Sun, Oct 14, 2018 - Page 16 News List

Guatemala seeks US$15bn in loans to public spending in cooling economy

Bloomberg

Guatemala seeks billions of US dollars in development loans in an effort to boost public spending and turn around Central America’s largest economy, one that has cooled in the past few years as corruption scandals have hit investment.

Guatemalan President Jimmy Morales said that the country hopes to secure US$15 billion in loans over the next decade from multilateral organizations such as the World Bank, the Inter-American Development Bank and Germany’s Deutsche Gesellschaft fur Internationale Zusammenarbeit, or GIZ, to invest in construction and tourism.

About 80 infrastructure projects were canceled last year amid legal uncertainty as construction companies contracted for the work came under graft allegations, costing the country US$400 million in investment while discouraging private enterprise, he said.

Cases against the former president and vice president are unfolding in courts and Morales himself faces accusations of wrongdoing.

“We can’t break an economy in the name of the fight against corruption,” Morales said in an interview in Washington, where he has met with US officials, including US Secretary of State Michael Pompeo.

“We need to create jobs,” he added.

Morales said that the loans could be used to build 1 million homes, upgrade ports and build new highways.

The government this year would boost budget execution to a 25-year-high as it seeks to stimulate economic growth, which slowed to 2.8 percent last year, he said, adding that GDP could expand by 3 percent this year.

“We are leaving state paralysis behind,” he said. “If there are no private companies that want to invest, the state can invest. The terror and fears of 2016 and last year have been overcome.”

Morales, 49, defeated a bid in the Guatemalan Congress last year to strip him of immunity from prosecution, although he faces new charges this year of illegal campaign financing. His son and brother are on trial for their alleged roles in a case to fraudulently bill the previous administration.

He on Friday said he would not renew a mandate for the UN-backed Commission Against Impunity in Guatemala (CICIG), which has spearheaded graft probes.

The CICIG’s mandate is set to expire in September next year, and Morales has claimed it broke the nation’s laws and politicized the justice system.

The military surrounded the commission’s headquarters with troop transport trucks donated by the US on the day that he made the announcement.

The Guatemalan courts have a backlog of 1.6 million cases and criminal cases can languish for years before going to trial, Morales said.

The CICIG should begin to transfer capacities to the Guatemalan judiciary, he said, adding that he is frustrated over a lack of response from the UN to an inquiry made almost a year-and-a-half ago.

“We’ve worked with it for 12 years,” Morales said. “If justice isn’t expedient, then it isn’t justice.”

Yields on Guatemala’s bonds coming due in 2022 were unchanged at 4.74 percent in New York trading at noon on Friday.

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