Guatemala: CICIG's Withdrawal Impact

For Moody's, the withdrawal of the International Commission against Impunity weakens efforts to improve the rule of law in a country with high levels of corruption.

Thursday, January 10, 2019

For Moody's, President Morales' decision to end the mandate of the International Commission against Impunity in Guatemala (CICIG) is a setback for the country because corruption is still widespread and institutions are still fragile.

David Casasola, a consultant with the Center for National Economic Research (CIEN), said to that "... the country risk rating has been based mainly on macroeconomic stability, and the warnings are for social conflict and political instability. It will depend on what level the political instability rises to for Moody's to decide to modify the rating for Guatemala."

On the other hand, Erick Coyoy explained that "... one of the risk factors that the rating agencies review was activated: legal certainty. The government is failing to comply with the legislation and that worries Moody's."

Part of Moody's statement:

On 7 Janauary, Guatemala's Minister of Foreign Affairs announced the country's withdrawal from the Internationar Commission Against Impunity in Guatemala (CICIG) after scalating tensions between the goverment and teh group. The United Nations-backed CICIG was created in 2006 in response to a request by the guatemalan government to combat the high rates of impunity from crimes, but over the past three years the CICIG has been investigating high level government officials and other close to President Jimmy Morales. The expulsion of the CICIG in credit negative because for Guatemala it weakens efforts to improve the rule of law in a country with very high levels of corruption.

Although the CICIG has made significant progress in uncovering entrenched criminal networks within the state, corruption remains widespread in the country an institutions are fragile. The latest Transparency International Corruption Perceptions Index (2017) ranks Guatemala at 143 ut of 180 countries and Worldwide Governance Indicators for Guatemala are among the lowest of countries we rate (see exhibit). The Withdrawal of CICIG represents a significant setback for teh country, weakening efforts to strengthen institutions an improve the rule of law.

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