The International Monetary Fund (IMF) report sheds a positive light on the country's macroeconomic situation and the stability of its financial system.
A staff team from the International Monetary Fund (IMF) visited Guatemala during August 17-26, 2010 to conduct the fourth and final review of the Stand-By Arrangement approved in April 2009. The mission met with Minister of Finance Edgar Balsells; Central Bank Governor María Antonieta de Bonilla; Superintendent of Banks Edgar Barquín; other senior government officials, and representatives of the private sector.
Between January and the first week of August 2010, the level of private capital increased from $6.8 to $7.4 billion.
According to information from the Guatemalan central bank, Banguat, the total for the period to August 2010 is $591 million higher than the same period last year, representing an 8.7% increase.
"So far in 2010 investments total $912.5 million, 1.3% up on the $901.1 million in 2009, which was 5.1% below the same period in 2008 when investments totaled $949.9 million," reports Sigloxxi.com.
The new calculation will come into effect on July 16th; it will only consider transactions larger than $20.000.
Currently, the Central Bank includes all foreign exchange market transactions to calculate an average rate.
“Carlos González, analyst at Asies (Social Estudies Association), considers that this will allow for faster transactions, as it will eliminate from the calculation a lot of small, meaningless transactions”, reported Sigloxxi.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.
Key economic indicators show less economic deterioration than other countries of the region.
An article in Prensa Libre published comments by two Guatemalan economists, Mario Cuevas and Carlos González Arévalo. The former is president of the Center for Economic Investigations (CIEN), while the latter represents the Association for Social Studies and Investigations.
The XVIII edition of the Apparel Sourcing Show, which will be held from May 19 - 21, will generate about $100 million in business.
The event, which is to be held at Hotel Tikal Futura’s Convention Center, will be attended by entrepreneurs from Colombia, Mexico, Central America and especially the United States.
An article in SigloXXI.com reported: "While the expectation is that business for about $100 million will be generated, [Antonio] Malouf (chairman of the organizing committee) considers that the most important thing in this issue of the fair is to keep the line to major markets such as the United States open."
The Monetary Board (JM) decreased the leading interest rate by 0.25 basis points, placing the indicator at 6.25%.
According to Sigloxxi.com, "One of the reasons for the adjustment, said the chairman of the Board and the Bank of Guatemala (Banguat), Maria Antonieta de Bonilla, is that inflation over the past three months was lower than expected. Even so, it lies slightly above the tolerance margin for 2009.
The Government is analyzing whether to ask the International Monetary Fund (IMF) for a precautionary loan through a stand-by agreement.
Siglo XXI published on its website: "A precautionary loan is characterized as stand-by because the organism commits to reserving the amount requested, but the disbursement is not immediate. Instead, the creditor holds the loan amount until it deems it is necessary to use the resources.
The Banguat president argues that the pace of GDP growth, estimated in the range of 3.0% to 3.5% for this year, is not sustainable.
Siglo 21 published on its website: "The official explained in a meeting with columnists and economic analysts that the reduction in demand and risk aversion among investors have begun to erode economic development. In fact, she noted that there is a revision pending for GDP growth in 2008, whose preliminary figure is 4.0%. De Bonilla would not reveal how much the revision would be because the technicians of the Central Bank are still doing studies to define it based on multiple factors."
The Monetary Board reduced the prime interest rate by .025 percentage points.
Prensalibre.com reports: "The decision was due, among other things, to the drop in the oil and food prices, as well as the forecast of recession in the world's largest economies, according to explanations at a press conference yesterday afternoon by the president of the Bank of Guatemala, Maria Antonieta Del Cid de Bonilla."
Businessmen estimate that a reduction in the rate which is now at 7.25% would help to reactivate credit.
There are division and the debate is hot. The petition from the industrial sector to lower the main interest rate in order to reactivate the economy has its supporters and dissidents.
Representatives from the private sector believe that it is time to make an adjustment.
According to Banguat, the banking system has $614.5 million (Q4,747.6 million) in available liquid assets.
"We have insisted that the banks have enough liquidity to meet commitments; that is, they have extra reserves and liquid assets, but in the current situation, they can, as some global banks have done, maintain higher levels as a precautionary measure," the president of Banquat, Maria Antonieta de Bonilla, said.
The Monetary Board in charge of directing macroeconomic policies of the country opened a special account in US dollars and placed it at the disposal of the private banks to help them acquire liquidity.
Maria Antonieta Bonilla explained that the account would come into effect as of 31st Jan, 09 with the objective of giving liquidity to banks in the system that have had some difficulties.
The Bank of Guatemala revised their growth estimates for 2008 to 4.3% which is lower than the 4.8% predicted in April and the initial 5.3% in January.
The Bank acknowledged that the national economy is slowing down due to adverse international conditions, the high price of oil, food and raw material.
The change comes after the Bank carried out a survey of 1250 companies between April and August to estimate GDP growth based on the behavior of employment, sales, inventories and production.