This was the recommendation of the president of the Bank of Guatemala, Edgar Barquín, in an interview with Joel Maldonado from S21.com.gt. "... The country lacks a policy on public debt. The governments of the past 25 years have been indebted to the nation according to what they need for the next year and have not had a foundation for the medium and long term," he said.

The policy must contain "at least four areas: what the debt ceiling is in relation to GDP (in my opinion that should not be over 28%). It should be defined in relation to tax revenues, so that it is not more than 2.3%, in addition, fiscal deficits should not be above 2.0%, and finally, borrowing should be for productive investment. "

"... Nowadays the debt level is manageable and there is still time to lay the foundation of these public policies, but if the country carries on getting into debt at the pace it is, in 10 years the debt service will be so big that the state will have fewer resources left to meet social obligations and investments ".

"In order to grow the country needs more private investment. We had income via Foreign Direct Investment (FDI) last year worth $1.25 billion, this year it will be around $1.325 billion. "

"With that level of FDI inflows we can not grow beyond 3.5%. In order to go further than this we need more investment: hydropower, roads, more mining, oil, hotels ... ".

Source: sigloxxi.com

More on this topic

Costa Rica: Public Debt Reaches 39% of GDP

March 2015

The need to borrow every month in order to pay current account expenses is the main cause of the continuing increase in the central government's debt to GDP ratio.

At the end of 2014, total public debt, which includes the Central Bank of Costa Rica and other public sector entities represented 58.6% of all production.

Guatemala: Public Debt Could Reach 25.5% of GDP

January 2014

The fiscal deficit of 2.3% proposed for the 2014 budget would cause such an increase in the Guatemalan public that could put monetary policy at risk.

In 2014 Guatemala's public debt will increase and it will be approximately $14.670 billion, equivalent to 25.5% of the country's GDP, explained Edgar Barquín, president of the Bank of Guatemala.

Growing Worries Over Guatemala's Public Debt

November 2013

Public debt has grown rapidly from $2 billion in 1998 to $13 billion in 2013.

This was explained by the president of the Bank of Guatemala, Edgar Barquín, who recommends establishing a debt policy in the country. "In the draft budget for 2014, the amount of debt accumulated by Guatemala will reach $14 billion," reported Prensalibre.com.

Guatemala's Debt, Manageable Now, is Unsustainable Long Term

April 2013

The president of the Bank of Guatemala, Edgar Barquin warned that "In a decade, the debt level will be critical."

Guatemala's foreign debt currently amounts to 25% of gross domestic product (GDP), and it appears to be far from the critical point, which is indicated by 40% of GDP.