Caribbean & Central America - October 2013 (ISSN 1741-4458)

Investor confidence down: On 30 September Guatemala’s central bank (Banguat) released a survey which found that investor confidence was at just 36.11%. While an improvement on the 31.37 % registered in August, this is still well off the 80.77% registered in March, two months after the government of President Otto Pérez Molina took office. Banguat president, Edgar Barquín, attributed the fall in confidence to crime, the lack of legal certainty for investors and social conflicts. The Banguat survey comes less than a month after the Geneva-based World Economic Forum (WEF) released its latest Global Competitiveness report on 4 September, which saw Guatemala fall three places down to 86 out of the total 148 countries. The WEF report notes that “Despite fairly well-functioning goods (66th) and financial markets (43rd), thanks to its openness to trade and a sound banking system (17th), the country continues to suffer from security-related and corruption costs that hinder the functioning of institutions”. The WEF ranks Guatemala below Panama (40) and Costa Rica (54); but above El Salvador (97), Nicaragua (99) and Honduras (111).

Budget proposal: On 2 September the government led by President Otto Pérez Molina sent down to congress its 2014 draft budget. As in the past, doubts persist as to whether the legislature will approve it by the 30 November constitutional deadline. Pérez Molina’s Partido Patriota (PP) has just 59 seats in the 158-member unicameral legislature. The budget, which is for Q$70.56bn (US$8.86bn), up from the Q$66.98bn (US$8.41bn) approved in 2013, is based on projected GDP growth of 3.3% - up from the 3% forecast for 2013 by the United Nations Economic Commission for Latin America and the Caribbean (Eclac). The ministries to receive the biggest allocations are: education (Q$12.32bn, up from Q$10.74bn in 2013); communications (Q$5.55bn, down from Q$5.88bn on 2013); health (Q$5.11bn, virtually unchanged from 2013) and interior (Q$4.40bn, down from Q$4.43bn in 2013).