The figures for the 2025 income and expenditure budget project, which the Ministry of Finance (Minfin) must present to Congress on September 2, are not yet known or revealed, which has caught the attention of representatives of the economic research centers that accompany the formulation process.
The specific allocations for each of the ministries and other agencies, the amount of the fiscal deficit, the amount of new borrowing and the revenue collection are not known. So far, the Technical Budget Directorate (DTP) and the Technical Commission of Public Finance (CTFP), the General Secretariat of Planning and Programming (Segeplán), have not provided any figures.
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Furthermore, there is no information on the various meetings held by the Economic Cabinet (Gabeco) coordinated by Vice President Karin Herrera Aguilar.
Information is missing
The National Economic Research Center (CIEN) has not received, to date, information from the Ministry of Public Finance regarding the budget project for the fiscal year 2025, responded analyst Jorge Lavarreda, when asked if he knows information regarding the 2025 spending proposal, and the specific allocations.
Similarly, Abelardo Medina Bermejo, an analyst at the Central American Institute for Fiscal Studies (Icefi), indicated that unfortunately there is no information on indicative ceilings and other variables, although he participated in some of the budget workshops organized by the Minfin, although representatives of the Bank of Guatemala and the Superintendency of Tax Administration (SAT) were present.
“Unfortunately, there is no information on indicative ceilings and other variables, although we participated in some of the budget workshops organized by the Minfin”
Abelardo Medina Bermejo, Icefi analyst
Along the same lines, Érick Coyoy, consultant for the Association for Research and Social Studies (Asíes) highlighted that, in the workshops held last June, the Minfin omitted to present the indicative ceilings of the State budget project for 2025. “This is information that has been presented in previous editions of the open budget, so it is strange not to have this indicative information now,” he remarked.
Without horizon
At the beginning of June, the Executive submitted a budget expansion initiative to the Congress of the Republic for Q14 billion, to cover the needs in the first year of the current administration.
According to those consulted, there is a consensus that this request for an extension is the reason for the lack of progress in the discussion or socialization of the budget for the following year and the result that could be expected.
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“The main problem that has prevailed in the current budget formulation process is the uncertainty caused by the lack of an orderly 2024 budget for the performance of the Government’s financial management, and which has been reflected in the lack of a real expectation of what will happen with the budget readjustment requested from the Congress of the Republic,” Medina Bermejo stressed.
He added that a revised Medium-Term Fiscal Framework is needed, because the scheme developed during the previous government administration “still had a tax planning (SAT goals) that was quite underestimated and there is no orderly fiscal scheme that defines the short- and medium-term strategy.”
The above, coupled with the change, possibly prematurely and undesirably, of some of the technical staff in the Treasury portfolio, has made it difficult to set a concrete horizon, “and what is difficult is the composition of the specific allocations for each department, because it is not really known what will happen with the requested 2024 readjustment, but at this point there should already be at least a preliminary approach.”
“This is information that has been presented in previous editions of the open budget, so it is strange not to have this indicative information now.”
Érick Coyoy, analyst at Asíes
Lavarreda said that during the process called “Open Planning and Budget 2025” there was the opportunity to present a proposal regarding the estimation of tax revenues “and we understand that they will give us an answer on whether they consider it feasible or not.”
What would be expected
As for the formulation of the 2025 budget draft, analysts also expressed their expectations, given the lack of data to support it.
The CIEN representative stated that ideally a proposal would be expected for 2025 that would overcome some of the weaknesses of previous years, such as, for example: a better-founded estimate of tax revenues or, on the expenditure side, greater progress in management by results.
Asíes points out that the Organic Budget Law establishes a results-based budgeting process because the definition of indicators and program goals is always complied with, but never the monitoring and evaluation of the results achieved with the resources executed, so it is expected that the new government will comply with this legal mandate.
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Finally, Icefi hopes that the 2025 budget will pursue progress in addressing the needs of the population and will cease to be “an accommodating resource scheme, which basically finances the operational levels of the ministries, without being clear about the results that will be obtained with public resources.”
“The first aspect that must be made clear is the horizon of tax collection, which has been greatly underestimated in the last four years, as well as the fact that the expected results in social indicators must be really considered; to do so, and possibly this has made current progress somewhat difficult, an effective evaluation of the public spending of each department must be proposed, to establish whether the allocations are worthwhile.”
“The National Economic Research Center (CIEN) has not received, to date, information from the Ministry of Public Finance regarding the budget project for fiscal year 2025”
Jorge Lavarreda, consultant of the Cien
The budget must also provide certainty regarding the fulfillment of the State’s financial obligations and proper management of public finances, not only in terms of achieving a manageable fiscal deficit, but also in terms of improving the use of public resources.
Aside from this, and given the time of management of the current Government, as well as the real values of the expected collection, assuming a fiscal deficit for 2025 around 2% of the Gross Domestic Product (GDP), the budget ceiling is estimated to be around Q130 thousand to Q132 thousand million.
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