The government asked Congress to increase public debt by $225 million to finance the budget.
Thursday, April 2, 2009
Currently, the Executive Branch may issue up to $171 million. If the increase is approved, the number would reach $394 million.
The measure is due to the expectation of an "unprecedented reduction in revenue, up to Q4 billion ($494 million,) due to the global economic crisis," said Juan Alberto Fuentes Knight, Minister of Finance, in an article in sigloxxi.com
The article also indicated that the Government plans to make transfers between portfolios to readjust the budget with Health being the most affected, giving up $46 million and Communications $28 million. Those that will have more are Pro Rural with $50 million and the Army, Ministry of Foreign Affairs and the Mi Familia Progresa (Progress for my Family) program.
On December 12th the Ministry of Finance expects to place in the domestic market the remaining 30% of the issue approved in order to finance the 2015 budget.
70% of the treasury bonds that Congress passed have already been awarded, and on December 12th it is expect that the remaining 30%, ie $110 million will be auctioned in the local market.
Guatemala's public finances face a tough scenario for 2010, after Congress rejected a proposed larger budget.
In 2010, a politically weakened Guatemalan Government will be obliged to find financing to cover an expected $770 million fiscal deficit.
It will be tough to achieve such goal without compromising the country's macroeconomic balance and sovereign debt ratings, so there will probably be important cuts in public spending.
The Finance Ministry presented the issue plan to bankers and investors.
Starting September 1st, public auctions will be carried out in the Stock Exchange, in which state companies, banks and private investors will participate.
"Those intending to invest in this securities have two options: they can approach the Central Bank and purchase bonds by themselves, with a minimum of Q10.000 ($1.214), or they can go to a stock broker and invest a minimum of Q5.000 ($607). In both cases, the investment can increase in multiples of Q100 ($12)", reported Prensalibre.com.
The SAT lowered its tax collection goal for 2009 by $441.
For 2009, the Tax Administration Superintendent (SAT) in Guatemala had planned to raise $4.758 billion, but it reported yesterday that the target was adjusted to $4.32 billion, a decrease of 9.28%.
Prensalibre.com reported that the Finance Minister, Juan Alberto Fuentes Knight, addressed the impact on the fiscal deficit: "It would have to be covered by a decrease in operating expenses, plus donations and debt grants pending approval, but it is expected that the aforementioned deficit will remain at 2%."
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