The fiscal deficit of 2.3% proposed for the 2014 budget would cause such an increase in the Guatemalan public that could put monetary policy at risk.
In 2014 Guatemala's public debt will increase and it will be approximately $14.670 billion, equivalent to 25.5% of the country's GDP, explained Edgar Barquín, president of the Bank of Guatemala.
From January to November 2013, the fiscal deficit reached $2.270 billion, 4.6% of the national production, 25% more than that accumulated up to November 2012.
Market Pulse Blog Aldesa:
Costa Rica: How much does the government borrow per day?
Every day operations made by the Government, and therefore by all Costa Ricans, add up to an additional ₡1.796 million of new debt.
In late 2013 the fiscal deficit will be 4% of GDP and public debt will have increased to around 58% of GDP.
Elsalvador.com reports that "The Central American Institute for Fiscal Studies (ICEFI) argues that El Salvador needs a sustainable fiscal policy in order to support growth, promote equity and adapt to changing conditions in the international environment. Reform is also required in income, expenses and transparency. "
Though means of five rounds of talks Costa Rica's government is attempting to build a social pact that will enable solutions to be found to the plight of the state's finances.
An article in Elfinancierocr.com reviews the topics to be discussed dates of the meetings scheduled by the Ministry of Finance:
1 - Administrative and Legal Strengthening of Tax and Customs System, October 24.
Authorities warn that the next administration will inherit a deficit of such a magnitude that it will require high impact decisions.
This was explained by the comptroller Marta Acosta during a session of the Costa Rican Congress where she presented a report on the budget plan for the Republic in 2014. In regards to the "high-impact decisions," she said that public revenue must be increased by $1.798 billion , equivalent to 3.4% of GDP.
In relation to GDP, the expenses of the Costa Rican state are the highest in Central America.
This was revealed by a survey conducted by the Central American Institute for Fiscal Studies (Icefi). Second place is occupied by the Government of Panama with 23% of GDP followed by Guatemala which has one of the lowest with 15.1% of production.
Costa Rica is the only Central American country which plans to increase current spending to a total of 18.6% of GDP, also the highest in the region. "... The tax burden is not enough to fund the standard of living in terms of public service delivery," said Renato Vargas Icefi analyst.
The gap between government revenues and expenditures has increased to represent 3.4% of the country's production, up from 2.9% in August 2012.
This was announced by the chief of Finance, Edgar Ayales. "The accelerated pace of deficit growth is due both to the growth of government expenditure as well as revenue hit by the slowdown in the economy," noted an article in Elfinancierocr.com.
The Central American Institute for Fiscal Studies has highlighted the unsustainability of the fiscal deficit in Costa Rica, El Salvador, Guatemala and Honduras.
Pensalibre.com reports that "... according to the results of a report by the Central Institute for Fiscal Studies (Icefi) submitted yesterday ... Guatemala, El Salvador, Honduras and Costa Rica find themselves with in unsustainable scenarios regarding public debt in the next few years. "
The country ranks third in Latin America in terms of the difference between income and expenditure in relation to GDP.
In 2012, government revenues totaled 14.4% of GDP while expenditures were 18.8%.
Data from the Economic Commission for Latin America and the Caribbean (ECLAC), reveals that compared with 2007 figures the country shows a significant deterioration .
The International Monetary Fund is warning that adjustments are needed in order to increase tax revenues and reduce the state's fiscal deficit.
They note that "... the tax reform passed in 2012, which came into effect on January 1 this year, broadens the tax base and gives the government more tools to enforce fiscal and supervisory controls and eliminates tax exemptions and reduces corporate tax rates," noted an article in S21.com.gt.
In the first six months of 2013 the Salvadoran government's debt rose by $296.1 million with the country risk increasing 104 basis points.
Estimates by the Central Reserve Bank (BCR), reveal that when comparing June 2013 ($14.5469 billion) to June 2012, state commitments increased by $1.2799 billion, as in June last year $13.267 billion was reported.
During the first six months of 2013, the Central Government's financial deficit reached $1.154 billion, equivalent to 2.3% of GDP.
From a press release by the Ministry of Finance of Costa Rica:
In June, 2013, primary expenditure, ie total expenditure excluding interest, grew by 8.8%, significantly less than the 11.2% recorded last year. The main elements which contributed to this slowdown were continued control of payroll spending and a slow down on the part of current transfers.
The third tax bill is now ready; it will tax bank transfers, luxury homes, as well as products used by printing companies.
The Ministry of Finance has not yet said when it will send the plan, which expects to increase revenuea by about $100 million, to the Legislature. According to the chief of Finance, Carlos Caceres, "we are working on the project which will, by 2020, return us to the same pre-crisis debt levels (before 2008).
The current administration can not implement an international bailout plan, therefore the serious fiscal problem will be inherited by the next government.
"The reality is that we have a huge fiscal problem, a fiscal deficit of 6% for Honduras is really high, the country has no access to external financing to meet a deficit of this magnitude and this has resulted in a growth of domestic debt," said the former finance minister, José Arturo Alvarado.
While up to May Finance revenue grew by 10% interannually, Central Government expenditure increased by 13.1%.
"Finance revenue grew by 10% interannually up to May, driven especially by the collection of income tax, tributes which recorded a growth of 11.7% in May," noted an article in Elfinancierocr.com.
"This increase in revenue pales in comparison to the rise of 13.1% in central government spending."