Guatemala’s Congress on Wednesday authorized a $500 million loan from the World Bank, which the government said would be used to pay down debt and free up cash for social spending. The administration and its supporters backed the loan, which received 86 votes in the Central American country’s 160-seat assembly. The “indispensable” loan, according to Finance Minister Alvaro Gonzalez Ricci, will preserve funds that can be used for social spending. An annual interest rate of 0.75%, according to the minister, would save 1.8 billion quetzales ($233.7 million) over the 13-year term of the loan by replacing higher government bonds dear. “It is an impossible rate to reach on the international or national financial markets”, added Gonzalez Ricci.

In April, Fitch Ratings revised Guatemala’s rating outlook to positive from stable, citing its strong economic recovery and fiscal consolidation. Guatemala struck a deal for the loan in 2020, but the government presented it to Congress this year. General elections are scheduled for next year. Some critics said the government should not take the loan amid questions over how the funds will be spent. “Let’s hope that the Guatemalan people will raise their voices against this audacity,” opposition lawmaker Samuel Perez said before voting against the loan.

Summary of news:

  • Guatemalan Congress Approves $500 Million World Bank Loan
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