Royalties on mineral holdings in Guatemala will be imposed on three levels related to the base value of the extracted material.
According to Mario Marroquin, president of the Union of Mining and CEO of the company Montana Exploradora (main extractor of gold and silver in Guatemala), precious metals are those with the highest and there are other lower rates for base metals and non-metallic minerals.
Segmenting the vast U.S. market into its 50 states is the recommendation of CABI, with support from the U.S. Agency for International Development.
The analyst Pablo De Leon, during the launch of the market intelligence tool ‘CABI U.S. Business Opportunities Model ®’, said: "In order to do business with the United States, the nation must be treated as if it were 50 different countries".
The lack of political stability and a clear tax system, make Guatemala unattractive for investment in metal extraction, compared with countries like Chile and Brazil.
A study by Central American Business Intelligence (Cabi) puts the Central American country at a disadvantage when compared with Chile, Brazil, Peru and Mexico in the exploitation of metals.
This historical record of 7% on average in Guatemala's banking system could stimulate investment.
Paulo de León, from the company Central American Business Intelligence (Cabi), told a group of government officials in Guatemala that banks are now offering an average rate of 7%, the lowest interest rate in the last 40 years.
"It's a good time for financial players to make investments or reinvestments," said De Leon, according to Prensalibre.com.
Compared to the same period in 2010, imports of machinery and equipment in the first 7 months of 2011, have increased by 14%.
According to the Bank of Guatemala, companies acquired $186 million worth of capital assets.
"An analyst at Central American Business Intelligence (CABI), Paulo De León, believes that this demonstrates the existence of dynamic sectors in the economy that are investing, producing and creating jobs, despite the odds", reported Siglo21.com.gt
The initiative presented to congress contains serious gaps to the detriment of consumers who use plastic money, and who have not been consulted in the preparation of the project.
Carlos A. Mendoza, CABI analyst, warns that the text of the bill on credit cards has been written without consulting financial consumers, and cites as an example the Salvadoran law on the same subject.
U.S. currency rose last week after having been at its lowest value for the last five years.
The upward trend that the dollar began showing last week against the quetzal, could continue in the coming months as it seems that factors that pushed the dollar down are no longer present in the Guatemalan economy.
One contributing factor is the inflow of foreign exchange from exports, which increased during the harvest and the months of higher coffee sales, but the coffee year is coming to an end, so the influx of dollars could start to decline in the coming months, relieving the pressure and creating a drop in the value of U.S. currency compared to the quetzal.
While analysts regard the 7.6% increase as low, it at leasts suggests that the economy is slowly recovering.
Loans granted by Guatemalan banks to the private sector seem to be returning to a growth trend. This can be seen from data published by the Guatemalan Central Bank, which shows an increase of more than 7% in banks' credit portfolios.
Although the figure is bigger than at the beginning of the year, consensus among Guatemalan economists is that it could be higher, especially considering that inflation is currently at 5.24%, which puts real growth in private sector loans at just 2.26%.
The recovery of the economy is inevitably tied to the U.S. and Guatemala's will only be as slow as the U.S. recovery.
Analysts at Central America Business Intelligence (CABI) noted that there are steps which the government could implement in order to improve the picture.
Sigloxxi.com includes comments by Miguel Gutierrez, a CABI economist, who recommends "...
After 13 years, prices in future contracts of coffee in the New York market are over $ 210.
This upward momentum comes not only from lower yield forecasts by main world producers of coffee, but also speculation. Dollar weakness encourages financial traders to hide their capital into commodities and coffee is one of the most sought after for future operations.
In the first quarter of the year consumption was up 4.7% and investment fell 11.6% relative to the same period of 2009.
The data form part of analysis conducted by the Guatemalan central bank, Banguat, on the economy's performance.
Economists consulted indicate their concern about the subject. Manuel Pérez Lara, ex member of the Monetary Committee comments that, "this is very dangerous because it is investment that drives improvements in the quality of life, productivity and development, not consumption," reports Prensalibre.com.
In a strange unanimity, government officials agree with independent economic analysts: dollarization is inconvenient for Guatemala.
That the Guatemalan Central Bank argues against dollarization is no surprise for anyone, as its very reason for existence is questioned with it. Accordingly, its president María Antonieta de Bonilla stated that the concept has more disadvantages than advantages.
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.
Carlos Gonzáles, expert from the Social Study and Research Association (Asies), told Sigloxxi.com that “private banks will have fewer resources to lend to productive activities, including micro, small and medium enterprises, slowing down the economic recovery”.
A proposal will be sent to Congress next week, reported Juan Alberto Fuentes, Finance Minister.
The Monetary Board, part of the Central Bank, has green lighted this operation. It is now in the hands of Congress to decide if the country should issue these bonds.
“Miguel Gutierrez, analyst from think tank CABI explained that if the Government decides to move forward with this transaction, it must do so in the next four months, before the U.S.
The global economic crisis forced Guatemala to increase its debt, but the country must now try to reduce it.
Economists are worrying for Guatemala’s foreign and domestic debt levels. “Eventually, it will be unsustainable, and the country won’t be able to pay it back. It will not happen right now, but in the medium term”, said Miguel Gutiérrez, analyst at Central American Business Intelligence.
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