During 2013 the Guatemalan economy continued to recover and show dynamism in most sectors in the country.
The Monetary Authority of Guatemala notes that in 2013 the country had a satisfactory rate of economic activity consistent with the recovery that has been seen in the world economy.
The entity predicts a robust 2014 with a strengthening of economic activity domestically, mainly driven by an acceleration in world trade, in which Guatemala is immersed.
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.
While Nicaragua and Panama have sustainable levels of public debt, for El Salvador, Honduras and Costa Rica the prognosis is "reserved" .
Recent analysis by the Central American Institute for Fiscal Studies (Icefi) reflects very different fiscal situations in each country.
An article in Prensalibre.com states that "data from the report indicates that the country with the greatest debt is El Salvador, as in 2011 it reached 50% of GDP, in 2012 it increased to 52% and it is expected to reach about 54% in 2013.
Warnings are being issued of a possible rise in the cost of credit if the government finances its spending with bonds issued in the local market.
Elperiodico.com.gt reports: "If Congress authorizes for the next fiscal period the issuance of $1.282 billion in bonds to finance public spending, as the executive branch plans, credit to the private sector could be affected ... ".
With the exception of Nicaragua, fiscal deficits are growing in the rest of the isthmus, along with public debt.
From the editorial of Central America's Fiscal Lens No. 6:
Central America faces an economic slowdown during 2013: on the isthmus, all countries project growth rates which are lower than last year. The degree of openness of these small open economies makes them susceptible to changes in the international context.
Public debt has grown rapidly from $2 billion in 1998 to $13 billion in 2013.
This was explained by the president of the Bank of Guatemala, Edgar Barquín, who recommends establishing a debt policy in the country. "In the draft budget for 2014, the amount of debt accumulated by Guatemala will reach $14 billion," reported Prensalibre.com.
"We are reaching a position in which the debt ratio must be studied," says Barquín.
Analysis of debt sustainability in Central America, economic growth, inflation, revaluation and management of the fiscal deficit.
Central America Fiscal Lens No. 5 reported that gross domestic production in Central America in 2012 amounted to U.S. $184.000 million. The fastest growing economies were Panama, Costa Rica and Nicaragua.
As for exports, although they grew by 7.1%, they were quite far from the 20.5% achieved in 2011.
In order to maintain a deficit reasonable and economically sound development in the next few years policies on borrowing are needed.
This was the recommendation of the president of the Bank of Guatemala, Edgar Barquín, in an interview with Joel Maldonado from S21.com.gt. "... The country lacks a policy on public debt. The governments of the past 25 years have been indebted to the nation according to what they need for the next year and have not had a foundation for the medium and long term," he said.
The delay in the allocation of foreign currency for international payments to suppliers has caused Venezuelan industrial companies to owe some $5 billion to international suppliers.
The problem for exporters in the Colon Free Zone over non-payment of goods sold to importers in Venezuela is not isolated, and creates problems not only outside the Bolivarian country, but also for its own industry.
"Weak public institutions in Guatemala and a polarized political environment continue to limit its credit quality" - Standard & Poor's
An article in elperiodico.com.gt reports that "The three most important credit rating agencies internationally: Moody's, Standard & Poors and Fitch Ratings, have pointed to deficient management in Guatemala's social indicators."
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 Central American Institute for Fiscal Studies has concluded that only the public debts of Panama and Nicaragua, using official data, are sustainable in the medium term.
The main theme of the fifth edition of the 'Lente Fiscal Centroamericano' (Central American Fiscal Lens) is an analysis of debt sustainability in Central America, which depends greatly on interest payments on debt, economic growth, inflation, revaluation and management of the fiscal deficit.
The issue that is planned to be made in July, will be used to settle accounts for $448.7 million which the government owes to builders.
"It's an important issue," said Alejandro Sinibaldi, head of the Ministry of Communications, Infrastructure and Housing (VIC), therefore, this month the initiative will be taken to Congress.
According to the Finance Minister Pavel Centeno, the project will be undertaken after rearranging the budget, as there are plans to make spending cuts of about $153.8 million amid falling revenues.
For the third consecutive week the Ministry of Finance in Guatemala has declared unsuccessful the placement of treasury bonds.
From a press release from the Ministry of Finance of Guatemala (Minfin):
The Ministry of Finance continued this June 3 with the placement of Treasury Bonds of the Republic of Guatemala, for the fiscal year 2013. These financial instruments were offered in the form of price in the local market, through public auctions and tenders in quetzals carrying the expiration date of December 2, 2013.
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