The Interinstitutional Roundtable, also known as the Country Risk Roundtable, was relaunched yesterday by the Minister of Public Finance, Jonathan Menkos, who commented that within a month they will have defined the route to follow, based on six lines of action.
The entity is made up of a representative of the Minfin, the entity that coordinates it; one from the Ministry of Foreign Affairs, and one from the Economy (through the National Competitiveness Program -Pronacom-).
For the private sector there is a representative of the Coordinating Committee of Agricultural, Commercial, Industrial and Financial Associations (Cacif), one of the Foundation for the Development of Guatemala (Fundesa) and one of the Banking Association of Guatemala (ABG). He also has the support of the Bank of Guatemala (Banguat).
Menkos announced that in a month they will have the roadmap, during April they will make their first trip to Washington to meet with executives from the three rating firms (Moody’s, Fitch and S&P), although he made the reservation that moving on to degree of investment will not be achieved in one year, but the goal is for this to be achieved within the four years of government and to leave the foundations established so that the country can remain at that level.
That is why we talk about immediate-term actions in the first 12 months, short and medium term from 1 to 3 years and long term from 3 to 10 years.
Six components
The lines of action in which they will work are:
- Macroeconomic policies: To preserve the stability and solidity of the external position of the Guatemalan economy that serves as a basis for generating an environment conducive to productive investment and sustainable growth.
- Competitiveness and productivity: Make investments in strategic infrastructure and reforms to the legal and regulatory environment. It includes expediting the contracting of strategic infrastructure projects, which include roads, ports and airports, among others, and strengthening public-private alliances.
- Promotion of exports and attraction of investments: It involves promoting the integration of the economy to the foreign market to take advantage of commercial opportunities, real investment and financing, increasing exports, attracting the installation of companies under the vision of the nearshoring and reduce infrastructure gaps, focusing on 3 pillars: competitiveness and development line; social protection and investment in human capital.
- Legal security: To reduce legal and regulatory uncertainty, and a better business climate but with full respect for human rights. It includes respect for private and intellectual property, protection of the rights of investors and taxpayers, and implementing agile mechanisms for the resolution of social conflicts.
- Institutional strengthening: integrates actions to increase the effectiveness of transparency and accountability mechanisms, moving from a sanctioning approach to a preventive one, as well as improving governance indicators, strengthening the independence and capacities of State agencies and autonomous institutions .
- Social protection and investment in human capital: Take advantage of financing opportunities to invest in social infrastructure, so that the population has health, education, access to employment and reduction of economic vulnerability.
“Positive initiative”
“It is necessary to attract more investment and consolidate macroeconomic institutions. Likewise, investment in infrastructure, human capital and legal certainty. The Guatemala Doesn’t Stop plan already shows us a clear route to follow. From the first moment we have maintained an open dialogue with President Arévalo and his ministers.”
This is how Ignacio Lejarraga, president of Cacif, expressed himself, indicating that the relaunch of this working group is a great opportunity, since “joint work between the public and private sectors is important. In addition, it will be beneficial for the country because having better qualifications represents more and better investments and development for all Guatemalans.”
The manager mentioned that all productive sectors will continue working on the proposals and issues that they have been promoting such as job creation, investment attraction, transparency, public policies and sustainability.
Among the speakers were the consultant Alejandro Werner who spoke about Guatemala’s credit rating and investment grade, and agreed with the current president of the Bank of Guatemala (Banguat) that, apart from the country’s good macroeconomic position, the rating agencies analyze other issues that must be worked on such as social development, strengthening of institutions, transparency and others.
Menkos added that work will also continue based on elements that are integrated into the Guatemala does not stop plan.
What it is and how it helps
Achieving investment grade opens the country’s doors to a broader supply of financing, with a lower cost and longer term, so that the State has access to resources that are transferred to social spending and infrastructure.
This helps expand financing possibilities in local currency and has an important impact even for families, under very favorable conditions.
The project for the investment grade route has also been worked on with the World Bank, Fundesa and other entities, it was indicated.
Guatemala ratings
The risk rating agencies maintain the country with evaluations close to investment grade:
- Moody’s: Maintained the rating and outlook at Ba1 stable, in February 2024.
- Fitch Ratings: Maintains it at BB stable according to its most recent bulletin of February 2024.
- S&P: Improved it to BB stable, from BB- positive in April 2023.
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