The monetary authority has endorsed the issuance of $447 million in Treasury bonds, which will be used to settle debts with private contractors.
José Luis Agüero, president of the Guatemalan Chamber of Construction (CGC) believes that this is an important step to be able to honor the debt, and if Congress goes on to approve the issuance, they will become resources that will revive the economy.
The presidents of various Guatemalan unions have asked the Monetary Board not to authorize the issuance sought by the state.
According to representatives of the Chambers of Agriculture, Industry and Commerce associated with the Committee of Commercial, Industrial and Financial Associations (Cacif), this action "will affect the macroeconomy and increase the fiscal deficit."
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.
The Monetary Board (JM) authorized the issuance of $ 210 million in treasury bonds by the Ministry of Finance.
If approved by Congress, the Government's deficit this year would reach 3.4% of GDP.
Elperiodico.com.gt reports, "Julio Suarez, vice president of Banguat, announced that JM endorsed his opinion of an increase in public debt, although representatives of the private banking and corporate sectors opposed it."
The Finance Ministry will meet with potential investors this week and will decide how much to set aside for the domestic and international markets.
Decree 19-2010 was published in the official government newspaper, thus authorizing the Finance Ministry to issue the securities.
Juan Alberto Fuentes, Finance Minister, told newspaper Elperiodico.com.gt that “Guatemala is well regarded internationally for its excellent payment reputation.
Since 2009, Colom’s administration had been pushing for a tax reform to improve the country’s tax revenues.
Since 2009, Colom’s administration had been pushing for a tax reform to improve the country’s tax revenues.
“As such proposal was met negatively by the opposition, this is the only short term alternative to get funds”, said Mario Taracena, president of the Finance Committee.
A proposal will be sent to Congress next week, reported Juan Alberto Fuentes, Finance Minister.
The Monetary Board, part of the Central Bank, has green lighted this operation. It is now in the hands of Congress to decide if the country should issue these bonds.
“Miguel Gutierrez, analyst from think tank CABI explained that if the Government decides to move forward with this transaction, it must do so in the next four months, before the U.S.
The Monetary Authority of Guatemala decided, against the vote of banking representatives and private enterprise sectors, to increase debt through issuance by 10.9%.
The main argument by the opposition is that the solution to the problems in the treasury is to reduce state spending, not increase debt. They insist that the money that is going to cover state expenditures in this manner should be invested to facilitate credit for the productive sector, which has suffered a sharp decline.
The Monetary Board of the Bank of Guatemala approved the issuance of treasury bonds for $223 million.
The international economic crisis is having a strong impact on the finances of the Guatemalan state, which saw revenue fall by 7.6% in the first quarter of 2009 and this translated to $85 million less in tax income. This was the main argument presented by the Monetary Board to approve the issuance of treasury bonds.