Companies and Banks Opposed to Increasing External Debt

The Monetary Authority of Guatemala decided, against the vote of banking representatives and private enterprise sectors, to increase debt through issuance by 10.9%.

Friday, April 24, 2009

The main argument by the opposition is that the solution to the problems in the treasury is to reduce state spending, not increase debt. They insist that the money that is going to cover state expenditures in this manner should be invested to facilitate credit for the productive sector, which has suffered a sharp decline.

From the government’s point of view, it is justified to the extent that, as Sergio De La Torre, the representative of the business sector for JM, noted in the article in SigloXXI.com, macroeconomic statistics indicate that the country can still borrow more. "The country's debt levels and debt service are not critical. Then, there has been a drop in tax revenue and a it is expected to continue dropping during the rest of the year. With a budget the size that was approved last year, 49.7 Billion Quetzals and revenue going down, there is obviously a deficit. Last year's budget was based on a projected growth of 4.6%, and the latest revision by the Bank of Guatemala points to a decrease between 1% and 2%."

More on this topic

Warnings Over Panama's Increased Public Spending

October 2014

Economists recommend fiscal discipline in order to better address the economic environment in the coming years and avoid the credit risk being raised due to increased borrowing.

The recent bond issue of state debt by $1250 million on the international market and the consequent increase in total public debt should be a wake up call for the government, which should be able to maintain an adequate balance in the relationship between debt and Panama's Gross Domestic Product.

El Salvador: Public Debt Grows and So Does Country Risk

August 2013

In the first six months of 2013 the Salvadoran government's debt rose by $296.1 million with the country risk increasing 104 basis points.

Estimates by the Central Reserve Bank (BCR), reveal that when comparing June 2013 ($14.5469 billion) to June 2012, state commitments increased by $1.2799 billion, as in June last year $13.267 billion was reported.

Projected Fiscal Deficit of 6% in Honduras

June 2013

Projections by the Ministry of Finance show that the future Honduran government could be left with an imbalance between expenditures and revenues of more than $1.2 billion .

Latribuna.hn reports that "... authorities from the ministry of Finance reported that in the current economic conditions, the fiscal deficit at the end of the year could exceed 6% and not 4.5%, as predicted by the Monetary Program, presented in April by the Central Bank of Honduras (BCH) ".

The IMF's prescription for Honduras

July 2010

Gradual increase in exchange rate flexibility, supported by fiscal consolidation, wage moderation, and a prudent monetary policy.

On July 12, 2010, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with Honduras.

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