8 per cent;  PROVALORES, with 24.6 per cent;  INVERNIC, with 13.1 per cent;  
and BAC Valores, with 5.6 per cent. 
104. During the period under review, the Stock Exchange of Nicaragua (BVDN), set up in 1993, 
grew rapidly up until 2010 and expa nded its range of products in bot h the primary and the secondary 
markets, options and repos.47  The BVDN is a privately owned co rporation founded by the majority of 
the private and government-owned banks and by  business groupings representing various economic 
sectors in Nicaragua.  It registers and authorizes the issue of securities to be traded through authorized 
securities exchanges, develops mechanisms for tr ading securities, supervises the conduct of securities 
transactions ensuring that they achieve their pur pose, provides information on trading on the BVDN 
and promotes Nicaragua's stock market.  All tradi ng is through an electronic trading system to which 
all securities exchanges are connected through a computer network administered by the BVDN.48 
105. Specialized services such as custody, manageme nt and settlement of securities, are provided 
by the Nicaraguan Securities Office (CENIVAL), a financial institution in the form of a privately owned corporation, founded by the BVDN in 1997 for this purpose,  and supervised by SIBOIF.  
CENIVAL has developed its own computer system s, operational mechanisms and regulations, and 
provides securities deposit, management and settlement  using electronic systems.  It currently has 
agreements with Central American securiti es offices in Panama (LATINCLEAR), Costa Rica 
(CEVAL) and El Salvador (CEDEVAL). 
                                                      
47 On the primary market, on which stock and securitie s are traded for the first time, the issuer trades 
through its securities exchange.  Government securities are issued through auctions by the BCN;  if such 
securities are bought as a result of an order from a c lient, the securities exchange buying the security must 
register this transaction with the Nicaraguan Stock Mark et Scheme.  Stock or securities in the private sector 
traded on the BVDN are issu ed directly through the latter and entered into the trading scheme by the securities 
exchange representing the issuer.  Th ese securities may then be sold on the secondary market, directly on the 
BVDN.  Options on the BVDN are in general purchase  options for securities traded on the BVDN and are 
issued simultaneously, but independently of a cash-based trading contract.  Repo transactions are stock market 
contracts in which the borrower (seeking cash) sells securities to the lender (investor) at a fixed price and the 
latter undertakes to transfer ownership of the securities to  the borrower at the expiry of the time limit determined 
against payment of the price agreed. 
48 Online information from the BVDN.  Viewed a t:  http://www.bolsanic.com/index.php?option=com_ 
content&view=article&id=33&Itemid=27. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 96 
  
 106. Procedures for the settlement of stock exchange transactions are covered mainly by the rules 
of procedure of the BVDN and CENIVAL, in the regulations on repos, assignment of repos, and options in BVDN Circular No. 4/98.  For the sec ondary market, repos and options, prior to trading on 
the BVDN the securities exchange making the sale deposits the securities with CENIVAL, in 
accordance with established procedures.  No secur ity not deposited in advance with CENIVAL may 
be traded on the stock exchange. 
107. In 2011, the amount traded on the BVDN was C$14,325.3 million (around 
US$637.5 million), 23.3 per cent more than in 2004.
49  This figure is 19 per cent lower than that 
recorded in 2010, but 30 per cent above th e amount of transactions recorded in 2009.50 
(iii) Telecommunications 
108. Since the previous Review in 2006, Nicaragua 's telecommunications network has continued 
to grow, notably the mobile telephony market, which saw the number of subscribers increase 
from 1.1 million in 2005, to 3.9 million in 2010, es decir 67.2 users per 100 inhabitants.  Of these, 
close to 95 per cent used a prepayment method.51  In 2009, there were some 252,000 basic (fixed) 
telephony subscribers, compared to 227,000 in 20 05, equivalent to a density of 4.8 subscribers 
per 100 inhabitants.  In 2008, 9,000 public telephon es were operating (Table IV.6).  Communications 
services (telecommunications and postal services) accounted for 3.8 per cent of GDP in 2010. 
Table IV.6 
Principal telecommunications sector indicators, 2006-2011 
Year Mobile 
telephony Mobile 
telephony 
density Traditional 
telephones Traditional 
telephone 
density Internet 
connections Internet 
connection 
density Population 
projection 
2006 1,617,319 29.3 247,862 4.5 23,624 0.4 5,521,247 
2007 2,503,051 44.8 257,588 4.6 40,597 0.7 5,593,023 
2008 3,108,854 54.9 254,438 4.5 49,833 0.9 5,665,733 
2009 3,344,563 58.3 254,686 4.4 102,701 1.8 5,739,387 
2010 3,962,247 68.1 258,325 4.4 118,363 2.0 5,815,526 
2011 4,823,534 81.9 287,618 4.9 143,400 2.4 5,886,475 
 
Source:  Information provided by the authorities. 
 
109. At present (since 2006) there are two fixed-te lephony operators:  Empresa Nicaragüense de 
Telecomunicaciones (ENITEL) S.A., in which Grupo Te lmex has a share, and Telefonía Celular de 
Nicaragua, S.A. (TCN).  Each has been given a c oncession for 20 years, the first of which will expire 
in 2022 and the second in 2026.  These two compani es provide mobile telephony services and have 
two thirds and one third of the market, respectively.   They were given 20-year licences, which expire 
the same year as the concessions fo r the basic service.  In 2009, an invitation to tender was issued for 
a third basic telephony concession combined with an Internet operator's licence.  The contract was 
awarded to Sociedad Yota S.A., which was given the corresponding authorizations.52  Although this 
                                                      
49 In 2005, 49.9 per cent of the volume traded on the BVDN was in United States dollars and 
50.1 per cent in córdobas (Supervisory Authority for Banks and other Financial Institutions, 2006). 
50 BVDN (2012) 
51 Online information from TELCOR.  Viewed  at:  http://www.tel cor.gob.ni/Desplegar. 
asp?PAG_ID=47. 
52 Administrative Decision TELCOR No. 508-200 9 of 30 September 2009.  Viewed at:  
http://www.telcor. gob.ni/Biblioteca.asp?Accion= VerRecurso&REC_ID=488. Nicaragua WT/TPR/S/274/Rev.1 
 Page 97 
 
 
 concession was granted for 20 years, by September 2012 Yota had not started to provide the service 
for reasons internal to the company and decr easing demand for fixed telephone lines.  There are 
also 19 companies providing Internet access services , for which they have been given licences valid 
for ten years.53 
110. The Nicaraguan Institute of Telecommunicati ons and Postal Services (TELCOR) was created 
by Decree-Law No. 1.053 of 5 June 1982 and is  the regulatory body for telecommunications and 
postal services.  It is an autonomous body under the supervision of the Office of the President of the 
Republic and its tasks are to regulate, plan, s upervise, apply and monitor compliance with the 
legislation and rules governing telecommunications and postal services.  It has the powers of a 
ministry and a regulatory entity and may propose le gislative changes to the President.  TELCOR is 
also responsible for managing and regulating the radio spectrum, and for granting all concessions, 
licences, permits or registration certificates to companies interesting in supplying telecommunications or postal services or utilizing the radio spectrum.
54  It is the authority responsible for ensuring 
compliance with the legislation on telecommunicati ons and postal services and with the quality and 
expansion targets for the services authorized.  It does this by means of various supervisory 
mechanisms.55 
111. Article 105 of Nicaragua's Constitution defin es communications as a basic public service.  
Pursuant to the Constitution, the State has the oblig ation to promote, facilitate and regulate the supply 
of services providing communications, without reserving to itself the supply of such services but rather encouraging participation by the private sect or and acting, for example, to guarantee universal 
access to such services.  The Cons titution also specifies that the State shall ensure that the mass media 
do not become subject to foreign interests or the economic monopoly of a particular group and that 
the law shall regulate this question. 
112. The process of opening up Nicaragua's telecommunications market has been gradual.  
In 1995, two laws were enacted that began to introduce more market principles and laid down the 
legal basis for the eventual termination of the government monopoly that previously existed.
56  
TELCOR was given regulatory responsibilities, and the supply of the telecommunications services 
provided by the State through TELCOR (for example,  basic telephony) was entrusted to ENITEL.  
Subsequently in 1999, restrictions on foreign inve stment in the sector were lifted (see below).57  
Pursuant to Law No. 210 of 7 December 1995 and amendments thereto58, 40 per cent of 
ENITEL's shares could be sold to a private compan y.  Privatization occurred in 2001 and the Law 
gave ENITEL an exclusive concession to provide basic telephony services until April 2005.  
The telecommunications market was finally opene d up fully when this exclusivity clause was 
terminated and basic telephony services, including local  telephony (calls within the same department), 
                                                      
53 Online information from TELCOR.  Viewed at:  http://www.telcor.gob.ni/Operadores.asp?Accion 
=ListarPorServicio. 
54 Online information fr om TELCOR.  Viewed at:  http:// www.telcor.gob.ni/Desplegar.asp? 
PAG_ID=7. 
55 Online information from TELCOR.  Viewed at:  h ttp://www.telcor.gob.ni/. 
56 Law No. 200, General Law on Telecommunications and Postal Services;  Law No. 210, Law on 
Incorporating Private Parties in the Operation and Expansion of Public Telecommunications Services. 
57 Law No. 326 of 17 December 1999  provides that licences may be granted to Nicaraguan or foreign 
natural or legal persons in accordance with the Law's provisions. 
58 These include the following:  Law No. 293, Law Amending Law No. 210, Law on Incorporating 
Private Parties in the Operation and Expansion of Public Telecommunications Services, published in 
Official Journal  No. 123 of 2 July 1998. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 98 
  
 national long-distance telephony (calls between tw o departments) and international long-distance 
telephony, were opened up to competition. 
113. The General Law on Telecommunications and Post al Services, Law No. 200 of 21 July 1995, 
established the overall institutio nal and legal framework to enable regulation of the 
telecommunications sector and gave TELCOR the aut hority to regulate, plan, supervise, apply and 
monitor compliance with the regulations govern ing telecommunications and postal services.  
Law No. 326 of 17 December 1999 amended Law No . 200 to remove the restrictions on the 
participation of foreign capital, persons or co mpanies in telecommunications operators;  these 
restrictions are still in place, however, for audi ovisual media.  Presidential Decree No. 19-96, 
published on 19 September 1996, amended ma inly by Decree No. 131-2004, published 
on 5 January 2005, contains the implemen ting regulations for the General Law on 
Telecommunications and Postal Services.  Thes e regulations lay down the requirements and 
procedures with which those interested in obtai ning authorizations must comply in order to 
operate any type of telecommunica tions or postal service.  In addition, TELCOR, in exercise of the 
regulatory powers conferred on it by the General Law on Telecommunications and Postal Services, 
has issued a series of basic regulations governin g various aspects of the telecommunications sector.59 
114. Decree No. 136-2004, Sectoral Policy and Guidelines for Opening Up the 
Telecommunications Market, contains the major elements of Nicaragua's recent telecommunications policy.  The Decree acknowledges the importance of competition for the sector's development;  this "must be regulated to ensure that it leads to the greatest possible efficiency and benefits".  
The strategy specifically provides that there sh all be no limits on the num ber of concessions to 
provide public telecommunications services to be granted and that any natural or legal person 
requesting a concession and meeting the requirements a nd obligations laid down in the regulations on 
authorizations shall be given a concession provi ded that it does not require the use of a scarce 
resource.  It also sets a number of targets for nati onal teledensity for fixed and mobile lines (35 lines 
per 100 inhabitants for 2009), and for public telephony a nd Internet access services. 
115. The Telecommunications Law classifies telecommunications services into five categories 
according to how essential they are, their usefulness a nd importance:  (i) public services;  (ii) services 
in the public interest;  (iii) services of special interest;  (iv) services of specific interest;  and (v) unregulated services. 
116. Public services are those which are essential, useful and important for the country's 
population as a whole and must be supplied according to specific terms for their operation and at rates 
approved by TELCOR.  Basic telephony and postal ser vices are deemed to be public services.  
Services in the public interest are those which,  while they are not essential public services, are 
                                                      
59 For example, the General Regulations on Inte rconnection and Access (Administrative Decision 
No. 020-1999 of 1 July 1999);  Regulations on the Subscriber Television Service (Administrative Decision 
No. 006-1997);  Regulations on Mobile Telephony Services (Administrative Decision No. 004-1998);  Regulations on the Television Broadcasting Service (A dministrative Decision No. 007-1997);  Regulations on 
the Telecommunications Investment Fund, FITEL (Administrative Decision No. 006-2006);  Regulations on 
Use of the Radio Spectrum and Radiocommunications Services (Administrative Decision No. 001-1997);  Regulations on Use of Numbering of Signalling Point Codes and National Signalling Plan (Administrative 
Decision No. 061-2003);  Regulations on Complaints  by Users and Operators (Administrative Decision 
No. 002-2005);  Regulations on Communications Services by Satellite (Administrative Decision No. 002-1997).  Regulations on the supply of telecommunications services in areas not covered - in order to lift restrictions on 
investment in areas of high and extreme poverty (refrain ing from applying the law).  Small-scale operators in 
these areas are not subject to the same regula tory requirements as those in other areas. Nicaragua WT/TPR/S/274/Rev.1 
 Page 99 
 
 
 supplied to the public freely by contract, but at rates approved by TELCOR.  This category includes 
mobile telephony services, radio, public television and subscriber television, data transmission and 
package switching irrespective of the value added ser vice concerned.  Services of special interest are 
those which may be supplied by an operator to a specified number of user s in accordance with the 
prevailing legislation.  Operators of such service s may be connected to the public telephony network 
subject to the agreement of its operator.  This cat egory includes radiolocation services, truncated links 
services, radiodetermination and ground stations or teleports for satellite communications. 
117. Services of specific interest are those set up by na tural or legal persons in order to meet their 
own communications needs, using authorized netw orks or their own facilities.  These services may 
not be supplied to third parties, unless they help to meet a social objective, and they must be supplied 
through private telecommunications networks that may not be interconnected to the public telephony 
network, except if so authorized by TELCOR.  Un regulated services are those which, because of their 
technical or economic specifications, may be supp lied in open competition and do not require the 
allotment of frequencies.  Value added telecommunications services such as electronic mail, voice mail, information services, acce ss to databases, and storing and dispatch of faxes, come under 
this category. 
118. A concession is required to supply public servi ces.  Operation of services in the public 
interest and of special interest requires a licen ce granted by TELCOR, whose terms vary depending 
on the type of service to be provided.  For mobile telephony, which is a service in the public interest, 
the law provides that the licence must be granted th rough a public bidding procedure.  Services of 
specific interest do not require any licence, it usually suffices to register with TELCOR.  A permit 
may be required, however, when in TELCOR's view  this is needed to ensure compliance with 
restrictions on interconnection for certain private networks.  Unregulated services simply have to 
be registered with TELCOR, which may only refuse registration if the service falls under another category.  A permit from TELCOR is require d to establish facilities that involve the allocation 
of radio frequencies which have not been specifical ly authorized in the concessions or licences, and 
also for operators of private networks.  TELCOR may also grant temporary, emergency or 
experimental authorizations for operations that ha ve technical, economic or geographical limitations 
which, in its view, do not entitle them to be gi ven a permanent concession, licence or permit.  The 
granting of a concession or licence includes the allo cation of the radio frequencies needed to supply 
the service. 
119. Pursuant to Law No. 326, licences may be grante d to Nicaraguan or fore ign natural or legal 
persons in accordance with the Law.  This Law amended the Telecommunications Law No. 200 
of 1996, which provided that licen ces could only be granted to Nicara guan natural or legal persons.  
For public limited companies, a Nicaraguan legal pe rson meant one in which at least 51 per cent of 
the registered capital was paid up by Nicaraguan na tionals.  TELCOR had to be informed of this 
registered capital and any changes to it.  The re quirements and criteria for granting concessions and 
licences are the same for all applicants offering the same service. 
120. The legislation provides that telecommuni cations services are supplied under a free 
competition regime, even though it allows them to be supplied under an exclusivity regime or by a 
limited number of operators and for a period previo usly determined when, for technological reasons 
or because of the situation in the market, the law so decides.  Operators are not allowed to take 
advantage of this situation vis-à-vis  others in order to introduce practices that hinder free competition 
or give rise to acts of unfair competition.  Basic telephony operators are obliged to give access to the 
telephone network at competitive rates to service  providers in possession of licences authorized 
by TELCOR. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 100 
  
 121. TELCOR controls the rates for public teleco mmunications and mobile telephony services in 
the relevant concession and licensing contracts.  Th e Law stipulates that the tariff structure must 
enable the cost of providing the service to be cove red, plus a reasonable profit.  Cross-subsidies 
among services provided by the same service supplie r are not allowed.  The concession and licensing 
contracts determine the methodology for fixing the pr ices to be paid for the supply of public and 
mobile telephony services.  For other telecommunications services, prices and other terms are established in the contract.  The rates for public  telecommunications services, mobile telephony and 
subscriber television come into force when they are published in the Official Journal.
60  The rates in 
córdobas are readjusted according to a formula in  order to maintain their constant value in 
United States dollars.61 
122. Law No. 210 of 7 December 1995, Law on Incorpora ting Private Parties in the Operation and 
Expansion of Public Telecommunications Servi ces (amended by Law No. 293 of 2 July 1998 and 
Law No. 389 of 17 April 2001), authorized the cr eation of ENITEL as a government-owned public 
limited company.  It was given the concession to  operate the public telecommunications services 
previously supplied by TELCOR.  The Law and ame ndments thereto authorized the Government to 
sell up to 40 per cent of ENITEL's shares, including th e management contract, to a firm or consortium 
of international repute.  The Law also author ized the Government to sell 10 per cent and to 
donate 1 per cent of ENITEL's shares to empl oyees and officials of ENITEL, TELCOR and 
Nicaraguan Postal Services.  The remaining 49 per cent of ENITEL's shares could be traded on stock exchanges or be put out to public tender.  The State was given a controlling share for 
the three-year exclusivity period.  As far as priv atization is concerned, the Law required the new 
shareholder to have no less than three years' experience in operating telecommunications services, 
annual invoicing of over US$300 million for telecommunications services, a minimum of 300,000 fixed and/or mobile telephony subscr ibers and assets of no less than US$200 million.  
After the first 40 per cent of ENITEL's shares had b een allocated, it was given a concession to provide 
basic telephony for a renewable period of 20 years and a time-bound exclusive right to provide such 
services (including local, national and internationa l long-distance telephony) throughout Nicaragua.  
This concession was published in the Official Journa l in April 2002.  The Law also gave ENITEL a 
licence to provide mobile telephony services nationwid e.  ENITEL undertook to meet certain targets 
for the expansion and upgrading of the network concerning the number of lines, public telephones, 
teledensity, rural services and the quality of services, inter alia .  The Government privatized the 
remaining 60 per cent of ENITEL's shares between 2002 and 2004, sold 10 per cent and donated 1 per 
cent to employees, and in a public auction awarde d the remaining 49 per cent to a foreign firm. 
123. Following the enactment of Law No. 200 and its implementing regulations, the monopoly on 
postal services has been prohibited, with the excep tion of operations such as stamped correspondence, 
the installation of mail boxes, use of the word " post" and the issue of postage stamps, which are 
the exclusive purview of the designated operator, Nicaraguan Postal Services.  With the enactment 
of Law No. 758, General Law on Nicaraguan Po st and Postal Services, published on 26 
and 27 May 2011, the regulatory frameworks for the postal and telecommunications sectors became 
separate.  This Law made Nicaraguan Postal Se rvices into a government-owned public law entity 
responsible for providing the universal postal service  as the designated operator, and kept TELCOR as 
                                                      
60 Rates have gone down significantly in recent years.  For example, in 2010, local fixed line calls cost 
only US$0.020/minute, while calls from mobile telephones cost from US$0.12 to US$0.29/minute.  
International calls to the United States and Canada cost US$0.15/minute (MIFIC, 2011). 
61 The following formula is used to obtain the rate in effect:  current rate in córdobas = (table 
value/12.622) x official exchange rate in force, where 12.622 is the exchange rate in effect on 1 June 2000, and 
the table value is the rate approved by TELCOR.  The "Official Exchange Ra te in Force" is the BCN's current 
official exchange rate. Nicaragua WT/TPR/S/274/Rev.1 
 Page 101 
 
 
 its regulatory body, empowering it to grant authorizations to private bodies interested in supplying 
postal services for a period of ten years.  Foreign postal firms must be established in Nicaragua, as provided in the Commercial Code, to be able to provide telecommunications or postal services.  
The Law provides that any dispute shall be settle d using the existing commercial dispute settlement 
mechanisms and operators may not turn to diplomatic channels for resolving them. 
124. The Telecommunications Investment Fund (FITEL) was set up by Executive Decree 
No. 84-2003 as a fund intended exclusively for fi nancing the supply of telecommunications and 
information technology services and communications in  rural and low-income areas so as to guarantee 
universal access to these services to all Nicaragua 's population.  Decree No. 128-2004, published in 
Official Journal No. 238 of 7 December 2004, repealed Decree No. 84-2003 and supplemented 
Decree No. 2-96, implementing regulations for the Organic Law of T ELCOR.  Nevertheless, 
Executive Decree No. 5-2006 of 26 January 2006 rein stated FITEL.  The implementing regulations 
for FITEL were approved by Administrative Deci sion No. 006-2006 of 14 March 2006.  FITEL is 
chiefly financed by TELCOR resources earned from th e rights and fees paid for concessions, licences 
and use of the radio spectrum, inter alia . 
(iv) Maritime transport and ports 
(a) Maritime transport 
125. In 2010, the transport services sector (maritime, air and land transport) accounted 
for 4.2 per cent of GDP.  The MTI's Directorate-Ge neral of Water Transport (DGTA) is responsible 
for formulating and implementing Nicaragua's  maritime and lake transport policy. 
126. The main legal basis for the maritime transpor t sector is Law No. 399 of 3 September 2001, 
the General Law on Water Transport.   This Law defines the DGTA's sphere of competence and lays 
down the general regulatory principles for the main le gal institutions in the water transport subsector.  
The Law allows foreign investment in some seg ments of maritime transport (for example, the 
registration of vessels and the setting up of a shippi ng company), Nicaragua restricts domestic traffic 
and cabotage to Nicaraguan-registered vessels opera ted by Nicaraguan shipowners.  Nevertheless, 
if no Nicaraguan or Central American vessel is available, foreign vessels may be authorized. 
127. The DGTA issues certificates of competency for deck and engine crew on merchant 
marine vessels, passenger, fishing, cabotage, river an d lake transport vessels.  It also issues navigation 
certificates to Nicaraguan and international ships (registration certificate, navigation licence, navigation permit, temporary permit and exit permits). 
128. Nicaragua has acceded to the following inte rnational maritime transport conventions:  
International Convention for the Prevention of Pollution from Ships, MARPOL 73/78;  International Convention on Load Lines 1966;  Convention on the International Regulations 
for Preventing Collisions at Sea, COLREG 72;  International Convention relating to Intervention 
On the High Seas in Cases of Oil Pollution C asualties 1969;  International Convention on Civil 
Liability for Oil Pollution Damage;  Convention on Facilitation of International Maritime 
Traffic (FAL Convention 65);  and the Intern ational Convention on To nnage Measurement of 
Ships 1969.
62  In October 1981, Nicaragua became a Me mber State of the International Maritime 
Organization (IMO). 
                                                      
62 Online information from the MTI's DGTA.  Viewed at:  http://w ww.mti.gob.ni/index.php/ 
legislacion-maritima. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 102 
  
 (b) Ports 
129. Nicaragua has five major international sea ports and one river port;  there are also two lake 
port authorities which manage nine quays.  Three of the sea ports are on the Pacific Coast (Puerto Corinto, Puerto Sandino and Puerto Sa n Juan del Sur) and two on the Atlantic Coast 
(Puerto Cabezas, El Bluff).  The port of Arlen Siu (El Rama) is a river port situated in the centre 
of Nicaragua in the locality of El Rama.  In 2011, 3,437,754 metric tonnes of cargo went through 
Nicaragua's ports, of which 2,782,659 metric t onnes were imports and 655,095 metric tonnes 
exports (Table IV.7). 
Table IV.7 
Water-borne cargo transport 2005-2011 
(thousands of metric tonnes) 
Sector 2005 2006 2007 2008 2009 2010 2011 
International freight 2,507.1 2,678.0 2,939.8 2,797.5 2,833.5 3,009.2 3,437.8 
Imports 2,120.5 2.355,5 2,447.7 2,342.0 2,348 2,317.9 2,782.7 
Exports 386.6 322.5 492.1 455.5 484.1 691.3 655.1 
Domestic freight 211.9 177.8 161.2 186.4 198.7 201.6 237.2 
Source:  BCN, Statistical Comp endium 1964-1974;  INEC, Statistical Yearbook (1975-1979);  MCT;  MTI. 
130. Puerto Corinto handles most of Nicaragua's cargo and in 2011 handled 71 per cent of total 
cargo.  Puerto Sandino has 27 per cent of the total, especially oil, iron and bulk grains, while Puerto San Juan del Sur only handles cruises.
63  Puerto Cabezas, which is in the North Atlantic 
Autonomous Region (RAAN), only handled 0.4 per cent of the total, its main cargos being wood, 
fish and shellfish, while Puerto El Bluff, in Bl uefields Bay in the South Atlantic Autonomous Region 
(RAAS) handled 0.7 per cent of the total with the principal cargos being shrimps, lobsters, 
frozen meat and small volumes of wood.  Puerto Arlen Siu (El Rama), situated 90 km from the mouth of the Rio Escondido in the city of Bluefields, a ccounts for 1.2 per cent of the total cargo handled in 
the form of general cargo and containers. 
131. The National Port Authority (EPN) was set up in 1995 by Decree No. 35-95 of 27 June 1995 
(as amended by Decree No. 12-1999) and is respons ible for managing the six major ports (five sea 
ports and one river port), a nd two lake port authorities on Cocibolca and Xolotlán lakes.
64  The EPN 
took over from the National Ports Enterprise (ENAP).  It is a decentralized body with administrative 
autonomy, legal status, its own assets, and the au thority to exercise rights and make commitments, 
under the sectoral supervision of the Office of the President of the Republic. 
132. The EPN is responsible for exploitation of the sea, river and lake port facilities it owns, 
as well as for the safekeeping, handling, and storage of cabotage, export, import or transit cargo and any other type of port services required for the embarkation or disembarkation of passengers.  
The EPN is empowered to take out foreign or domestic  loans in order to develop the ports it manages, 
and to enter into any type of contract for the use of port services, quays, berths and other maritime, 
river or lake facilities of a commercial nature, for up to 25 years, which may be extended.  The EPN 
may grant an authorization to operate within the port area under a contract to private stevedoring companies legally set up and duly authorized to oper ate as such by the compet ent authority.  At the 
end of the contract, the equipment, floating or  fixed facilities and any other investment or 
improvement accrue to the EPN.  In this connection,  the authorities have indicated that contracts have 
                                                      
63 Online information from the EPN.  Viewed at:  http://www.epn.com.ni/Estadisticas1.aspx. 
64 Online information from the EPN.  Viewed  at:  http://www.epn.com.ni/Historia1.aspx. Nicaragua WT/TPR/S/274/Rev.1 
 Page 103 
 
 
 been signed with international firms to finance th e development of ports and to conduct studies into 
the building and upgrading of ports and for the granting of concessions fo r dock crane, tug and 
warehousing services. 
133. The EPN is also in charge of drawing up re gulations governing the supply of port services 
and of deciding on the rates for services provided in the ports it manages.  These regulations and rates 
must be approved by the MTI's DGTA. 
134. The present Government's policy aims to improve the development of ports, expanding 
maritime transport on the Atlantic coast in partic ular so that large cabotage vessels can be used.  
Currently, international cargo needing large cabot age vessels often goes through Puerto Cortés 
(in Honduras) or Puerto Limón (in Costa Rica).  This is why the EPN is currently working to 
implement a Master Plan for the period 2009-2019 that includes various projects amounting to up to US$595 million such as the building of a deep-water por t on Nicaragua's Caribbean coast, at the place 
known as Monkey Point, to handle Nicaragua's interna tional maritime traffic with the East Coast of 
the United States, other countries of the Americas  and Europe.  The Master Plan also covers 
upgrading of the infrastructure and the purchase of e quipment for Puerto Corinto, Puerto Sandino and 
Puerto Cabezas. 
135. To encourage shipping companies to use Nicara guan ports, the EPN continues to maintain a 
preferential tariff policy for container ships and co ntainerized cargo with rates that are lower than 
those in the rest of Central America.  The rates pa id for the various services and in the different ports 
can be found online on the MTI's website.
65 
(v) Air transport and airports 
(a) Air transport 
136. Since the previous Review in 2006, there have  been changes in the legislation and in the 
institutional arrangements for air transport in Nicara gua.  The main changes have been the enactment 
of a new civil aviation law, Law No. 595 of Octo ber 2006, or General Civil Aviation Law, and 
creation under this Law of a new body responsible  for civil aviation matters and air transport in 
general, the Nicaraguan Civil Aviation Institute (I NAC).  The general thrust of Nicaragua's civil 
aviation policy as set out in this Law is to apply ope n skies policies on the basis of bilateral reciprocal 
concessions. 
137. INAC, the new civil aviation authority created by the General Civil Aviation Law of 2006, 
is an autonomous technical and specialized body that acts as the National Aviation Authority (AAN), 
replacing without interruption the Directorate-General of Civil Aviation previously attached to the 
MTI.  INAC's responsibilities include the regulation, supervision, control and implementation of rules 
governing air transport services and "all aviation activ ities within national territory, its air space and 
involving its territorial waters" (Law No. 595, Title II,  Chapter I, Article 9).  Pursuant to this Law, 
INAC is composed of a Governing Board, a Directorate-General and specialized directorates:  
the Flight Standards Directorate, the Air Transport Directorate, the Infrastructure Directorate, the Air 
Navigation Directorate, and the Finance and Administration Division.  It also has supporting units 
                                                      
65 Online information from the MTI.  Viewed at:  http://www.mti.gob.ni/index.php/tarifas-
acuaticas/doc_download/62-tarifas-acuaticas. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 104 
  
 (Public Relations Department, Informatics Depart ment, Airfield Certification Department, Aviation 
Safety Office, ICAO Liaison Office, Aviation Registration Office, and Technical Library).66 
138. It is INAC's responsibility to issue or annul re gistration certificates fo r aircraft, to issue, 
endorse, extend, renew, revalidate, suspend, annul or revoke air navigation certificates, as well as 
licences and permits for flight crew and ground staff.   It also has the task of granting, extending, 
modifying, suspending, annulling or revoking operati ng certificates and/or air operators' certificates 
(COA), as well as exploitation certificates, for Nicaraguan firms providing public domestic or 
international scheduled or non-scheduled air trans port services or engaged in aviation-related work.  
Air exploitation certificates and authorizations ma y not be granted for a period of more than 
five years. 
139. INAC is mainly financed through the revenue  earned from providing its civil aviation-related 
services and by 7 per cent of the income earned from th e right to use terminals in public airfields in 
Nicaragua.  Law No. 595 provides that annual transfer s to INAC under this heading shall not be less 
than the equivalent of US$1.2 million. 
140. General Civil Aviation Law No. 595 of October 2006 is Nicaragua's principal legislation on 
air transport.  It provides that civil aviation-related legal issues shall be govern ed by:  the Law itself;  
international civil aviation law c onventions ratified by Nicaragua;  the laws, rules and regulations on 
aviation which supplement but do not contradict th e Law;  general principles of aviation law;  
aviation-related uses and customs;  similar laws;  general principles of ordinary law;  and the 
provisions in the Commercial Code.  By means of th is Law, Nicaragua adopted  ICAO's international 
standards as applicable to the activities covered by the Law.  It created INAC as the civil aviation 
authority, giving it responsibility for formula ting, approving, updating and publishing technical 
regulations on civil aviation c onsistent with ICAO standards. 
141. Registration of an aircraft in Nicaragua's National Aviation Register gives it 
Nicaraguan nationality.  Aircraft registered in an y other country may acquire Nicaraguan registration 
after having annulled the previous registration.  There is an Aviation Property Register in which 
aircraft and the various operations to which they  are subject are recorded, and an Administrative 
Aviation Register, which lists the documents concerni ng aviation such as:  the registration numbers of 
aircraft and their air navigation certificates;  air e xploitation certificates and authorizations to provide 
scheduled or non-scheduled domestic, international or private air services against payment, and any 
annulments or changes to these;  licences and author izations for air crew and ground staff, and their 
renewal, suspension or annulment;  and administ rative deeds and decisions authorizing airport 
infrastructure, aviation workshops and flying schools in the country. 
142. The requirements for being considered the owner of a Nicaraguan-registered aircraft are:  
(i) the owner must be a Nicaraguan natural or legal person.  If there are several co-owners, the requirement for the majority owner whose rights account  for over half the value of the aircraft is to 
have real domicile in Nicaragua.  In the case of legal persons, companies or associations, these must 
have been set up in accordance with Nicaragua's legi slation or be legally dom iciled in Nicaragua;  or 
(ii) the owner must be a foreign natural person pe rmanently domiciled in Nicaragua;  or (iii) be a 
foreigner not domiciled in Nicaragua  provided that there is a hire purchase or chartering agreement 
with or without a purchase option. 
143. The Law permits the chartering of aircraft without crew to those in possession of a COA 
provided that operational control of the aircraft is  transferred to the person with the COA.  Any 
                                                      
66 Online information from INAC.  Viewed  at:  http://www.inac.gob.ni/institucion/. Nicaragua WT/TPR/S/274/Rev.1 
 Page 105 
 
 
 Nicaraguan or foreign natural or  legal person must obtain a COA before starting up a public air 
transport service;  for foreigners, its concession de pends on whether or not there is reciprocal 
treatment for Nicaraguan persons or firms in the country of origin. 
144. The General Civil Aviation Law also defin es the general requirements for exploitation 
certificates in the subsector.  Domestic or intern al (cabotage) air transport services may only be 
provided by Nicaraguan natural or legal persons.  For legal persons, the Chairman of the board of 
directors or governing board and at least 51 per cent of the directors must be of Nicaraguan origin.  
Foreign airlines may not take on passengers, freight  or mail to be carried within Nicaragua.  
Nevertheless, INAC may exceptionally authorize fo reign companies to provide such services where 
this is in the public interest.  The Law provides that  this exceptional procedure applies particularly to 
Central American airlines so as to create a Central American regional aviation market that is as open 
as possible. 
145. Aviation staff employed in domestic air trans port services must be Nicaraguan nationals.  
If none are available, however, INAC may authorize the recruitment of non-Nicaraguan staff.  Foreign 
legal persons authorized to provide an international air service, directly or indirectly, must designate a 
domicile and a legal representative with full powers of attorney and representation, who must be 
permanently domiciled in Nicaragua. 
146. Nicaragua has open skies agreements with th e United States (1997) and Panama (1998).  
It also has air transport agreements with Spai n, Peru, Cuba and the former Soviet Union. 
147. The following international airlines provide services in Nicaragua:  American Airlines, 
Continental Airlines, Copa Airlines, Grupo Taca, Sp irit and Delta.  Nicaragua has a national airline 
called La Costeña, which flies to the cities of Corn Island, Siuna, Puerto Cabezas, Bluefields, 
Bonanza, Rosita, Waspán and San Carlos.  It also provides charter flights and carries freight. 
(b) Airports 
148. Nicaragua has two international airports situated in Managua and Puerto Cabezas 
and three domestic airports in Bluefields, Puerto  Cabezas and Corn Island.  There are also rural 
airfields in Nueva Guinea, San Carlos, Siuna, Rosita  and Bonanza.  August C. Sandino International 
Airport in Managua was expanded and upgraded in a US$60 million project that was completed in 
2006.  This included the renovation of the infrastru cture for passenger transport and the building of 
new freight handling facilities.  The number of  international passenge rs arriving through 
Nicaragua's airports was 503,911 in 2011, while the number of incoming dom estic passengers was 
72,745.  In 2011, the volume of incoming inte rnational freight was 21.7 million pounds, while 
54.1 million pounds of dom estic freight arrived.67 
149. INAC is responsible for authorizing and s upervising the construction, maintenance and 
operation of airports and other airfields and for providing air navigation services, aviation safety and 
air traffic control which comply with the technical security and flight safety requirements prescribed 
in national and international st andards.  The establishment and operation of an airfield requires 
authorization and approval from INAC, which has th e authority to inspect aircraft, airfields and 
related aviation services, as well as aviation technical staff.  All Nicaragua's civil airfields and airports must forward financial and statistical reports on th eir activities and aircraft movements to INAC each 
month, in accordance with Nicaragua's ICAO commitments. 
                                                      
67 Online statistics from the International Airports  Management Company (EEAI).  Viewed at:  
http://www.eaai.com.ni/index.php?option=com_cont ent&view=article&id=42&Itemid=223&lang=es. WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 106 
  
 150. The Law recognizes the existence of government-o wned public airports and private airports, 
but prohibits the privatization of airports owned by  the Nicaraguan State.  In State-owned airports, 
however, airport and air navigation services, as well as their infrastructure and related aviation services, may be the subject of concessions or management contracts, as applicable.  If there is a 
concession, INAC receives a share or regular fee from the concession holder in accordance with the 
terms of the respective concession contract.  INAC is  responsible for overseeing the operation of the 
services for which it has granted concessions. 
151. The International Airports Management Comp any (EEAI), a decentralized autonomous body 
created by Decree No. 1.292 published in Offici al Journal No. 186 of 16 August 1983 and governed 
by this Decree and amendments thereto, is responsib le for managing Nicaragua's airports.  In addition 
to Augusto C. Sandino International Airport, it curre ntly manages three local airports in Bluefields, 
Puerto Cabezas and Corn Island.
68 
                                                      
68 Online information from the EEAI.  Viewed a t: http://www.eaai.com.ni/ index.php?option=com_ 
content&view=article&id=75&Itemid=197&lang=es. Nicaragua WT/TPR/S/274/Rev.1 
 Page 107 
 
 
 REFERENCES 
 
 Central Bank of Nicaragua (2010), Memoria Anual 2009 (Annual report 2009), March.  Viewed at:  
http://www.bcn.gob.ni/publicaciones/anual/m emoria/2009/Memoria_Anual_2009.pdf. 
 Central Bank of Nicaragua (2011), Informe Anual (Annual report).  Viewed at:  
http://www.bcn.gob.ni/publicacion es/anual/index.html?&val=0. 
 
Central Bank of Nicaragua (2012), Estadísticas Económicas (Economic statistics).  Viewed at:  
http://www.bcn.gob.ni/estadisticas/economicas_anua les/anuario_estadistic o/2010/pdf/Capitulo%203
%20Empleo%20y%20Salarios.pdf.  World Bank (2011), Nicaragua:  Country Profile:  Enterprise Survey 2010 .  Viewed at:  
http://microdata.worldbank.org/inde x.php/catalog/871/download/19401. 
 
Nicaraguan Stock Exchange (BNV) (2012), Informes Anuales 2009, 2010 y 2011 (Annual reports 
2009, 2010 and 2011).  Vi ewed at:  http://www.bolsanic .com/index.php?option=com_ 
content&view=category&layo ut=blog&id=19&Itemid=70. 
 
International Monetary Fund (IMF) (2011), Seventh Review Under the Extended Credit Facility and 
Financing Assurances Review , Country Report No. 11/322, October.  Viewed at:   http://www.imf.org 
/external/pubs/ft/scr/2011/cr11322.pdf.  National Energy Institute (INE) (2011), Estadísticas Año 2011 (Statistics for the year 2011).  Viewed 
at:  http://www.ine.gob.ni/DGE/estadis ticas/2011/anual/Resumen_2011_actMar12.pdf. 
 
National Development Informa tion Institute (INIDE) (2011), Encuesta de hogares sobre medición del 
nivel de vida 2009 (Household survey on living standards 2009), May.  Viewed at:  
http://www.inide.gob.ni/Em nv/Informe%20EMNV%202009.pdf. 
 
Ministry of Agriculture, Livestock and Forestry (MAGFOR) (2008a), Manual de incentivos para el 
desarrollo de inversiones forestales sostenibles (Guide to incentives for the development of 
sustainable forestry investment).  Viewed at:  http://www.magfor.gob.ni/descargas/legislacion 
/MANUAL%20DE%20ACCESO%20A%20LOS%20INCENTIVOS.pdf.  
MAGFOR (2008b), Subprograma nacional de fortalecimiento de  los servicios de sanidad e inocuidad 
agroalimentaria (National subprogramme on the improveme nt of agri-food health and safety 
services), October.  Viewed at:  http://www.magfor .gob.ni/prorural/programasnacionales/perfilessub/ 
sanidadinocuidad.pdf.  Ministry of Development, Industry and Trade (MIFIC) (2011), Doing Business in Nicaragua 2011 .  
Viewed at:  http://www.mific.gob.ni/LinkClic k.aspx?fileticket=FyzO 4FqzlnE%3d&tabid=58& 
language=es-NI.  MAGFOR (2008a), Marco de Estrategia para el Fomento de la Agroindustria Rural del Gobierno de 
Reconciliación y Unidad Nacional (Strategic framework for the pr omotion of rural agro-industry 
proposed by the National Reconciliation and Unity  Government), December.  Viewed at:  
http://www.magfor.gob.ni/prorural/program asnacionales/marcoagroindustria.pdf. 
 WT/TPR/S/274/Rev.1 Trade Policy Review 
Page 108 
  
 MAGFOR (2008b), Subprograma Productivo Alimentario (PPA)  (Food production subprogramme).  
Viewed at:  http://www.magfor.gob.ni/prorur al/programasnacionales/perfilessub/SPPA.pdf. 
 Ministry of Finance and Public Credit (MHCP) (2010), El Gasto Tributario de Nicaragua 
(Nicaragua's tax expenditu re), Managua, October. 
 Supervisory Authority for Banks and Other Financial Institutions (SIBOIF) (2012), Informe del 
Sistema Financiero Nacional a diciembre de 2011  (Report on the national financial system 
as at December 2011).  Viewed at:  http://www.s uperintendencia.gob.ni/documentos/institucional/ 
publicaciones/diciembre2011.zip. 
 Secretariat for Central American Economic Integration (SIECA) (2011), La Unión Aduanera 
Centroamericana (The Central American Customs Union) , Guatemala, February.