Standard & Poor's has reduced Guatemala's debt rating from BB to BB-, arguing that political instability and weakness in government institutions are affecting economic growth prospects.
A series of events that began earlier this year, when President Jimmy Morales declared the Commissioner of the International Commission against Impunity in Guatemala,Iván Velasqueza persona non grata, and which continued with the "Corruption Pact" made by 107 deputies to approve a reform of the Penal Code to favor politicians implicated in illicit financing and to extend commutative penalties is the main reason behind the reduction in the debt rating.
The Guatemalan government has formally introduced a comprehensive development plan which sets out long-term goals to accelerate economic growth.
Administration officials said the plan was created with the participation of multiple sectors represented in the National Council of Urban and Rural Development (CONADUR).
The 2032 K'atun National Development Plan contains five axes around which the actions to be implemented rotate, such as: Welfare for the people, Wealth for All, Natural resources for today and tomorrow, as well as the hub of Urban and Rural Guatemala and the state as guarantor of rights and driver of development.
The project stalled in the Guatemalan Parliament is keeping investment decisions paralyzed, until there is certainty about the rules that will govern the country.
In the meantime, President Pérez Molina once again urged the passage of the Act:
From an article on Guatemala.gob.gt:
The president of Guatemala, Otto Perez Molina, emphasized the need to pass the Law for Investment Promotion and Employment which was presented by the Executive Agency in January 2013 and is a package of reforms and new legislation to facilitate installation of firms in the country.
The struggle between political parties paralyzes Congress which is not approving the legislation necessary to keep the economy competitive.
According to the Foundation for the Development of Guatemala (Fundesa), if you want to improve competitiveness, job creation and economic growth, a series of initiatives which have been stalled in Congress since January must be passed, including the law to create a national system to regulate competition and temporary work.
The Guatemalan government has established that the SAT and the Ministries of Defense and Government should work together in order to achieve compliance with the Customs Act.
A Government Agreement states that both ministries should coordinate operations with the Superintendency of Tax Administration (SAT) in order to reach this goal for a period of three months.
The measures to strengthening customs controls to increase revenue and curb customs fraud are almost ready.
Prensalibre.com reports that "the government has refined the plan to strengthen controls at customs offices, in the event that the intervention by the Superintendency of Tax Administration (SAT) does not proceed along legal channels, but also it is progressing in "coordination" between institutions, in case the measure is deemed legally correct. "
Faced with criticism over multi million dollar direct purchases, the chief of Government justified these measures saying "a bidding tender does not guarantee transparency and honesty."
In interview for Elperiodico.com.gt with Mauricio López Bonilla, Minister of the Interior, the official said that several strategic materials needed for the National Civil Police (PNC by its initials in Spanish) such as weapons, equipment, technology and infrastructure construction, will be some of the purchases made without tender processes.
As part of the campaign launched by the administration of Pérez Molina so that Guatemala can be admitted to the Pacific Alliance, the visa requirements for Colombians and Peruvians to enter the country have been removed.
From a press release by the Guatemalan Government:
The elimination of visa requirements for citizens of Colombia and Peru for entry into Guatemala, is one of the proposals of President Otto Perez Molina given during participation this Thursday of the VII Summit of the Pacific Alliance in Cali, Colombia.
Between June and July, the government plans to place in the local market $250 million in Treasury bills in order to ease their financing needs, not addressed by Congress.
According to Pavel Centeno, Finance Minister the measure is in response to the Government not gaining Congress' approval for taking out loans.
"We hope that legislators understand the sensitivity of financing the general budget of the nation.
The Chamber of Industry of Guatemala has requested that Congress approve reforms to laws which prevent or reduce corruption and to punish public officials involved in such acts.
From a press release issued by the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (CACIF):
As part of the site visit scheduled for this day, regarding the evaluation of Guatemala in the Follow-up Mechanism to the Inter-American Convention against Corruption (MESICIC-OAS), the Chamber of Industry of Guatemala (CIG) participated with a presentation on "Cooperation between the private sector and the supervisory bodies in efforts to prevent and combat corruption."
The company belonging to the Guatemalan Army will no longer be able to sell goods between State agencies and municipalities.
This dependency under the Ministry of Defense of Guatemala, raised $43 million in contracts in less than eight months of the current administration.
"The institution has been questioned by opposition deputies, because late last year, the Executive authorized an expansion of the operational purposes for which it was created. This amendment details the ability to import and distribute all kinds of equipment with the Army of Guatemala and other public and independent entities" reported Elperiodico.com.gt
Guatemala is seeking to consolidate its presence in Asia in order to explore new business, investment and cooperation opportunities.
From the Ministry of Foreign Affairs in Guatemala:
The interest of the Republic of Guatemala in consolidating and improving the bilateral relationship with the Republic of India, beginning from the month of May 1972 has been realized with the opening of the Embassy of Guatemala in New Delhi, being officially established on 4 April of this year. The Republic of India set up its resident Embassy in Guatemala in 2011.
The Government announced it will not use Non-governmental Organizations for developing public infrastructure or supplying materials.
This is part of a series of actions taken by authorities to increase transparency in public spending, which also includes creating a citizen watchdog and controlling public works executed by municipalities and development councils.
The Guatemalan Government will collect $494 million less in taxes in 2009 and the national budget could be reduced to $5.562 billion.
It was reported in the Prensa Libre website: "To meet the revenue decline for the budget, the government is already prepared with four scenarios: the first would be to reduce public spending, the second to search for internal or external credit, the third to increase revenues via taxes, and the fourth could be a combination of the previous three."