In the first months of Bernardo Arévalo’s administration, 11.04 percent —Q309 million 44 thousand— of the Q2 thousand 798 million assigned this year in external loans has been executed, according to the records of the Integrated Accounting System (Sicoin), reported by the Ministry of Public Finance as of June 30.
The loans that are in force were requested during Alejandro Giammattei’s administration and approved in the last legislature. Around Q1,789 million has been paid in interest on these loans.
The Ministries of the Interior, Education, Health, Communications, State Obligations in Charge of the Treasury and the Justice Sector are the agencies that have been assigned these credits.
Last year, at the same date, execution was at 16.91 percent.
The execution
The Ministry of Health and Social Assistance has the most approved funds, with Q1,063 million distributed between a program to strengthen the institutional network of health services, Crecer Sano, and an investment project in hospital infrastructure and equipment.
On average, they report an execution of 42 percent of the total amounts received, but almost 55 percent is still pending to be disbursed. So far, Q35 million has been paid in interest for the three that are valid until 2026.
Among the investments made are improvements and construction of hospitals, as well as equipment and renovations of various units in several departments.
The Ministry of Education has two other loans for Q534 million, intended for improving educational coverage and quality, and another for rural education. The first has already been almost completely disbursed and half of it executed, but regarding the second, 14 percent of the Q116 million received has been used. Q122 million in interest has been paid on these loans.
Public information indicates that two institutes have been built, three thousand schools have been renovated and furniture has been purchased.
The Ministry of the Interior has executed only Q10 million of the Q488 million approved. The Public Ministry (MP) also has a loan, but does not report execution, as do those held by the Judicial Branch, the Institute of Public Criminal Defense and the National Institute of Forensic Sciences.
The Communications, Infrastructure and Housing portfolio has five loans, of which 83 percent of the disbursements have been received, but only 26 percent of them have been executed. In addition, Q1,368 million has already been paid in interest.
Approaches
But the Ministry of Communications is also seeking six more loans from different international banking entities. Some of them were already in the process of being negotiated by the previous government. One of them would be for the “Avenues for Good Living” program, which is one of the goals of the Arévalo administration and one of the central axes of the government plan.
The ministry says it will focus on developing rural infrastructure and improving mobility. The program aims to work on tertiary roads, especially in the Verapaces, the western highlands and the Dry Corridor. US$400 million —about Q3.96 billion— is required from the World Bank, according to recent statements by Minister Félix Alvarado.
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The other five loans are managed from the portfolio with the Inter-American Development Bank, the Central American Bank for Economic Integration, the International Bank for Reconstruction and Development and the Spanish Agency for International Development Cooperation. In addition, one is being negotiated with Taiwan.
“The objectives of this financing include the construction, paving and expansion of the CA-09 north highway, from El Rancho to Puerto Barrios,” the institution said.
Little will
Fiscal policy specialist from the Central American Institute for Fiscal Studies, Ricardo Barrientos, explained that the execution figures show the lack of will to execute and the growing intention to seek more funds through treasury bonds on loans in the last three governments.
“What is evident is that there is an extremely poor level and a demonstrated inability or lack of will,” he commented.
He explained that treasury bonds are another type of debt and that the use of this measure has grown over the last 12 years because, unlike loans, they are not subject to any specific program and pointed out that the interest rate on loans is usually lower than that of bonds and the terms for repaying them are longer.
Jorge Lavarreda, a macroeconomics specialist at the National Economic Research Center, said that the execution is relative, in accordance with what was planned for the year. He said that the idea of multi-year loans is to execute them over several years.
“It depends on which year we compare it to – the execution. If we compare it to 2022, we are doing very badly, but if we compare ourselves to 2021, well, we are on the right track,” he said.
Reports
In response to the question about the low execution of the loans, the Ministry of Finance, through the Communications Directorate, indicated that the portfolio requests the loans and once they are approved, they are distributed. “Each executing unit of the different ministries is the one that must provide explanations of the progress of the execution.”
On July 10, the Minister of Public Finance, Jonathan Menkos, presented the monthly report on the budget execution of the external loans provided for in the General Budget of State Income and Expenditures.
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