Companies and Banks Opposed to Increasing External Debt
The Monetary Authority of Guatemala decided, against the vote of banking representatives and private enterprise sectors, to increase debt through issuance by 10.9%.
Friday, April 24, 2009
The main argument by the opposition is that the solution to the problems in the treasury is to reduce state spending, not increase debt. They insist that the money that is going to cover state expenditures in this manner should be invested to facilitate credit for the productive sector, which has suffered a sharp decline.
Economists recommend fiscal discipline in order to better address the economic environment in the coming years and avoid the credit risk being raised due to increased borrowing.
In the first six months of 2013 the Salvadoran government's debt rose by $296.1 million with the country risk increasing 104 basis points.
Projections by the Ministry of Finance show that the future Honduran government could be left with an imbalance between expenditures and revenues of more than $1.2 billion .
Gradual increase in exchange rate flexibility, supported by fiscal consolidation, wage moderation, and a prudent monetary policy.
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