Standard & Poor's has reduced Guatemala's debt rating from BB to BB-, arguing that political instability and weakness in government institutions are affecting economic growth prospects.
A series of events that began earlier this year, when President Jimmy Morales declared the Commissioner of the International Commission against Impunity in Guatemala,Iván Velasqueza persona non grata, and which continued with the "Corruption Pact" made by 107 deputies to approve a reform of the Penal Code to favor politicians implicated in illicit financing and to extend commutative penalties is the main reason behind the reduction in the debt rating.
The private sector is demanding that the government investigate the possible existence of criminal structures which may be operating in an organized manner behind the strike at some ports and customs offices.
From a statement issued by the Chamber of Agriculture in Guatemala:
Guatemala, November 2, 2016.Given the situation under which for a sixth consecutive day import and export of products have been halted in Puerto Quetzal, Puerto Santo Tomas de Castilla and on the border of Tecun Uman,
The budget proposed by the Morales administration for 2017 includes $736 million to develop 2,500 public infrastructure projects.
Water and sanitation works, road construction and renovation, and rehabilitation of prisons and hospitals are some of the projects included in the budget submitted by the Executive for 2017.
Without setting a date for a new proposal, the Executive has asked Congress to return the controversial bill.
After receivingcriticism because of the absence of reforms in the control and transparency of public expenditure, the Executive has requested the withdrawal from discussion in Congress of the tax reform bill, which aimed, among other things, to raise tax on the distribution of cement, mining and fuels.
The Chamber of Industry and the government have organized for November 9 and 10 an international investment forum which will include a business matchmaking service between companies and also conferences.
From a statement issued by Guatemala Investment Summit:
It is the most significant international investment event in the Central American region, whose first successful edition took place in 2013.It is being organized by the Chamber of Industry of Guatemala in conjunction with the Government of the Republic, through the Ministry of Economy.
The acquisition of TCB by APM Terminals means that any dispute concerning the granting of Puerto Quetzal will involve the largest group in the world in the maritime sector, the Maersk shipping company.
Following the Public Ministry's denouncement of the existence of an illicit money laundering network operating in the Container Terminal at Quetzal , the government of Jimmy Morales is torn between declaring void the concession contract with the current operator, TCB, as recommended by the Attorney General's Office on several occasions, or making other arrangements with the company. The Morales government may have to negotiate with the Danish giant Maersk Group, which bought 100% of the shares of the Spanish TCB in October 2015, according to an article on Elperiodico.com.gt.
Accession to the WTO agreement would improve export competitiveness through increased availability of information, simplification of procedures, and greater transparency.
Adherence to the Agreement on Trade Facilitation of the World Trade Organization (WTO), which only nine countries have so far ratified, would improve the conditions for access to the international market, mainly through less paperwork, access to information electronically and more efficiency.
The administration of Pérez Molina has announced the upcoming opening up of a trade office in China.
From a statement issued by the Government of Guatemala:
President Otto Perez Molina said that as part of the objective of expanding trade relations and increasing Guatemalan exports to major international markets, trade with China is being promoted.
As part of the agreements signed between the two governments the elimination of double taxation has been established.
From a statement issued by the Government of Guatemala:
Within the framework of an official visit by President Otto Perez Molina which will took place on Friday, the Governments of Guatemala and Mexico signed the following bilateral agreements:
The Executive argues that foreign companies planning to invest in the country desist from doing so if they are not provided with tax incentives and the possibility of paying differentiated wages.
The Government is continuing to put pressure on Congress to approve the Investment and Employment Act which has been temporarily suspended due to several actions of unconstitutionality presented before the Court.
President Hernández announced that the country will join an ambitious project which for now has not transcended the good but vague intentions of the Mexican government.
From a statement issued by the presidency of Guatemala:
The president of Honduras, Juan Orlando Hernandez, announced in Guatemala City that his country will join the pipeline project, whose construction is the result of a bilateral agreement between Guatemala and Mexico.
The agreement between the two governments states that as of December 15, 2015 customs offices at common borders will suspend their tax functions and allow the free movement of goods and people.
From a statement issued by the Government of Guatemala:
64 years after having started the process of Central American integration, the presidents of Guatemala, Otto Pérez Molina, and Honduras, Juan Orlando Hernandez, signed a historic agreement for a customs union between the two nations today, from which it is expected that economic growth of 15% will be produced in the short term. The agreement aims to eliminate the three land crossings on the borders of the two countries.
The Executive is considering increasing taxes on cigarettes and alcoholic beverages as an option for balancing the 2015 budget.
With the provisional suspension of the tax on telephone lines the Guatemalan government is left with a deficit $237 million, approximately, which is why it is looking at bridging the gap using new taxes on liquor and cigarettes, as the main alternative.
The Foundation for Development in Guatemala argues that there is a lack of technical justifications for new taxes and lack of transparency in approving the 2015 budget.
From a statement issued by the Foundation for the Development of Guatemala (FUNDESA):
The Foundation for the Development of Guatemala - FUNDESA - expressed concern about the non-transparent way in which the General Budget of the Nation for 2015 was approved, and the lack of technical studies to support various tax increases, including both the one applied to telephony and the distribution of cement, as well as the excessive increase in royalties.
The private sector is asking the government to repeal the new tariff schedule in the ports of Quetzal and Santo Tomas de Castilla, saying it there is no justification for it and the competitiveness of ports is deteriorating.
According to employers, the increase is not only unwarranted, but also directly impacts the cost structure of firms, which end up passing on the prices increases to end consumers.
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