Return to: Index of "1993 Country Reports on Economic Practice and Trade Reports" ||
Index of "Economic and Business Issues" || Electronic Research Collections Index || ERC Homepage


TITLE:  NICARAGUA ECONOMIC POLICY AND TRADE PRACTICES
DATE:  FEBRUARY 1994
AUTHOR:  U.S. DEPARTMENT OF STATE

                            NICARAGUA

                     Key Economic Indicators
        (Millions of U.S. dollars, unless otherwise noted)


                                  1991      1992      1993 /1
Income, Production,
 and Employment

Real GDP (1991 dollars)           1,696.0   1,697.8   1,680.8
Real GDP Growth (pct.)             -0.2       0.1      -1.0
GDP by Sector:
  Agriculture /2                    257.5     256.1     253.8
  Energy and Water                   50.7      52.2      53.8
  Manufacturing                     402.2     381.2     374.8
  Construction                       44.8      47.6      47.1
  Rents                              71.1      71.5      70.6
  Financial Services                 55.3      55.3      55.5
  Other                              74.7      80.6      84.0
  Government, Health
   and Education                    190.3     190.4     184.8
Net Exports of 
 Goods and Services                -867.3   -1083.9    -740.1
Real Per Capita GDP                 446.7     430.4     410.2
Labor Force (000's) /3            1,243.4   1,310.0   1,378.7
Unemployment Rate (pct.)             13.0      16.6      20.0


Money and Prices
 (annual pct. growth unless otherwise noted)

Money Supply (M1)                  95.6      33.4     -25.6
Rediscount Rate (pct.) /4          11-15     13        13
Personal Saving Rate /5
 (pct. of GDP)                     10.9      17.0       n/a
Consumer Price Index              865.6       3.5      25.0
Exchange Rate (Cord. per $)
  Official                            5         5         6.3
  Parallel                            5.4       5.5       6.5


Balance of Payments and Trade

Total Exports (FOB)                 272.4     217.5     205.7
  Exports to U.S. /6                 50.0      70.4      85.0
Total Imports (CIF)                 751.4     830.8     653.9
  Imports from U.S.                 110.0     270.5     300.0
Aid from U.S. /7                    274.4      77.0     150.5
Aid from Other Countries            915.2     629.1     473.2
External Public Debt               9,391    10,482    10,485
Debt Service (paid)                  55.0      82.5      99.1
Gold and FOREX Reserves             110.5     105.6      28.5
Trade Balance                      -479.0    -613.3    -448.2
  Balance with the U.S.             -60.0    -200.1    -215.0


Sources: The International Monetary Fund (IMF), the World Bank,
and the Central Bank of Nicaragua unless otherwise indicated.

Notes:

1/  Figures are annual projections based on 9 months of data.
2/  Agriculture does not include livestock or fisheries.
3/  Reviewed figure provided by the Nicaraguan Ministry of
    Labor.
4/  Central Bank rediscount rate for short- and long-term
    credit.
5/  Based on IMF figures.  Personal saving as percent of GDP
    calculated as difference of consolidated public sector
    deficit from gross national savings.
6/  Data provided by Nicaraguan Customs, 1993 projection based
    on 6-month total.
7/  Includes all aid granted.



1.  General Policy Framework

    During the 1980's, misguided Sandinista economic policies,
political repression, and war combined to devastate Nicaragua's
economy, once one of Central America's most advanced. 
Following her 1990 electoral victory, Violeta Chamorro assumed
control of an economy scarred by hyperinflation, depressed per
capita income levels, and high rates of unemployment.  Economic
activity was hampered by inefficient state financial
institutions, over-staffed and debt-burdened state enterprises,
the confiscation of thousands of parcels of private property,
record levels of foreign debt, and a moribund private sector. 
As the Chamorro government concentrated on bringing peace to
the nation, little was accomplished in 1990 on the economic
front; Nicaragua's economy contracted for the seventh straight
year and inflation soared to 13,490 percent.

    In March 1991, the Chamorro administration began an
ambitious economic stabilization program, combined with a
series of steps to reorganize the national economy along
market-oriented lines, and subsequently signed an International
Monetary Fund (IMF) Standby Agreement.  The government cut
public spending, restricted central bank credit, and replaced
the nation's devalued currency.  The measures yielded
impressive results -- annual inflation fell from 13,490 percent
in 1990 to 775 percent in 1991 and just 3.5 percent in 1992. 
Encouraged by the government's program, in September 1991 the
donor community helped Nicaragua clear arrears of one-third of
a billion dollars with the World Bank and Inter-American
Development Bank (IDB).

    Despite the reforms and a series of fiscal measures
(including reduction in a number of national taxes and planned
allocations of $280 million for public investments) aimed at
spurring growth, Nicaragua's economy failed adequately to
respond.  The measures, part of the government's 1992 "Economic
Reactivation Program," produced few results.

    Political turmoil, renewed fighting in northern Nicaragua,
inadequate protection of property rights, and interruptions of
foreign assistance flows discouraged investors from risking
money in Nicaragua during 1992.  As a result, the GDP grew by a
disappointing 0.1 percent for the year.

    Towards the end of 1992, the government was forced to
adjust much of its "reactivation" program, restricting spending
to avoid expenditures beyond the target fiscal deficit of six
percent of GDP.  Lower than expected foreign exchange inflows
forced the government to enact a new package of austerity
measures on January 10, 1993.  These measures included the
imposition of new luxury taxes, the elimination of a series of
tax exemptions, and a 20 percent one-time devaluation of the
cordoba coupled with the institution of a "crawling peg"
devaluation tied to the dollar, at a rate of five percent per
annum.

    Intensified austerity efforts in the form of increased
vehicle and license-plate fees triggered a transportation
strike which paralyzed the country for three days in September
1993.  The government was required to rescind the increases,
and the incident cast doubt on the government's ability to
raise substantially more revenue.  

    Through the Central Bank's rediscount facility to both
state and private banks and directed credit to specific
sectors, the Government of Nicaragua also hoped to spur growth
during the year.  Unfortunately, the government's program has
had limited results, as few private banks are willing to make
high risk agricultural loans, and many potential borrowers are
reluctant to offer their land or production facilities as
collateral in what remains an uncertain and risky business
climate.  The lack of credit to the productive sector continues
to be a major stumbling-block to growth.

    The September 1991 IMF Standby Facility expired in March
1993.  Throughout the year the government was engaged in
discussions with the IMF over an Enhanced Structural Adjustment
Facility (ESAF), a three-year program designed to maintain
stability and generate growth.  Conclusion of the ESAF would
also set the stage for a World Bank economic recovery credit
and continued lending from other international financial
institutions.  These potential credit sources represent
critical elements for the nation's economic stability, as
Nicaragua continues to suffer from a chronic balance of
payments gap estimated at $1 billion in 1993.  Due to
protracted ESAF negotiations, an IMF program would not begin
until March 1994 at the earliest.


2.  Exchange Rate Policy

    In January 1993, the Government of Nicaragua modified its
fixed official exchange rate system which since September 1991
had pegged the Cordoba to the dollar at five to one.  With its
devaluation, the government set the Cordoba at six to one, with
a crawling peg schedule adjusted daily, at an annual rate of
five percent.  A parallel exchange market, legalized in
September 1991, continues to operate, supplying foreign
currency for specific purposes, including most present current
account transactions (imports and the payment of certain bills
in dollars).   The spread between the official and parallel
markets has been generally maintained at two to four percent.

    A foreign investment law, passed in mid-1991, guarantees
new foreign investors the right fully to repatriate profits and
provides for full repatriation of capital three years after the
initial investment.  Several U.S. companies with investments
predating the current law were allowed to repatriate their 1990
and 1991 profits in early 1992, following some difficulties. 
Formal repatriation of profits through agreements with the
Central Bank continue, although at a slower rate.  Profits
generated by many investments, however, are now commonly
repatriated through legal transactions in the parallel exchange
market, greatly reducing demand for formal Central
Bank-authorized profit repatriation.


3.  Structural Policies

    Pricing Policies:  Upon taking office in April 1990, the
Chamorro government inherited a system of generalized price
controls, closed markets, and government monopoly regulation of
the export of principal commodities and the import of inputs
and capital goods.  The administration has since lifted price
controls with the exception of those imposed upon "fiscal"
goods (e.g., tobacco, soft drinks, alcoholic beverages),
pharmaceuticals and medical goods, petroleum products, and
public utilities.  In addition, the central government (i.e.,
Ministry of Economy and Development) commonly negotiates with
domestic producers of important consumer goods to establish
voluntary price restraints and on several occasions, has
purchased emergency stores of important basic foods (sugar,
beans, basic grains, etc.) during periods of shortage to
maintain domestic supplies and keep down prices.

    Tax Policies:  Nicaragua maintains a maximum tariff level
on most imports of 20 percent on CIF value.  In addition, the
country assesses a variable selective consumption tax (although
most goods are exempt, when assessed, the tax generally falls
between ten and 20 percent) and revenue stamps (a flat five
percent) on all imported goods.  (The government plans to phase
out the selective consumption tax sometime in 1994 and replace
it with a levy on certain products, whether imported or
domestic.)  A handful of "luxury items" including grapes,
apples, liquors and new automobiles are assessed a luxury tax
ranging from ten to 30 percent.  Finally, most goods (except
basic food items) are subject to a value-added tax of 15
percent paid by the importer upon entry of the good (and often
again at point of sale in an effort by the importer or merchant
to recover the initial tax expense).  Effective import
protection, however, is much higher than the total of the
customs tariff and other import taxes, as these other taxes are
assessed on a cascading basis.

    The highest income tax rate is 30 percent (for taxpayers
earning more than 180,000 Cordobas Oro per year - or about
$29,000 at the official exchange rate of 6.2 to the dollar in
October 1993).  Taxpayers earning less than 25,000 Cordobas Oro
are exempt from the income tax.  The other rates are seven
percent between 25,000 and 40,000 Cordobas; 12 percent between
40,000 and 60,000 cordobas; 20 percent between 60,000 and
100,000 cordobas; and 26 percent between 100,000 and 180,000
cordobas.  Corporations are levied taxes at a rate of 30
percent.  In addition, merchants often complain of municipal
and special taxes, such as the two percent flat tax on sales
charged by the Municipality of Managua, which tend to increase
consumer prices.


4.  Debt Management Policies

    The Chamorro administration inherited a crushing foreign
debt burden from the previous government.  By June 1991,
foreign debt totaled $9.4 billion, of which over $3 billion was
owed to the former Soviet Union and former Eastern Bloc
countries.  In September 1991, Nicaragua succeeded in clearing
its total arrears of $330 million to the World Bank and IDB
with the assistance of a $75 million grant from the United
States.

    After becoming eligible to receive new credits from the
multilateral development banks, Nicaragua began to renegotiate
its bilateral debt.  In 1990/91, Mexico virtually pardoned
almost one half of approximately $1 billion owed (rescheduling
the other one-half on 12-year terms, including debt swap
provisions).  The United States forgave $294.5 million in
official debt and Venezuela and Colombia effectively forgave a
combined $190 million.  In 1992, Argentina and Nicaragua agreed
upon terms rescheduling Nicaragua's $70 million debt for 15
years with concessional interest and a four-year grace period.

    Throughout 1992 and 1993, Nicaragua continued its
discussions with the Commonwealth of Independent States and
Germany over the large debt owed to the former Soviet Union,
and to the former Democratic Republic of Germany (East
Germany).  Similarly, Nicaragua continues discussions on its
debt of roughly $1.3 billion to private foreign banks.  The
government also continues to seek foreign assistance for a
complete buy-back.  However, Nicaragua's foreign debt still
totals more than six times its GDP.

    In December 1991, the Paris Club creditors agreed to grant
Nicaragua the most favorable rescheduling terms offered by the
club to date.  The rescheduling agreement included a provision
that Nicaragua may apply to the Paris Club for a reduction of
debt after 3 years, provided that the country continues its
economic stabilization and reform programs.  Nicaragua
continues to negotiate bilateral agreements with its Paris Club
creditors to formalize the Paris Club accord.

    At an April 1993 Consultative Group Meeting, Paris Club
members made new pledges of $46.8 million dollars, which,
although significant, still left Nicaragua with a substantial
financing gap.  That gap has been closed by additional sources
of assistance, new austerity measures, and the suspension of
Paris Club payments.  Although there has been some payments
problems, Nicaragua has generally remained current on debt to
international financial institutions.


5.  Significant Barriers to U.S. Exports

    Licenses:  The Chamorro government has significantly
reduced trade barriers by cutting tariffs and eliminating state
monopolies and strict import licensing controls.  (Nicaragua
does maintain a price band variable tariff on the import of
basic grains, a high tariff of 240 percent on imports of
poultry in parts and 480 percent on unprocessed cattle sides,
significant selective taxes on imports of fiscal goods produced
locally such as rum, cigarettes, beer and soft drinks and a
luxury tax applied to many "non-essential imports").  U.S. 
exports to Nicaragua have benefitted from overall import
liberalization, growing from $78 million in 1990 to 270.5
million in 1992, and an estimated $300 million for 1993. 
Although Nicaragua's constitution reserves foreign trade as an
exclusive preserve of the state, in 1991, President Chamorro
signed a decree mandating pro forma five-year licensing of
private export and import transactions.

    In most cases the issuance of these licenses is little more
than a formality, or at worst an inconvenience, although the
government continues to work to make the bureaucratic process
less cumbersome.  U.S. pharmaceutical importers, however,
continue to complain that licensing procedures, continually
under review due to a process of regional harmonization of such
regulations, continue to delay the entry of some U.S.
pharmaceutical products.

    Services Barriers:  1991 legislation allowed the
establishment of the first private banks in Nicaragua in a
decade.  Seven private banks are now in operation in the
competitive financial market.  Although current banking law
does allow foreign banks to open and operate branches in
Nicaragua, no U.S. bank has initiated the necessary
proceedings.  One U.S. bank maintains a Nicaraguan banking
license, but does not currently operate in-country.  Insurance
activities remain in the hands of a state monopoly, although
the government is considering legislation which would allow
private sector participation in the insurance sector.

    In the absence of a bilateral aviation treaty,
U.S.-Nicaraguan aviation relations are based on comity and
reciprocity.  In 1992, the Nicaraguan government granted
landing rights to a new U.S. carrier.  After some effort, this
carrier was given a second Managua frequency.  In 1993, four
U.S. air passenger and cargo carriers provide service to
Nicaragua, and both of Nicaragua's international carriers
(passenger and cargo) enjoy landing rights in the United States.

    Investment Barriers:  A new investment law was passed in
June 1991, allowing 100 percent foreign ownership in virtually
all sectors of the economy, guaranteed repatriation of profits,
and repatriation of original capital three years after the
initial investment.  To benefit from this law, investments must
be approved by the foreign investment committee which analyzes
the proposal based upon varied criteria (including in some
cases an "environmental impact study" from the Nicaraguan
Institute of Natural Resources and the Environment).  The
fishing industry remains protected by requirements involving
the nationality and composition of vessel crews and a
requirement for repatriation of 100 percent of the catch (e.g.,
for processing for later export).  In early 1993, the
Government of Nicaragua lifted its moratorium on lumbering in
state forests (representing over 50 percent of national forest
area).  In the sensitive area of forestry, the government
painstakingly reviews all project proposals.

    The government continues to move forward with plans to
privatize state-owned companies in government-dominated sectors
such as energy generation, telecommunications and mining.  In
the mining sector, a private worker-owned consortium is already
active, and several foreign companies have plans to initiate 
some operations.  In October 1993, the government initiated the
pre-qualification phase for privatization of the national
telecommunications company, which is scheduled to be privatized
by June 1994.  The government is also expected to release a
privatization schedule for the electrical utility in 1994. 
Since 1991, the government has divested itself of two-thirds of
the total of 351 state-owned companies and enterprises, and
hopes to finish the privatization process by the end of 1993.

    Definition of property rights continues to remain an
obstacle to both domestic and foreign investment.  Claims for a
large number of homes, businesses, as well as large tracts of
land confiscated without compensation by the Sandinista
Government of Nicaragua have yet to be resolved.

    Over 5000 individuals (including more than 400 U.S.
citizens) affected by property confiscations have outstanding
claims against the Government of Nicaragua.  In early 1993, the
Chamorro government's administrative property claim resolution
mechanism, constructed in late 1992, began to process these
claims for some 16,000 individual pieces of property belonging
to Nicaraguan nationals and foreigners.

    As the resolution mechanism processing the claims continues
to function, the Government of Nicaragua has returned a small
number of properties to original owners.  The majority of cases
settled to date, however, have been resolved through
compensation.  In those cases where it is determined that
devolution of the property is not possible, the government pays
compensation in the form of government bonds.  These 20-year
bonds earn three percent interest payable upon maturity,
maintain value vis-a-vis the U.S. dollar, and are redeemable
through a variety of authorized transactions with the central
government (including payment of certain debts and purchase of
some government-held properties or state companies).

    Lack of an established exchange market makes it difficult
to discern a market value for the bonds.  Informal trading on
the secondary market has been generally conducted from 20 to 40
percent of face value.  This bond compensation remains a
controversial form of resolution, as the vast majority of U.S.
citizen claims have not been resolved and most claimants
believe their properties could be returned if the Nicaraguan
government had the will to do so.

    Customs Procedures:  Importers commonly complain of steep
"secondary" customs costs including custom declaration form
charges and consular fees.  In addition, importers are required
to utilize the services of licensed custom agents, adding yet
another layer of costs.  Legitimate importers also complain
that "black market concerns" are able to bring in the same
goods at greatly reduced tariff rates through informal
arrangements with customs officials, and later offer these
under-priced goods on the open market.


6.  Export Subsidies

    In August 1991, President Chamorro signed an export
promotion decree, establishing a package of fiscal exonerations
and incentives for exporters of non-traditional goods (for this
purpose, goods other than coffee, cotton, sugar, wood, beer,
lobster and sea-harvested shrimp).  Export operations for such
products receive exemption on payment of 80 to 60 percent of
income tax liabilities on a sliding scale from 1991 to 1996,
after which the benefit will be eliminated.  In addition,
exporters of both traditional and non-traditional goods are
allowed to import inputs (used to produce exports goods) duty
free and are exempt from paying the current 15 percent value
added tax.  The decree also allows for preferential access to
foreign exchange for exporters of non-traditional goods.

    The export promotion law provides the right to a Tax
Benefit Certificate equivalent to 15 percent of the FOB value
of exported non-traditional goods.  (The percent of FOB value
eligible decreases to five percent in 1996.)  In May 1993, the
first group of Nicaraguan exporters received the certificates,
valid for payment on tax or duty fees, or payable 24 months
from the date of issue.


7.  Protection of U.S. Intellectual Property

    In May 1990, the Chamorro government committed itself to
"provide adequate and effective protection for the right to
intellectual properties of foreign nationals" in the context of
requesting designation as a beneficiary of the Caribbean Basin
Economic Recovery Act.  Current levels of protection, however,
do not meet modern international standards.

    Although still unable to dedicate extensive resources to
protecting intellectual property rights due to the demands of
its program of economic stabilization and reactivation, the
Government of Nicaragua is in the process of evaluating and
modernizing its intellectual property rights protection
regime.  In January 1993, the Government of Nicaragua publicly
committed itself to accede to the Bern Convention on
Copyrights.  As of this writing in late 1993, the government
has not yet done so.

    Since late 1991, the Nicaraguan National Assembly has been
considering 110 articles of legislation aimed at increasing
protection of copyrights.  The U.N.'s World Intellectual
Property Organization, among others, has expressed concern that
although the legislation would be an improvement over current
protection, it remains deficient in many areas, including the
failure to explicitly extend copyright protection to
foreigners.  Copyright protection currently in force,
established in the 1904 Civil Code, does not include protection
for modern technologies such as bio-patents and computer
programs.  

    The government is also working to modernize its patent and
trademark protection and services.  In October 1992, Nicaragua,
with its Central American neighbors, committed itself to accede
to the Paris Convention for the Protection of Industrial
Property.  The Ministry of Economy and Development has also
prepared new patent and trademark legislation which will be
presented to the National Assembly.  According to preliminary
analysis by the U.S. Government, the bill would offer improved
protection for national and foreign industrial properties. 
Nicaragua is a signatory to the following copyright conventions:

-   Mexico Convention on Literary and Artistic Copyrights (1902)
-   Buenos Aires Convention on Literary and Artistic Copyrights
    (1910)
-   Inter-American Copyrights Convention (1946)
-   Universal Copyright Convention (Geneva 1952 and Paris 1971)
-   Brussels Satellite Convention (1974)

    Trademarks:  Notorious trademarks represent a potential
problem area for Nicaragua.  Although only two instances of
infringement involving U.S. companies were reported in 1992
(and none in 1993), current Nicaraguan procedures allow any
individual to register a trademark without restriction, at a
low fee, for a period of 15 years.

    Copyrights/New Technology:  Piracy of copyrighted
properties continues to be evident as Nicaraguans dedicate
increasing financial resources to entertainment.  Pirated
videos, both imported from neighboring countries and more
recently produced locally from pirate "master" copies, are
readily available in nationwide video rental stores, as are
imported and domestic pirated audio cassettes.  It is not
uncommon for copyrighted books to be photocopied, or illegally
published, as occurred with a recent work by a local author. In
addition, cable television operators are known to intercept and
retransmit U.S. satellite signals -- a practice which continues
despite a limited trend of negotiating contracts with U.S.
sports and news satellite programmers.

    One of Managua's two functioning private television
stations similarly transmits (often from video cassettes)
pirated U.S. films; the second station ceased the practice in
early 1993.  The practice, not illegal under Nicaraguan law,
has proved especially damaging, as in several instances the
abusing television station under-cut the theater market for
feature U.S. films being actively promoted.  In an effort to
avoid some of these losses, in mid-1993 several U.S. film
distributors ceased supplying Nicaraguan theaters.

    A report prepared in September 1992 by the International
Intellectual Property Alliance estimated that losses in
Nicaragua due to copyright infringements involving books and
motion picture industry cost U.S. firms 1.3 million dollars
annually.


8.  Worker Rights

a.  The Right of Association 

    The Nicaraguan Constitution guarantees the right of workers
to voluntarily organize unions "in conformity with the law"
(Article 87).  Legally, all public and private sector workers,
with the exception of the military and the police, are entitled
to form and join unions of their own choosing; they exercise
this right extensively.  New unions must register with the
Ministry of Labor and be granted legal status before they may
engage in collective bargaining with management.  Some labor
groups report occasional delays in obtaining legal status. 
Nearly half of Nicaragua's work force, including agricultural
workers, is unionized, according to labor leaders.

    The constitution also recognizes the right to strike
(Article 83).  Workers may strike legally only after they have
exhausted other methods of dispute resolution, including
mediation by the Ministry of labor and compulsory arbitration. 
In practice, unions regard these lengthy procedures as too
expensive and time consuming and frequently ignore them when
initiating a strike.  There were numerous strikes in Nicaragua
in 1993, but most were declared illegal.

    Unions may freely form or join federations or
confederations and affiliate with and participate in
international bodies.

b.  The Right to Organize and Bargain Collectively

    The constitution provides for the right to bargain
collectively (Article 88).  The Chamorro government's labor
negotiations in 1993 continued primarily to constitute ad hoc
efforts to resolve pressing labor conflicts, usually in the
public sector.  Despite unfavorable economic conditions and
unfamiliarity with the practice following 10 years of central
planning, collective bargaining is becoming more common in the
private sector.

    In July 1992, the International Labor Organization's
Committee of Experts on the application of conventions and
recommendations issued a report noting that the Nicaraguan
labor law provision which subjects collective agreements to the
prior approval of the Ministry of Labor before they can come
into force violates the Convention on the Right to Organize and
Bargain Collectively, ratified by Nicaragua in 1967.  No action
was taken to modify this provision in 1993.

c.  Prohibition of Forced or Compulsory Labor

The constitution prohibits forced or compulsory labor (articles
40 and 86), and there is no evidence that it is practiced.

d.  Minimum Age for Employment of Children

    The constitution prohibits child labor that can affect
normal childhood development or interfere with the obligatory
school year (Article 84).  Education is compulsory to age 12,
and children under the age of 14 legally are not permitted to
work.  Nevertheless, because of the prevailing economic hard
times in Nicaragua, more than 100,000 children reportedly work
up to 12 hours a day.  Although the Ministry of Labor rarely
enforces it, the child labor law is generally observed in the
small modern sector of the economy.

e.  Acceptable conditions of Work

    Over the objections of labor representatives, a commission
made up of representatives of the government, labor, and the
private sector set sectoral minimum wages in mid-1991.  The
labor groups argued that the monthly minimum wage rates
(ranging from $30 in the agricultural sector to $39 for central
government employees to $50 in the banking sector) were
inadequate given the high cost of living.  According to a 1991
estimate by the government's National Commission on the
Standard of Living, the minimum wage did not provide a family
of four with the income to meet its basic needs.  Minimum wage
levels were not adjusted following the 20 percent devaluation
of the Cordoba in January 1993.

    Enforcement of the minimum wage is lax, and some workers
are reportedly paid less, particularly in the agricultural
sector.  However, Ministry of Labor surveys indicate that some
86 percent of urban area workers earn more than the minimum
wage.

    The constitution specifies an 8-hour work day with weekly
rest and establishes the right to a safe and healthy work place
(Article 82).  The standard legal work week is a maximum of 48
hours with one day of rest.  The Ministry of Labor's office of
Hygiene and occupational security is responsible for verifying
compliance with health and safety standards.  Although
extensive, these standards are not strictly enforced due to an
insufficient number of inspectors.  Workers have no specific
right to remove themselves from dangerous situations without
jeopardy to continued employment.

f.  Rights in Sectors with U.S. Investments

    The above rights are generally observed in sectors with
U.S. investment and overall working conditions do not differ
adversely from the general description above.




         Extent of U.S. Investment in Selected Industries

              U.S. Direct Investment Position Abroad
                on an Historical Cost Basis - 1992
                    (Millions of U.S. dollars)

Category                                    Amount

Petroleum                                                 D
Total Manufacturing                                      -9
    Food & Kindred Products                     D
    Chemicals and Allied Products               0
    Metals, Primary & Fabricated                0
    Machinery, except Electrical                0
    Electric & Electronic Equipment             0
    Transportation Equipment                    0
    Other Manufacturing                         D
Wholesale Trade                                           1
Banking                                                   0
Finance and Insurance                                     0
Services                                                  D
Other Industries                                          D

TOTAL ALL INDUSTRIES                                      D



(D) -Suppressed to avoid disclosing data of individual companies

Source:  U.S. Department of Commerce, Bureau of Economic
Analysis.

(###)
To the top of this page