What Challenges Will the New Government Face?

Alejandro Giammattei, Guatemala's new president, is hosting a country with weak institutions, legal uncertainty and a business sector that is asking for a less "hostile" environment for new investments.

Tuesday, January 14, 2020

After winning the presidential elections in August 2019, Alejandro Giammattei took office on Jan. 14 with the challenge of implementing policies aimed at providing greater legal certainty for investments and reviving the economy.

Standard & Poor's, Fitch Ratings and Moody's agree that Giammattei will have to face conditions in which debt levels, legal certainty and investment attraction are some of the main challenges.

Months ago Fitch Ratings anticipated that the new president will have limited support in Congress, as he will have to govern over the next four years without a majority of deputies and with an atomized legislature.

Regarding the business climate, Standard & Poor's has been forceful, since it indicates that the new government will have to strengthen law enforcement in the fulfillment of contracts, in order to attract private investment and contribute to the country's economic growth.

The business sector has also expressed its opinion in this regard. Eduardo Girón, president of the Guatemalan Chamber of Industry (CIG), told Prensalibre.com that "... one of the priorities of the new members of the Economic Cabinet is to create the right conditions to improve the environment for doing business and create new sources of employment."

Giron added that "... currently in Guatemala there is a hostile environment towards new investment, which is associated with the lack of state presence in several parts of the country, so policies to attract new productive capital must be reviewed."

The positive thing for the new government is that it receives a country with a rise in business expectations, since in December 2019 the Index of Confidence in Economic Activity (Icae) in the country reported a considerable increase compared to the same month in 2018, a performance that strengthens the upward trend that has been registered since July last year.

See articles in Prensalibre.com "The Guatemala that Jimmy Morales gives to Giammattei, according to the risk qualifiers" and "'A less hostile climate': What businessmen are asking from the new Economic Cabinet" (in Spanish).

More on this topic

Legal Certainty: What are Investors asking for?

March 2021

A few weeks before the new magistrates of the Constitutional Court take office in Guatemala, the business sector is asking that the new members of the highest court advocate for a real rule of law and provide legal certainty to investments.

In recent years, Guatemala's Constitutional Court (CC) has gained prominence in the country's economic sphere, as its rulings have affected different investments that were already operating locally.

Government: Lights, Shadows and Challenges

January 2021

The agile execution of economic stimulus programs, the considerable increase in public debt and the need to accelerate the process of economic reactivation are the lights, shadows and challenges identified a year after Alejandro Giammattei took office as president of Guatemala.

On January 14, 2020, when Giammattei took office as president of Guatemala, he received a country with weak institutions, legal uncertainty and a business sector that was asking for a less "hostile" environment for new investments.

Political Environment Favors Business Confidence

December 2019

The electoral triumph of Alejandro Giammattei and the appointments he is making in his cabinet to assume next January 14, are the main reasons that explain the upturn that has had business confidence since July.

In November of this year, the Index of Confidence in Economic Activity reported a 28% growth with respect to the same month in 2018, a performance that reinforces the upward trend that has been registered since July 2019.

Guatemala Seeks More Mexican Investment

September 2019

Alejandro Giammattei, elected president of Guatemala, will propose to the authorities of the North American country that a special economic zone covering both sides of the border be developed.

Guatemala's president-elect is wasting no time, since four months after taking office, he is already making investment proposals to neighboring countries.

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