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Projects to expand the 2024 state budget raise doubts because engineering negotiations may need to be put to a vote for emergency state approval.
During the August 13 meeting, the questioning of Interior Secretary Francisco Jiménez was interrupted to hear a request for an extension and to remove previous adverse comments made on the Public Finance and Monetary Initiative committee.
The vote was open for one hour to accept the exemptions and ended with 109 votes in favor, an approach reminiscent of the previous legislature’s adoption of budget items. Finally, in a second vote, it was approved to increase state resources by 14.4517 billion quetzales, which are now at the disposal of the Constitutional Court (CC) due to three writs of constitutional protection filed by opposition representatives and the Anti-Terrorism Foundation.
Decree No. 16-2024 expands the budget, modifies three provisions and adds a 500 million quetzales allocation to support small agricultural producers with inputs (fertilizers, seeds and implements), as well as a 500 million quetzales loan program, the National Mortgage Credit (CHN), which will be available.
The Central American Fiscal Institute (ICEFI) analyzed that the amendment created a farmer credit fund but did not clearly define the requirements and conditions for issuing loans. He also pointed out that the purchase of agricultural inputs in the past has encouraged abuses and corruption.
In response, President Bernardo Arevalo said this week on his X account that he instructed that “everything be done with transparency, guaranteeing that resources reach those who need them.” “This will reduce production costs for farmers and ensure that Guatemalan families have access to food at lower prices.”
Works worth millions
For ICEFI, Congress ignored technical recommendations against an increase of 1.675 billion quetzales for the Sector Development Council (CODEDES) and approved 1.875 billion quetzales, an allocation with no justification and serious risks of abuse and corruption. This year, the Council’s current budget will total 6.4011 billion quetzales, but the level of implementation is too low, representing only 16.1% of the initial allocation of 4.0442 billion quetzales.
In 2023, an election year, CODEDES received an allocation of 4.334 billion quetzales and had executed 80% of it by the end of the fiscal year.
This area was one of the most contested, and for Paul Botteo, executive director of the Freedom and Development Foundation, it became a central point in negotiations for the Legislature to pass budget expansion with the support of multiple groups.
According to the results of the August 13 vote published on the portal of the Congress of the Republic, 16 deputies were absent; 10 made excuses; 23 voted against, and 111 voted in favor of increasing the budget. Representatives of Vamos, who voted both in favor and against, and the same was true of Representatives of Vos, rejected the budget expansion, but Karina Paz Rosales, Vice President and First Secretary of the Board, supported the revision of the budget.
Botteo assured that there is a temporary alliance where the mayors put pressure on the deputies to obtain engineering resources, thus opening this mechanism of negotiating works in exchange for votes. He said that the executive branch is interested in increasing the projects it seeks to promote, while the deputies are interested in bringing public works inland.
He commented that this was not a lasting alliance, but it would help with the approval of the 2025 budget and that Congress would be less hostile to the executive branch.
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Political costs
For risk rating agency Moody’s, the approval is “a key legislative victory” for the government as it will gain resources to address infrastructure and social development gaps. He added that the fiscal deficit this year will reach 2.4% of gross domestic product (GDP), which is in line with the International Monetary Fund’s (IMF) recommendation to maintain the deficit within 2% to 3% of GDP.
Moody’s said progress is being made in breaking the legislative deadlock and could pave the way for addressing other areas of government interest, such as competition law, investment law and anti-corruption laws.
ICEFI believes that some of the approved provisions, such as exemptions from transparency and public procurement processes, reverse existing anti-corruption controls and therefore calls for a commitment to enact regulations that reduce the potential for abuse of power and corruption.
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Botteo explained that the executive branch pays a political cost for such negotiations, which have been viewed poorly by the public in the past. He commented that within the executive branch, this can be seen as a cost of advancing governance issues.
Although there is no recent survey data, he added that the infrastructure crisis has already reduced the government’s approval ratings, which may fall further with the negotiations for an expanded budget. “Ultimately, it will be a cost-benefit for the executive branch, and it will depend on them being accountable to the public and demonstrating a different and transparent execution than in the past,” he concluded.
A week after hastily approving budget changes, Finance Minister Jonathan Menkos said on a radio show that he was committed to trying to plug the path of corruption and gave assurances that spending would be accounted for, also in an orderly and transparent process.
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