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 Prensalibre.com 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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More on this topic

Costa Rica: Government Urges to Issue More Eurobonds

September 2019

The Ministry of Finance plans to present a new bill in the Legislative Assembly to issue $4.5 billion in foreign debt bonds next year.

The amount that will be requested is what is needed to reach the $6 billion that was requested this year before Congress, of which only $1.5 billion was authorized.

Approval to Issue Eurobonds

July 2019

The Legislative Assembly of Costa Rica approved in second debate the bill that authorizes the government to issue up to $1.5 billion in bonds in the international market.

The Ministry of Finance (MH) reported that with the approval of Bill No. 21.201, which was made on July 16 as planned, the Executive is authorized to administer, issue and manage financing operations in the international market up to an amount of $1.5 billion (one thousand five hundred million U.S. dollars), during the following year after the law was approved.

Costa Rica is Closer to Issuing Eurobonds

July 2019

The Legislative Assembly approved in first debate the issuance of $1.5 billion in debt securities in the international market, which in the opinion of the rating agencies, helps to reduce uncertainty about the government's ability to meet its financing needs.

The Treasury Department's initial plan was to issue $6 billion within six years, however, the committee in charge of the file modified the text so that the limit would be $1.5 billion.

Guatemala Issues $1.2 Billion in Eurobonds

May 2019

The government was able to issue $700 million over 30 years at a 6.12% rate, and $500 million over 10 years at a 4.9% rate.

The operation was carried out through the bank Citigroup Global Markets Inc, one of the three most important investment banks in the world, chosen through a competitive process, informed the Ministry of Finance.

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