It was in 1960 that the four countries signed the General Treaty of Central American Integration, giving legal life to the Central American Common Market. Costa Rica joined in 1962.
The Central American Bank for Economic Integration (CABEI) was included in the Treaty as one of the so-called Central American integration entities. Clearly, the financial component is key to building an integrationist process. Debt issues are complex because they are national, but integrationist objectives require regional coordination in deciding what to finance.
As stated on its website, CABEI was founded “to promote economic growth and improvement in the Central American region” by four initial signatories and two years later member states (Costa Rica Complied with the Agreement CABEI (July 1963), as well as the three countries that recently joined the Central American Integration System (SICA).
The following information is taken from the CABEI website.
“CABEI is a multilateral development finance institution with an international character. Headquartered in Tegucigalpa, Honduras, with regional offices in Guatemala, El Salvador, Nicaragua, Costa Rica, Panama and the Dominican Republic.” It aims to be a benchmark for development and economic integration, effectively affecting the welfare of society and partner countries by funding high-impact regional integration projects at the lowest possible financial cost. It aims to support government action. ..”.
CABEI has funded projects in SICA member countries and played an important role in regional integration. Similarly, following the Inter-American Development Bank (IDB) plan, it included his eight extraterritorial members in Taiwan, the Republic of China, Mexico, Argentina, Colombia and Spain. The Dominican Republic, Panama and Belize are members of SICA and non-founding regional partners. Similar to IDB, it is assumed that non-regional countries are not covered by his CABEI credits, but by investors.
In recent years, the operation of CABEI has not progressed as expected. It is true that the contribution of non-regional partners has increased economic strength, but the following aspects are questionable.
• Excessive support to Nicaragua, whose current operations do not correspond to the democratic practices that the Tegucigalpa Protocol requires of SICA member states.
• Funding works that support projects of questionable relevance to social development and Central American integration.
• There is a question that it trusts Argentina, which is a non-regional member, and therefore should not be subject to CABEI credit. In addition, lending to Argentina involves a great deal of risk. It’s a bad precedent.
• One of the former national directors questioned the very high compensation received by the national directors who act as managers of CABEI’s domestic offices.
• The project’s approval mechanism has been questioned, exposed to manipulation, and allegedly negotiated (you scratch my back and I scratch your back).
The decentralization of CABEI’s operations has reduced Honduras’ heavy burden on banks, but the burden remains high. The fact that the last two executive presidents of the current and previous presidents for a total of 12 years were Hondurans reaffirmed this situation. It is difficult to understand how a member state that votes in executive presidential elections would allow this. He is undoubtedly responding to Honduran pressure and political influence. The incumbent president will not be re-elected, thus opening up an irreplaceable and necessary opportunity to change the course of CABEI. Countries other than Honduras also have the right to aim for it.