“Central America, a region which is not involved in the [Iran] conflict, that has no control over the Strait of Hormuz and does not produce the petroleum, fertilizers and the Active Pharmaceutical Ingredients (APIs) that it consumes,” is facing a dramatic crisis, according to a private economic newsletter published in the region.
With a population of 55 million, Central America imports more then 75% of the fertilizers it consumes, and since Feb. 28 the prices of fertilizers have risen by 40-55%. “Honduras [population 11 million] has the highest risk profile in the region. About 50% of its basic grain production depends on granular fertilizer; more than 800,000 rural families face chronic food insecurity and have a high dependency on foreign remittances—more than 25% of GDP,” the study reports.
The report also explains that “Central America doesn’t have industrial scale production of Active Pharmaceutical Ingredients (APIs), which makes it structurally dependent on imports from India, China, Europe and North America.” They note that India plays the critical role, because it produces some 60-65% of all APIs worldwide, as well as 20% of all generic medicine. Central America needs this help “to supply the antibiotics, the insulin, and the anti-parasitic drugs for the health systems of the region.”
They explain that “in Guatemala and Honduras, more than 32% of their populations are under 15 years old… With no capacity to absorb them, this pressure translates into migration, reinforcing the dependency on remittances—which constitute more than 25% of GDP in Honduras—to maintain consumption.”
The newsletter touches on a few proposed regional solutions. They call for the Central American Bank for Economic Integration, an international multilateral development financial institution, to provide “emergency lines of credit for the importation of fertilizer and essential medicines, channeled through the regional banking system with sovereign guarantees.”