The authorities that will assume the government in 2020 in Guatemala could evaluate options to tax temporarily some sectors, however, there would be a risk that these taxes become permanent.
The balance of debt authorized to finance the 2015 budget was issued in three tracts with maturities of ten, twelve and fifteen years, with rates of 6.99%, 7.19% and 7.38% respectively.
After declaring the auction held last week void, the Ministry of Finance has finally managed to place the balance of the debt issuance authorized by the Congress. Due to the conditions demanded by investors, the government had to adjust rates to levels below those offered in the auction of the first part of the issue.
On December 12th the Ministry of Finance expects to place in the domestic market the remaining 30% of the issue approved in order to finance the 2015 budget.
70% of the treasury bonds that Congress passed have already been awarded, and on December 12th it is expect that the remaining 30%, ie $110 million will be auctioned in the local market.
Carlos Gonzalez, an analyst at the Association for Research and Social Studies, told Diario de Centro America "... The extraordinary bond issue was made due to underfunding of the budget, resulting from low tax revenues. Also, the spending requirements of the Ministries of Health, Education and Government forced Congress to authorize this transaction. "
In terms of 10, 12 and 15 years and rates of 7.12%, 7.37% and 7.57% respectively, the government has issued treasury bonds for Q1,958.1 million, equivalent to $256 million.
Of the $366 million in treasury bonds approved by the Congress, 70%, which corresponds to $256 million, was placed by the Ministry of Finance in order to finance the budget for 2015, because the World Bank did not approved the loan of $340 million which was to be used for that purpose.
The General Budget for Revenues and Expenditures for fiscal year 2013 has been approved by the Congress of Guatemala through an express approval.
The law provides for tax revenues of $6.42 billion, placement of treasury bonds for $689 million, external borrowing of $932 million and $463 million in non-tax revenues and grants.
In terms of expenditures, the budget provides $5.41 billion for operations, $1.83 billion for investment and $856 million for debt services.
Experts agree Alvaro Colom’s successor will face a difficult fiscal, economic and political situation.
First, it will be difficult to achieve the tax reform needed to tackle the decline in tax revenues which is set to continue into 2012. Ricardo Barrientos, Central Institute for Fiscal Studies (ICEFI in Spanish), also said that the losing candidate in the election will become the main opposition, and will complicate any reform attempts or approval of additional financing for the state.
Congress’ slow pace of Congress in approving the fiscal plan and another 12 loans could bring down the country’s risk rating, the finance minister has said.
A low risk rating in the country, difficulties in accessing international credit markets and loss of credibility abroad are some of the situations that could arise if there is no progress in passing the tax package.
The Monetary Board approved the issuance of $ 673 million in securities to finance the 2011 budget.
The approval was unanimous, this time with the support of the private bank sector.
"Tulio García, representative of the private sector at the WB, said that opposing the decision of the board was a lost cause, so they opted to seek the Government's commitment for the fiscal 2011 deficit not to exceed 2.7 percent of gross domestic product (GDP) and wait for the year to end between 3.1 to 3.4 percent of GDP," writes Lorena Alvarez from Elperiodico.com.gt.
Due to the lack of a quorum in Congress, the approval of a tax package, with which they had hoped to complete the State budget for 2009, had to be called off.
Despite criticism from some parties and businesses, the majority party will not back down from the package and say that they have enough support to pass it. It includes the creation of a new tax for the first time registration of vehicles and increases the registration tax for this, in addition to other tax modifications.
The Guatemalan Congress needs to urgently approved the 2009 budget starting today.
The budget for $6.5 billion (Q49.7 billion), according to opposition lawmakers, includes $13 million (Q104 million) for Government publicity, assigned to 33 NGOs, including $1 million (Q8 million) for one created only last week, and for the strengthening of Cohesion Social, which has been difficult to supervise.