The president of the Bank of Guatemala, Edgar Barquin warned that "In a decade, the debt level will be critical."
Guatemala's foreign debt currently amounts to 25% of gross domestic product (GDP), and it appears to be far from the critical point, which is indicated by 40% of GDP.
However Barquín explains that the problem is in the low payment capacity of the Guatemalan state, which could be compromised in terms of the maintaining a fiscal deficit at a reasonable level.
On January 22, the Ministry of Finance of Guatemala made the second issuance of debt this year.
A press release from the Ministry of Finance, Guatemala reads:
The Ministry of Finance continued on January 22 with the placement of Treasury Bonds of the Republic of Guatemala, for fiscal year 2013, approved by Decree No. 30-2012 of the Congress of the Republic of Guatemala, "Law on the General Budget Revenues and Expenditures for Fiscal Year Two Thousand Thirteen ".
On January 15, 2013 Guatemala started the issuance of Treasury Bonds for fiscal year 2013.
A press release from the Ministry of Finance, Guatemala reads:
The Ministry of Finance successfully launched this January 15, 2013, a placement of Treasury Bonds by the Republic of Guatemala for fiscal year 2013, approved by Decree No. 30-2012 of the Congress of the Republic of Guatemala, "Law on General Budget Revenues and Expenditures for Fiscal Year Two Thousand Thirteen".
Several Central American governments have resorted to issuing public debt as a way to continue living beyond their means.
An article by Rafael Delgado Elvir in Laprensa.hn objectively analyzes the tendency of governments to fall in debt when faced with economic slowdowns. Excess liquidity worldwide makes it very easy to issue bonds of any kind and for states to obtain direct loans.
This debt has dragged on for two governments, and now the Minister of Finance Pavel Centeno has promised to pay it off.
An article in Elperiodico.com reports that "Jose Luis Aguero, president of the Chamber, said that will grant the executive a little more time, while Perez said that he will talk to the Finance Minister Pavel Centeno about the mechanism for paying the debt. "
Governments should act as good parents, thinking about the welfare of future generations, not just about the next election.
Governments should act as good parents, thinking about the welfare of future generations, not just about the next election.
In his article in Martes Financiero, Oscar Castaño Llorente discusses the rationale of the proposed creation of the Panama Savings Fund (FAP in Spanish), not only in its philosophical scope, but also from a practical point of view, present and future.
Fitch Ratings has analyzed patterns of economic growth in Central America, and its relationship to sovereign debt ratings.
According to Fitch Ratings, two patterns have emerged in the evolution of economic growth and public finances in Central America. The quality of sovereign credit in Central America is largely reflected by these two patterns, and this is expected to remain the case for the foreseeable future.
The government has completed the fourth release for sale of bonds for the fiscal year 2012 worth Q286.7 million ($36.7 million).
A bulletin from the Ministry of Finance reports that the financial instruments are being offered in the local market through auctions and tenders in quetzals, reports Prensalibre.com.
According to the document, during the fourth release there was demand for Q323.8 million ($41.4 million), of which 62.5% came from the private sector and 37.5% from the public sector
This is the maximum amount allowed by law and the first issue will be on February 13th .
Guatemala's government plans to place up to Q 2,500 million ($ 320.1 million) in treasury bills in 2012, announced the Ministry of Public Finance (Minfin). The first release will take place on February 13th .
The amount is equivalent to 20 percent of current revenue estimates, which is allowed by Decree33-2011, contained in the State’s Budget of Income and Expenditures for this year, reported La Prensa Libre on its website.
The highest percentage of external debt is with multilateral organizations; to the IADB alone $2,192 million are owed.
Of the total debt, 39% corresponds to the Inter-American Development Bank (IDB), 24% to the International Bank for Reconstruction and Development (IBRD), 19% to the Central American Bank for Economic Integration (BCIE), and the rest to others.
The Credit Default Swaps (CDS) for Guatemalan bonds is only 1%, confirming the perception of investors that the chance of a default is very remote.
History seems to be repeating itself, but in reverse. While developed countries, especially those in Europe, are struggling to find a solution to the debt crisis, Latin American countries are enjoying relatively stable conditions, especially in the sphere of international finance.
Representatives from chambers of commerce and from the Monetary Board have rejected contracts for 2 loans for $166 million for the purchase of aircraft.
Applications for loans of $133 million to the National Bank of Economic and Social Development of Brazil (BNDES) for the purchase of 6 Embraer aircraft and $33 million for the purchase of radars with Banco Bilbao Vizcaya Argentaria (BBVA) of Spain are intended to finance a project submitted by the Ministry of Defense.
Foreign loans, bond issues and grants will finance one-fifth of government spending in 2012.
Revenue generated by taxes and other income will not be sufficient to meet the $9,293 million budget that the government has presented for next year.
Meeting this figure will require funding of over more than $1000 million with a bond debt and a further $737 million in loans which will be requested by the Guatemalan government.
The Ministry of Finance has published the Preliminary Report of the General State Budget for 2012-2014.
It serves as basis for the General Budget of Revenues and Expenditures of the State, and establishes the economic variables to be used as assumptions, together with the maximum ceilings which the Cabinet can authorize per year.
For 2012-2014, the paper assumes an average nominal GDP growth of 8% and an inflation rate of between 3% and 4%.
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