The Central Bank of Nicaragua published its April 2025 Financial Stability Report, concluding that Nicaragua’s macrofinancial conditions and the National Financial System remained robust through the first quarter of 2025, supported by solid economic performance, low unemployment and inflation, fiscal consolidation, financial and monetary stability, and stronger external inflows. It also flags rising external risks and vulnerabilities linked to changes in economic policies and tight global financial conditions. Compared with the October 2024 report, credit activity continued to grow at double-digit year-on-year rates, underpinned by growth in public deposits, while prudential solvency and liquidity indicators point to well-capitalised banks with adequate liquidity and stable asset quality and profitability. Public deposits represented 86.9% of system liabilities at March 2025, alongside reduced reliance on non-resident funding and lower deposit dollarisation, down to 66.4% from an average 68.5% during 2024. Domestic markets were described as stable, with higher foreign-exchange market activity without supply and demand pressures, a recovery in securities trading volumes in the first quarter of 2025, improving real-estate credit, and double-digit growth in net insurance premiums; total public debt fell to 51.7% of GDP from 56.7% in 2023. The report also notes the Central Bank kept its monetary reference rate (TRM) at 7.0% until October 2024 before gradually reducing it to 6.25% in January 2025, and raised its interest-rate expectations for local-currency bill auctions in the first quarter of 2025 while keeping those for foreign-currency bills unchanged. Stress scenarios covered a deterioration in global growth driven by geopolitical tensions and protectionist policies, and a slowdown in Nicaragua’s exports following broadly applied US tariffs; simulated stress tests indicate high resilience of the economy and financial system, while highlighting the need to monitor global developments, climate change and natural disasters. The report adds that strengthening of the monetary and financial regulatory framework in late 2024 and the first quarter of 2025 expanded the authorities’ toolkit for mitigating risks.
Central Bank of Nicaragua 2025-05-02
Central Bank of Nicaragua publishes April 2025 Financial Stability Report citing robust banking conditions and heightened external risk scenarios
The Central Bank of Nicaragua's April 2025 Financial Stability Report highlights robust macrofinancial conditions and a stable National Financial System, supported by strong economic performance and fiscal consolidation. Despite rising external risks, credit activity grew at double-digit rates, with well-capitalised banks and stable asset quality. Stress tests indicate high resilience, though the report emphasizes monitoring global and climate risks.