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 "... 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. "

More on this topic

Fiscal Uncertainty despite Eurobonds

July 2019

Although the Legislative Assembly approved the issuance of $1.5 billion of debt in the international market, Fitch Ratings believes that in the coming years there could be renewed uncertainty about the sources of financing for the Costa Rican government.

For the qualifier, the uncertainty could resurface because the Treasury Department's initial plan was to issue $6 billion within six years, however, the Legislative Assembly Committee in charge of the file modified the text so that the limit would be $1.5 billion.

More State Debt, But for Poor Quality Spending

May 2019

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.

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.

Warnings Over Panama's Increased Public Spending

October 2014

Economists recommend fiscal discipline in order to better address the economic environment in the coming years and avoid the credit risk being raised due to increased borrowing.

The recent bond issue of state debt by $1250 million on the international market and the consequent increase in total public debt should be a wake up call for the government, which should be able to maintain an adequate balance in the relationship between debt and Panama's Gross Domestic Product.

Sustainability of Public Debt in Central America

June 2013

The Central American Institute for Fiscal Studies has concluded that only the public debts of Panama and Nicaragua, using official data, are sustainable in the medium term.

The main theme of the fifth edition of the 'Lente Fiscal Centroamericano' (Central American Fiscal Lens) is an analysis of debt sustainability in Central America, which depends greatly on interest payments on debt, economic growth, inflation, revaluation and management of the fiscal deficit.

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