GUATEMALA CITY – Guatemala’s Congress on Wednesday approved a $ 500 million loan from the World Bank, which the government says will be used to repay loans, freeing up funds for social spending.
The debt was backed by the government and its allies, and was passed by 86 votes in the Central American country’s 160-seat legislature.
Finance Minister Alvaro Gonzalez Ricky said this month that he would save “essential” debt funds that could be used for social spending.
The minister said the 0.75% annual interest rate would save about 1.8 billion quintals ($ 233.7 million) over the 13-year period of the loan by replacing the more expensive Treasury bonds.
“This is a rate that is impossible to achieve in the international or local financial markets,” said Gonzalez Ricky.
In April, Fitch’s rating revised Guatemala’s rating outlook from stable to positive, citing its strong economic recovery and fiscal consolidation.
Guatemala reached an agreement on the loan in 2020 but the government presented it to Congress this year.
General elections are to be held next year.
Some critics have said the government should not borrow in questioning how the funds will be spent, media reported.
“Hopefully, the people of Guatemala will raise their voices against this shamelessness,” said opposition lawmaker Samuel Perez before voting against the debt. (Reporting by Sophia Menchu in Guatemala City and Brendon O’Boyle in Mexico City; Written by Valentine Hillier; Edited by Christian Schmalinger, Robert Bircel)