If Congress does not approve loans which enable funding of the state budget, the crisis could be severe.
Roberto Villate, head of the Lider back bench group, said that as a block, they do not support the loan approval because from the beginning they did not agree to an underfunded budget and one without any programatic basis. The official said that with each loan "the country takes one more step in the direction of Greece or Cyprus".
The IADB loan to Guatemala for the purpose of "generating more tax revenue" is another example of the current inflation of funding promoted by international bureaucracy to pay the salaries of national bureaucracies.
EDITORIAL
An article by Jose Raul Gonzales in the blog of Guatemala's economic think tank CIEN, reveals one of the many cases in which international financial organizations, supposedly created to help nations develop, engage in financing consulting activities, which end up being just expenses instead of financing real economic sectors.
In early December, the government will begin negotiations for a potential $300 million agreement.
The Finance Minister, Alfredo del Cid, said that “that agreement will set parameters to control the fiscal deficit, which will be 2.8 percent this year and between 3 percent and 3.2 percent in 2011".
The Executive Board of IMF on June 16 concluded the third review of Guatemala’s economic performance under a program supported by an 18-month Stand-By Arrangement (SBA).
The Guatemalan authorities intend to continue treating the arrangement as precautionary.
After a second review of Stand-by Agreement signed in April, the IMF approved a disbursement of $786 million.
The Executive Board of the International Monetary Fund (IMF) on December 16th completed the second review of Guatemala’s economic performance under a program supported by an 18-month Stand-By Arrangement (SBA). The Guatemalan authorities intend to continue treating the arrangement as precautionary.
After a second review of Stand-by Agreement signed in April, the IMF approved a disbursement of $786 million.
The Executive Board of the International Monetary Fund (IMF) on December 16th completed the second review of Guatemala’s economic performance under a program supported by an 18-month Stand-By Arrangement (SBA). The Guatemalan authorities intend to continue treating the arrangement as precautionary.
In 2010, the Central American Bank for Economic Integration (CABEI), will lend $1.038 million for development projects.
$370.8 million are earmarked for Costa Rica, $199.8 million for El Salvador, $173.2 million for Guatemala and $114.9 million for Nicaragua.
As for Honduras, Alfredo Ortuño, CABEI's director, explained that "...disbursements are on hold until the Central American Integration System (SICA) revokes a ruling enacted after the Honduran coup d'état. Nevertheless, the bank has earmarked $123.6 million to finance projects in the country".
In good times, multilateral lending agencies do not have too many customers. In times of crisis, everyone needs them.
To continue to grow and not stagnate, Latin America needs foreign investment in an amount ranging from 5% to 6% of the GDP in the region. It is $200 billion, a figure too large for the current scope of these credit institutions.
The International Monetary Fund offered a preventive line of credit to reinforce the country’s international reserves of $4.758 billion.
Leonel Diaz wrote in Prensalibre.com: "Alfred Schipke, IMF representative for Central America, said yesterday that because of the country's macro-economic strength, the IMF offered a stand-by agreement which would function as a line of credit. The proposal is being examined by the authorities of the Bank of Guatemala (Banguat). 'It's like an extra mattress. However, we are still holding talks to determine whether to accept it,’ the official said."
During a meeting of Governors, IDB President Luis Alberto Moreno announced that the entity will increase its support to countries in the region.
Proceso Digital published on its website: "’At this juncture, we have to lend more and that is our obligation and why we are here,' said the head of the IDB in his opening speech.
Moreno said the IDB is ready to meet this 'obligation' to raise capital to the region but he did not specify the amount.
Siglo XXI published on its website: "A precautionary loan is characterized as stand-by because the organism commits to reserving the amount requested, but the disbursement is not immediate. Instead, the creditor holds the loan amount until it deems it is necessary to use the resources. The president of the Bank of Guatemal (Banguat), María Antonieta de Bonilla, revealed that the possibility is being evaluated because, just like other countries, Guatemala is looking to ‘ensure a contingency amount of resources’ that will be available in case of extreme necessity."
The Congress approved two loans for $28.5 million which will be added to the $950 million that were approved last Tuesday to finance the national budget.
PRENSALIBRE.com reports, "The decision to approve another loan for $30 million (Q237 million) - in aid for the criminal justice system -, was postponed at the request of the "Eferregistas" lawmakers who asked for more time to analyze it, as they claimed that "not even the Supreme Court knew all the details."
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