The Ministry of Finance awarded $37 million in installments of 10, 12 and 15 years at interest rates of 7.1%, 7.3% and 7.5%, respectively.
From a statement issued by the Ministry of Finance of Guatemala (Mifin):
The results of the placement of Treasuries held on Tuesday March 10, 2015 are as follows:
Demand was for $ 96.8 million, of which 0.67% was received with a maturity date October 2, 2025; 71.6% with a maturity date of May 19, 2027 and 27.6% with a maturity date of March 18, 2030.
In the third and final tract of the issue authorized by the Legislature, the government has placed $18 million with maturities of 10 to 15 years and rates of 7.12% and 7.50% respectively.
From a statement issued by the Ministry of Public Finance of Guatemala (Mifin):
The results of the placement of Treasuries held this in February 2015, are:
Requests received $62.9 million, of which 3.1% were for maturity dates of 10.02.2025; another 43.6% for the maturity date 05/19/2027 and 53.3% for the maturity date of 3/18/2030.
The Ministry of Finance received offers for $205 million but only issued $188 million in tracts with maturities in 2025, 2027 and 2030, at rates of 7.12%, 7.37% and 7.50% respectively.
From a statement issued by the Ministry of Finance in Guatemala:
The Ministry of Finance hs placed Q1,440.6 million ($188 million) in Treasury Bonds
The results of the placement of Treasury Bonds on January 22, 2015, were as follows:
The balance of debt authorized to finance the 2015 budget was issued in three tracts with maturities of ten, twelve and fifteen years, with rates of 6.99%, 7.19% and 7.38% respectively.
After declaring the auction held last week void, the Ministry of Finance has finally managed to place the balance of the debt issuance authorized by the Congress. Due to the conditions demanded by investors, the government had to adjust rates to levels below those offered in the auction of the first part of the issue.
On December 12th the Ministry of Finance expects to place in the domestic market the remaining 30% of the issue approved in order to finance the 2015 budget.
70% of the treasury bonds that Congress passed have already been awarded, and on December 12th it is expect that the remaining 30%, ie $110 million will be auctioned in the local market.
Carlos Gonzalez, an analyst at the Association for Research and Social Studies, told Diario de Centro America "... The extraordinary bond issue was made due to underfunding of the budget, resulting from low tax revenues. Also, the spending requirements of the Ministries of Health, Education and Government forced Congress to authorize this transaction. "
In terms of 10, 12 and 15 years and rates of 7.12%, 7.37% and 7.57% respectively, the government has issued treasury bonds for Q1,958.1 million, equivalent to $256 million.
Of the $366 million in treasury bonds approved by the Congress, 70%, which corresponds to $256 million, was placed by the Ministry of Finance in order to finance the budget for 2015, because the World Bank did not approved the loan of $340 million which was to be used for that purpose.
The average tax burden for the region is 13.4% of GDP, while the average public expenditure increased from 18.7% in 2013 to 19.2% at the end of 2014.
From the Introduction of the report Macrofiscal profiles in Central America, from Instituto Centroamericano de Estudios Fiscales (Icefi):
The fiscal situation has worsened in Central America in recent months, mainly due to a structural lack of sufficient resources to meet the needs of Central Americans and realize many of the commitments made by governments.
With the recent consent given by the Banguat for a new issuance of new debt totalling $1,917 million to finance the 2015 budget, the fiscal deficit could exceed 2.5% of GDP.
The private sector is not looking favorably on the approval given by the Monetary Board of the Bank of Guatemala for the possible issuance of $1.917 million in debt to finance part of the 2015 expenses, because the fiscal deficit would rise to levels above that considered acceptable in economic terms.
Although the government has agreed to pay of the $41 million debt with the pharmaceutical companies, not all of them are participating in tenders for medicines.
The Ministry of Health and Welfare and the Ministry of Finance agreed this year to pay a portion of the debt, of $16.4 million, but only $3.2 million would be paid immediately and the remaining amount during the month of November.
Increased borrowing costs, a disincentive to foreign investment and distrust of economic performance, are part of the expected scenario if public debt growth is not controlled.
Prensalibre.com reports that "... The draft budget for 2015 presented by the Ministry of Finance, amounting to $9.250 million (Q71 thousand 840.8 million), contemplates taking on new debt of about $2 billion (Q15 billion), of which $1.6 billion (Q12 thousand 334 million) came from bonds and loans. "
Fitch has also downgraded the issue ratings on Guatemala's senior unsecured foreign and local currency bonds to 'BB' from 'BB+', with outlook revised to Stable.
From the press release by Fitch Ratings:
Fitch Ratings has downgraded Guatemala's long-term foreign and local currency Issuer Default Ratings (IDRs) to 'BB' from 'BB+'. Fitch has also downgraded the issue ratings on Guatemala's senior unsecured foreign and local currency bonds to 'BB' from 'BB+'. The Rating Outlooks on the long-term IDRs have been revised to Stable from Negative. In addition, Fitch has downgraded Guatemala's Country Ceiling to 'BB+' from 'BBB-' and affirmed the short-term foreign currency IDR at 'B'.
The president of the Bank of Guatemala has stated that in order to sustain the fiscal debt, the tax burden in the Guatemalan economy will have to rise from 11% today to 14%.
An article on Lahora.com.gt reports that, Edgar Barquín president of the Bank of Guatemala, said "... in order to maintain economic stability and ensure social spending for the benefit of the population, the level of taxes needs to rise to 14 percent of GDP this year.
Companies in the sector are warning of over-indebtedness in some areas of the country and are asking for adjustments to the rules that regulate the activity.
At the end of the first quarter of 2014, the country has a total of 1,708 outstanding microloans, with a total balance of $774,000 and having a default rate of 1.84%, according to data from the Bank of Guatemala (BANGUAT).
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