Caribbean & Central America - January 2014 (ISSN 1741-4458)

New finance minister: On 9 January President Otto Pérez Molina promoted the deputy minister for financial administration, María Castro, to finance minister. Castro replaces Pavel Centeno who stepped down on 16 October 2013. A co-founder of the ruling Partido Patriota (PP), Centeno was a key architect of the president’s February 2012 fiscal reform, passed a month after his PP government took office. Centeno’s departure was seen as a victory for the conservative business elite, which fiercely opposed the tax reform and which has lodged various challenges to it, leaving its efficacy in considerable doubt.  Centeno also had frequent run-ins with the legislature. He offered his resignation (which was not accepted) in March 2012 in protest at the opposition’s attempts to summon him for questioning, a tactic he slammed as an attempt to sabotage the executive’s legislative agenda [RC-12-05]. While Centeno this time round cited ‘health reasons’ as grounds for his decision to step down, the local media was quick to fan rumours that he had a run-in with Pérez Molina over the president’s decision, announced on 15 October, to intervene in five customs posts, with military support, as part of efforts to combat organised crime and boost Guatemala’s notoriously low tax take.

While Centeno reportedly supported the proposal, the media suggested that the two men differed over as to how best to implement the customs intervention, last invoked in 1996 under the Álvaro Arzú government (1996-2000). The latest figures from Guatemala’s tax authorities (SAT), released on 13 December, estimated annual tax receipts in 2013 of Q$46.5bn (US$5.89bn). This is 5.3% less than the Q$49.1bn target for 2013. On 20 December, Pérez Molina said the target for 2014 would be Q$51bn (US$6.5bn).  He said the tax take as a percentage of GDP would reach 11.6% in 2013, up from 10.9% in 2012 and 2011, but less than the 12% minimum target established in the 1996 Peace Accords.

Inflation: On 8 January Guatemala’s national statistics institute (INE) reported that monthly inflation for December 2013 was 0.31%, bringing the accumulated rate to 4.39%. The latest (11 December 2013) report by the United Nations Economic Commission for Latin America and the Caribbean (Eclac) put Guatemala’s annual GDP growth at 3.4% in 2013, up from 3.0% in 2012. Eclac expects this to rise to 3.5% in 2014.