After four failed attempts in Congress, the Government will resume the subject next year.
Rolando Del Cid Pinillos, Finance Minister, said that this time, the government will not make a large public consultation, but will negotiate with all productive sectors on a case-to-case basis.
"We need to study tax breaks, because there are some that are no longer useful and may disappear, we are checking thoroughly to remove these privileges," the minister told Sigloxxi.com,"... the government is in disposition of giving in order to get."
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.
In the past 3 years, the fiscal deficit rose from $ 595 million in 2008 to $ 1,226 million in 2010.
The rapid growth of public spending was financed with more debt and bonds. Experts consulted by El Periódico noted that this scenario will force the next administration to push for a tax reform.
"The president of Banguat, Edgar Barquin, is optimistic that the next fiscal deficit be reduced to 2.5 percent of GDP in 2012 and 2.3 percent for 2013 and within 5 years to reach 1.7 percent."
Slow recovery tied to a lagging U.S. economy, 3% growth in 2010 due to increased domestic consumption and rising remittances and international trade.
The countries in Central America are recovering gradually, led by a rebound indomestic demand (following its sharpcontraction in 2009), which has partly spilled over into imports. Pickups in exports and morerecently remittances have been further positive developments.
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."
Guatemala’s economic recovery has continued despite the natural disasters that hit the country in May.
The Executive Board of the International Monetary Fund (IMF) today concluded the fourth review of Guatemala’s economic performance under a program supported by an 18-month Stand-By Arrangement (SBA). The arrangement, in the amount equivalent to SDR 630.6 million (about US$974.7 million) was approved on April 22, 2009 (see Press Release No.
Central America may be directly impacted by the slowdown in the recovery of the world economy.
For the time being, the region's measures of external and internal demand do not seem affected by the threat of lower growth rates for the economies of partner developed countries. Some central banks had raised their expectations but, in view of the risks, they are likely to revise their growth predictions back to original levels between 2.0% and 2.7%.
The country needs 1.2 million quality homes in order to cover its housing shortage.
The data come from housing demand research by the Guatemalan Housing Developers Association (Anacovi in Spanish) carried out in the recently held Expocasa 2010 event.
Ricardo Obiols, Anacovi president, told Sigloxxi.com that, " the country's housing shortage is approximately 1.2 million quality homes - the gap is both quantitative and qualitative".
The International Monetary Fund (IMF) report sheds a positive light on the country's macroeconomic situation and the stability of its financial system.
A staff team from the International Monetary Fund (IMF) visited Guatemala during August 17-26, 2010 to conduct the fourth and final review of the Stand-By Arrangement approved in April 2009. The mission met with Minister of Finance Edgar Balsells; Central Bank Governor María Antonieta de Bonilla; Superintendent of Banks Edgar Barquín; other senior government officials, and representatives of the private sector.
In the first six months of the year the country's accumulated trade deficit reached $2.16 billion, compared with $1.70 billion for the same period in 2009.
According to the report released by the Guatemalan central bank, Banguat, in the first half of 2010, exports increased 18% relative to the same period of 2009. Meanwhile imports increased almost 21%.
The government will not insist on the approval of tax reform this year due to the current fiscal defecit.
Édgar Balselles, recently appointed Minister for Public Finances, announced the decision.
La Prensagrafica.com reports comments from the Minister: "We plan to have a well developed proposal with short, medium and long term measures ready for 2011".
Central American countries still need to improve their economic performance to reach investment grade ratings.
On its Quarterly Country Risk report for June 2010, the Central American Monetary Council (SECMCA), notes that Moody’s Investor Service improved the foreign currency risk ratings for Guatemala and Nicaragua. For Guatemala, the criteria for this improvement included a stable macroeconomic environment, backed by prudent fiscal and monetary policies, and for Nicaragua improvement in debt indicators and low fiscal deficits.
The new calculation will come into effect on July 16th; it will only consider transactions larger than $20.000.
Currently, the Central Bank includes all foreign exchange market transactions to calculate an average rate.
“Carlos González, analyst at Asies (Social Estudies Association), considers that this will allow for faster transactions, as it will eliminate from the calculation a lot of small, meaningless transactions”, reported Sigloxxi.com.
On June 15 the Finance Ministry will start selling $560 million in Treasury Bonds in the domestic securities market.
They will use an auction-based method to sell the securities, and they are currently considering whether to offer the bonds in the international market.
“The issue will be split in 2-year, 5-year, 7-year, 10-year and 15-year securities, and the interest rates will be defined by the market.
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.