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

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.

Giammattei, New President of Guatemala

August 2019

Alejandro Giammattei will assume the presidency of the country on January 14, 2020 with the challenge of implementing policies aimed at providing greater legal certainty to investments and reactivating the economy.

According to the most recent results of the Supreme Electoral Tribunal, Alejandro Giammattei won the second round of elections by a wide margin, concentrating 57.9% of the votes, a proportion higher than the 42.1% captured by Sandra Torres, candidate of the Unidad Nacional de la Esperanza (National Unity of Hope). See full results.

El Salvador: Legal Uncertainty Making Business Climate Worse

February 2017

Although emphasis was given to the momentum taken in the fight against corruption in 2016, lack of legal certainty continues to affect conditions for doing business in the country.

From a report on the Legal and Institutional Situation by the Salvadoran Foundation for Economic and Social Development:

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