Guatemala: Microfinances in the Red

A warning has been given that 44% of microfinance clients are overindebted and that a change is required in the regulation in order to reverse the situation.

Thursday, August 20, 2015

A study prepared by Grupo Analítica, SA for the Network of Microfinance Institutions of Guatemala (Redimif) said that the main problem behind the high level of indebtedness is the poverty that affects most of the debtors, many of whom live in the poorest departments, such as Totonicapan, Suchitepequez, Quetzaltenango, Zacapa and Sacatepéquez.

Reynold Walter, president of Redimif, explained that "... Those at risk of losing their surplus, are 7.90% of the total; and those who can not pay their credit, because they have a debt indicator of greater than 100%, represent 23.20%. "

"... David Arrivillaga, chairman of the Committee for the Prevention of indebtedness, emphasized that the phenomenon that has arisen is a mistake on the part of microfinancers, as a result of mismanagement of microcredits (loans from $10 to $1,300). "

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