GUATEMALA CITY (Reuters) – The Guatemalan Congress on Wednesday approved a $ 500 million loan from the World Bank, which the government says will be used to pay off debt, freeing up funds for social spending.
The loan was supported by the government and its allies and was approved by 86 votes in the 160-seat legislature of the Central American country.
The Minister of Finance, Álvaro González Ricci, said this month that the “essential” loan would save funds that could be used for social spending.
The minister said an annual interest rate of 0.75% would save about 1.8 billion quetzals ($ 233.7 million) over the 13-year loan period by replacing more expensive treasury bonds.
“It’s a rate that’s impossible to get in the international or local financial markets,” González Ricci said.
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In April, Fitch Ratings revised Guatemala’s rating outlook from stable to positive, citing its strong economic recovery and fiscal consolidation.
Guatemala reached an agreement for the loan in 2020, but the government presented it to Congress this year.
General elections are scheduled for next year.
Some critics have said the government should not take out the loan amid questions about how the funds will be spent, media reported.
“I hope the people of Guatemala raise their voices against this brazenness,” said opposition MP Samuel Perez before voting against the loan.
(Reporting by Sofia Menchu in Guatemala City and Brendan O’Boyle in Mexico City; Written by Valentine Hilaire; Editing by Christian Schmollinger, Robert Birsel)
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