Caribbean & Central America - January 2016 (ISSN 1741-4458)

At the end of November, Guatemala’s 158-member unicameral legislature passed the 2016 national budget of Q$70.79bn (US$9.31bn). While the approval of the budget is itself an achievement given that the process is a traditionally difficult one in Guatemala, the allocations to sectors such as health – which the human rights ombudsman recently declared to be facing unprecedented crisis – remain a major cause for concern. Days after the budget’s approval, a new report was released which shows that poverty in the country has gone up.

Approved literally minutes before the constitutionally established deadline of 30 November by 100 votes to eight, the 2016 budget was less than the proposed Q$72.4bn (US$9.4bn) put forward by the executive but up from the 2015 Q$70.6bn (US$9.2bn) budget. According to a congressional press release, education will receive Q$12.89bn (up from Q$12.29bn in 2015); health will receive Q$5.53bn (down from Q$5.64bn); and the interior ministry will receive Q$4.47bn (down from US$4.57bn). Meanwhile the judiciary will receive Q$1.19bn (up from Q$1.46bn in 2015) and the attorney general’s office, Q$1.99bn (up from Q$1.05bn).

Local think-tanks including Instituto Centroamericano de Estudios Fiscales (Icefi), as well as the United Nations Children’s Fund (Unicef), had already criticised the executive’s initial (higher) budget proposal for cutting back on crucial social spending. Prior to the budget’s approval, Health Minister Mariano Rayo warned that the Q$5.53bn proposed allocation for the sector (1.1% of GDP) was insufficient and would mean that the public health needs of 40% of the population would not be met. The Icefi also warned that unless the incoming conservative Frente de Convergencia Nacional (FCN) government led by Jimmy Morales (which takes office on 14 January) overhauls the tax authorities (SAT) -  the credibility of which has been left in tatters following the series of corruption scandals – which ultimately forced Otto Pérez Molina to resign as president in September last, tax take for 2016 will reach just 10.1% of GDP. Tax take for 2014 was just 10.8% of GDP - less than the 12% minimum target established in the 1996 peace accords that ended Guatemala’s 36-year civil war (1960-1996) and one of the lowest in Central America.

• Poverty

According to the Guatemalan national statistics institute (INE)’s national survey on living conditions (Encovi), released on 10 December, 59.3% of the population (total 16.7m) were living in poverty in 2014, up from 51.2% in 2006 while 23.4% were living in extreme poverty, up 8.1 percentage points from 2006. The Encovi survey also showed a discrepancy between indigenous and non-indigenous populations, indicating that 79.2% of the indigenous population is poor, compared with 46.6% of the non-indigenous population. According to the local press, the poverty and extreme poverty lines were set at Q$10,218 (US$1,334) and Q$5,750 (US$750) annually. The most impoverished regions were Alta Verapaz (where 83.1% of the population were living in general poverty), Sololá (80.9%) and Totonicapán (77.5%). Guatemala, Sacatepéquez and Escuintla departments registered the lowest rates of general poverty (33.3%; 41.1% and 52.9% respectively).