ABSTRACT
Economists are want to project economic or market growth based on the assumption that “other things are equal.” This caveat is intended to exclude from their calculations what they call exogenous factors, events which happen outside the control of the writer. Nicaragua became the focal point of a deepening civil unrest in the region. Abstract notions about “political risk” were suddenly transformed into specific and painful write-offs. The projects themselves did not fail, at least not initially, but they all deteriorated in the long run. In fact, the Sandinistas had negotiated no less than four separate rescheduling agreements, depending on the circumstances surrounding each case. Additional recoveries are expected. These recoveries were possible, in part because of patience and the intangible asset of having been the first foreign financial institution to resume doing business in Nicaragua following its return to democratic rule.
