More State Debt, But for Poor Quality Spending

So far in the Morales administration, the Guatemalan government has raised $2.4 billion through the issuance of Eurobonds, but the quality with which the funds collected are being executed is questioned.

Tuesday, May 28, 2019

The last issuance of Eurobonds was on May 23, when the government issued $700 million over 30 years at a 6.12% rate, and $500 million over 10 years at a 4.9% rate.

See "Guatemala Issues $1.2 Billion in Eurobonds"

Hugo Maul, an analyst at the Center for National Economic Research, explained to that "... If this issuance really lowers the cost of debt and conditions, then welcome. But we know that these operations come to finance public spending and the problem with the quality of that public spending, because of the low productivity and efficiency and to put these resources in the common fund, is to condemn that they go to the sewer of ineffectiveness, corruption and opacity."

Maul added that "... the issuance generates doubts because it is done in an election year. All this generates financial spaces that when a budget is discussed in a new government, also has a little more freedom, which is not bad, but the worst thing is that it is left unfunded."

In summary, during the first year of Morales' administration, $700 million in Eurobonds were issued, in the second the amount was $500 million and in 2019 $1.2 billion have been issued.

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