If approved by Congress, the Government's deficit this year would reach 3.4% of GDP.
Elperiodico.com.gt reports, "Julio Suarez, vice president of Banguat, announced that JM endorsed his opinion of an increase in public debt, although representatives of the private banking and corporate sectors opposed it."
The issuance of the bonds will take place during the remainder of the year.
The Monetary Board approved the issuance of $ 673 million in securities to finance the 2011 budget.
The approval was unanimous, this time with the support of the private bank sector.
"Tulio García, representative of the private sector at the WB, said that opposing the decision of the board was a lost cause, so they opted to seek the Government's commitment for the fiscal 2011 deficit not to exceed 2.7 percent of gross domestic product (GDP) and wait for the year to end between 3.1 to 3.4 percent of GDP," writes Lorena Alvarez from Elperiodico.com.gt.
Experts foresee increased interest rates, exchange rate variations, liquidity issues, domestic credit shortages and more inflation.
Investors would be drawn to the superior interest rates paid by government securities, taking money out of the market and into the State Treasury, limiting the capacity of banks to lend to private companies.
Congress approved a $ 210 million bond issuance with the purpose of rebuilding the country.
Recent natural disasters which have hit the country left damages for more than $ 1,500 million.
"The decision was adopted with 110 votes from a quorum of 133. Decree 53-2010 was approved with 4 amendments and stipulates that if the resources are not used this year, they may be included in the 2011 budget," wrote Kenia Reyes from Elperiodico.com.gt.
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