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Nicaragua Taking Measures To Prevent Seizure of Assets

March 13, 1987

MANAGUA, Nicaragua (AP) _ Nicaragua is moving to prevent foreign bankers from seizing its assets as payment of back interest on its foreign debt, the head of the nation’s central bank said in an interview.

Joaquin Cuadra, president of the Central Bank of Nicaragua, told the pro- government newspaper El Nuevo Diario in an interview published Thursday that such a move by foreign bankers would have serious consequences for the international financial system and would cause alarm among other debtor nations.

Cuadra did not say what steps the government was taking to prevent a possible seizure.

The Miami Herald reported Tuesday that U.S. banks were forming a creditor’s committee to consider seizing Nicaraguan assets overseas if the country continued missing interest payments on its $3.7 billion debt.

The bank group had notified some 150 international banks of its intention to recover the debt, an unidentified banker told the Herald.

A Bank of America spokesman in San Francisco confirmed that Bank of America, New York’s Citibank and Wells Fargo Bank, also based in San Francisco, were attempting to form a creditors committee on behalf of Nicaragua’s international bank lenders.

Banking sources said the purpose of a creditors committee would be to explore available options for collecting the debt.

The financially strapped Central American nation has had trouble meeting payments on its foreign debt since the Reagan administration imposed a trade embargo in 1985 when relations between the two countries deteriorated.

President Daniel Ortega was quoted Thursday in a report from the Sandinista news agency Nueva Nicaragua as saying, ″There is no possibility that we could pay, although we would like to.″

Ortega said Nicaragua wants to ″renegotiate the debt that we have in moratorium, to find reasonable terms and interest rates.″

Cuadra said Nicaragua was hindered in making debt payments by the trade embargo, which officials say has cost Nicaragua more than $108.4 million.

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