The State of Guatemala Could Issue Another $1.9 billion

With the recent consent given by the Banguat for a new issuance of new debt totalling $1,917 million to finance the 2015 budget, the fiscal deficit could exceed 2.5% of GDP.

Friday, November 14, 2014

The private sector is not looking favorably on the approval given by the Monetary Board of the Bank of Guatemala for the possible issuance of $1.917 million in debt to finance part of the 2015 expenses, because the fiscal deficit would rise to levels above that considered acceptable in economic terms.

Luis Lara Grojec, from the Industrial Bank, told Elperiodico.com.gt "... Guatemala has been controlling its deficit well since the crisis, but this new project will lead the country to have figures of around 2.5% for the fiscal deficit, meaning that that 'instead of putting things in order, we are messing them up again'. However, the country has to borrow money, as Guatemala is not in conditions which would able it to avoid borrowing, but it should be for lesser amounts and we should learn from the mistakes of other places, such as Europe where they have had problems because of this. "

Ricardo Barrientos, an economist at the Central Institute for Fiscal Studies (ICEFI) added that "... From the technical point of view, the actions of the Monetary Board are fine, because the only thing is they have been ordered to assess is the monetary impact of the new debt, which can be done in one complete package. What can not be done is for Congress to then approve the debt as a whole. "

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