Tomorrow the Superintendence of Banks (SIB) will request that the Monetary Board approve a modification of the Regulations for Credit Risk Management.
Even though bank portfolios in arrears are not at a critical level, the SIB will request that the Monetary Board make the changes to the rules in order for banks to increase their reserves for bad debts (loans).
Businessmen estimate that a reduction in the rate which is now at 7.25% would help to reactivate credit.
There are division and the debate is hot. The petition from the industrial sector to lower the main interest rate in order to reactivate the economy has its supporters and dissidents.
Representatives from the private sector believe that it is time to make an adjustment.
Managed by CABI and financed by the Soros Foundation, the Mirador Monetario will contribute to transparency in the Financial System of Guatemala.
Managed by Central American Business Intelligence, the mission of the Mirador Monetario is "to be the leading source of information and education regarding financial monetary matters and to expand to the rest of countries in CA."
"I wish that it would be someday!" said Mexican president Felipe Calderon, pointing out that Latin America has very distinct economic and monetary policies.
He also highlighted the various exchange rate and monetary systems. "There are countries which have their own currency and the corresponding seigniorage; and there are countries which used other countries' currencies, such as El Salvador or Ecuador, which have their economies in US dollars.
In order to reduce the effects of the economic slow down, some politicians are turning to monetary policy or the Central Bank. They believe that by printing more money there will be more wealth, more investment and more employment.
When a Central Bank, such as the US Federal Reserve (FED) or the European Central Bank, increases the amount of money in circulation it is done by reducing interest rates.
Several sectors of Guatemala's economy are making dire predictions about the negative effects of the Central Bank's decision to raise its benchmark interest rates as part of its anti-inflation strategy.
Among the expected effects are corresponding increases in bank loan rates, less investment, more unemployment, and exchange appreciation, all of which spell more problems for the economy.
Guatemala's Monetary Committee has raised the benchmark interest rate half a percentage point, from 6.75 to 7.25 percent.
It made the decision upon learning that the rate of inflation soared to 13.56 percent in June, well above the Central Bank's goal of 4 to 7 percent.
"The interest rate was at a level that we thought was low, and we don't want abrupt changes," said Central Bank President María Antonieta del Cid de Bonilla.
Guatemala's business sector has expressed disappointment with some of the monetary policy measures that were imposed to deal with inflation.
One of these is the tightening of the money supply, which they say has a negative effect on the country's economic growth.
The Bank of Guatemala has taken excess liquidity out of the economy to discourage spending and to keep prices down.
Guatemala's Monteary Committe kept the leading seven-day interest rate at 6.75 percent. the rate is one of the government's tools to control prices.
Maria Antonieta Del Cid de Bonilla, present of the Bank of Guatemala (Banguat) and of the Monteray Committee, said during a press conference that the decision was made unanimously.
The Banguat has taken liquidity out of the market and by so doing it has reduced the monetary issues with the goal of preventing a major increase in prices.
Inflation is a world-wide problem, said Julio Suárez, vice-president of Guatemala's central bank, Banguat. Suárez was replying to a question on the nation's current annual inflation rate of 12.24 percent.
Suárez said the the rate of inflation was slowing down. Prices, he said, rose by 1.4 percent in May compared with 1.43 percent in April. Meanwhile, inflation was worse in April in Costa Rica (1.9 percent) and Honduras (1.8 percent) than in Guatemala.
The monetary restrictions that hit the Guatemalan economy in recent months is no longer severe and monetary indicators are back in line with the government's plans, Finance Minister Juan Alberto Fuentes said in an interview.
The government's decision to release more budget funds and interventions by the central bank, Banguat, have helped to restore liquidity, Fuentes added.