Most of the reported increase in foreign investment flows to the country in the first quarter of the year was explained by investments in the electricity sector.
In the first quarter of 2019, figures from the Bank of Guatemala (Banguat) report a considerable increase in foreign direct investment (FDI) compared to the same period last year, going from $293 million to $340 million.
At the end of June in Guatemala, credit to the private sector registered a 7% year-on-year growth, which is explained by the upturn in mortgage and consumer loans.
Figures published by representatives of the Banco de Guatemala specify that at the end of the first semester of the year, the total credit to the private sector reached $26.571 million, amount that is 6.9% higher than that reported a year ago.
During its last visit to Guatemala, the IMF warned that if banking secrecy is not lifted in the country, compliance with "international transparency treaties" could be undermined.
After the last visit of the International Monetary Fund (IMF) to Guatemala, the international organization warned that reversing the decrease in tax collection involves strengthening the control of large taxpayers, improving the use of tax information to reduce non-compliance, reallocating resources to risk-based audits, and reconsidering the lifting of bank secrecy for tax auditing purposes.
Due to the crisis affecting Nicaragua and paralysis of construction in Panama between April and May, the IMF has reduced the expectation of economic growth for the Central American region from 4% to 3.3%.
The International Monetary Fund (IMF) cut growth forecasts for the Central American economy, due to the uncertainty caused by the situation in Nicaragua and its effect on the region's economic activity, and the impact of the construction strike in Panama, which has halted works on 260 projects nationwide for the last 30 days.
The International Monetary Fund is warning that adjustments are needed in order to increase tax revenues and reduce the state's fiscal deficit.
They note that "... the tax reform passed in 2012, which came into effect on January 1 this year, broadens the tax base and gives the government more tools to enforce fiscal and supervisory controls and eliminates tax exemptions and reduces corporate tax rates," noted an article in S21.com.gt.
The issue that is planned to be made in July, will be used to settle accounts for $448.7 million which the government owes to builders.
"It's an important issue," said Alejandro Sinibaldi, head of the Ministry of Communications, Infrastructure and Housing (VIC), therefore, this month the initiative will be taken to Congress.
According to the Finance Minister Pavel Centeno, the project will be undertaken after rearranging the budget, as there are plans to make spending cuts of about $153.8 million amid falling revenues.
The world economic order is changing rapidly , while Guatemala's foreign relations are conducted with the same style as in the times of the Cold War.
An analysis of this issue by Reny Mariane Bake in Prensalibre.com, reviews the current status of Foreign Affairs in Guatemala, but this analysis also applies to other, but not all, countries in the region.
In light of the European crisis and slow growth in the U.S., the best protection for Latin American countries is macroeconomic discipline.
Although it is believed that regional banks are "solid, liquid and stable," the recommendation for Latin America to avoid or at least mitigate the inevitable effects of the economic crisis in Europe and the slow recovery of the U.S., is to keep a lid on fiscal deficit.
Central America and the Dominican Republic have agreed together to ensure financial liquidity, create mechanisms for monitoring risk management and financial systems, as well as taking measures against the effects of the euro zone crisis and the weakness of U.S.
Carlos Acevedo, president of the Central Reserve Bank of El Salvador, told Prensalibre.com that "we are preparing a regional financial system and shielding mechanisms."
As a result of the the contagious effect of the financial crisis in Europe, along with slow U.S. recovery, commodity prices have reversed their upward trend and started to decline.
The IMF's report last September on expectations about the global economic situation indicated a slow recovery for the more advanced economies.
For Latin America the picture was different, with growth of 4.5% forecasted.
Authorities from the Central American countries will discuss with the IMF the outlook for the coming years.
Two years after the international financial crisis significantly affect the economies of Central America, the authorities of the isthmus nations are meeting to discuss progress of the fiscal and economic reforms that have been implemented.
An article in Infolatam.com reports: "regional monetary authorities and the IMF will discuss progress in rebuilding fiscal space and ensure debt sustainability, the strength of the financial, regulation and supervision systems and prudential framework, and the interaction between structural reforms and economic growth, among other issues, according to the official program.
The U.S. could be facing a possible reduction in their risk rating, due to levels of national debt and government deficit.
Democrats and Republicans have been debating in the United States Congress trying to reach an agreement that will raise the debt ceiling and secure public finances for the future, avoiding a potential cessation of payments or a reduction in the country’s risk rating.
While in Europe ratings go down and in Latin American they go up, the opinion of the agencies is starting to be looked at with different eyes.
A decade ago debt issued by European countries benefited from mostly high grades and attractive ratings, which helped them maintain high prices and low yields.
This situation now appears to have reversed, and today it is the Latin American countries that rating agencies look upon favorably, while countries such as Portugal and Greece are seeing debt ratings fall to speculative levels.
The lack of definition of a comprehensive agenda focused on identifying the root of the problem seems to be the reason.
Latin American countries have shown significant levels of economic growth in recent years pushed by, among other things, the favorable international environment. However, the productivity of Latino workers seems not to have kept pace.
In early December, the government will begin negotiations for a potential $300 million agreement.
The Finance Minister, Alfredo del Cid, said that “that agreement will set parameters to control the fiscal deficit, which will be 2.8 percent this year and between 3 percent and 3.2 percent in 2011".
Guatemala has requested to date four Stand-By agreements, from 1992 to 94, 2002 to 03, 2003 to 04 and the last from 2009 to 2010.