Research center issues a warning that Guatemala's budget proposal would raise public debt to 29.4% of GDP by 2027

An analysis by CIEN published by Infobae indicates that Guatemala's budget proposal would raise public debt to 29.4% of GDP in 2027. (Illustrative image Infobae) Guatemala's 2027 Budget Proposal would raise public debt to 29.4% of gross domestic product, above the 26.8% target set by the Semilla Movement for the end of its term. The initiative, submitted to the Congress of the Republic on September 2, proposes a fiscal deficit of 4.43% of GDP, the second highest in two decades. The projected amount totals Q192,045.1 million (USD 25,137 million), equivalent to 17.6% of GDP and a real increase of 10.3% over the current budget. The increase exceeds the historical average of 6.5% for the period analyzed, though it falls below the increases recorded in four previous fiscal years. The proposal would also authorize the Executive Branch to expand the budget ceiling to Q193,925.1 million (USD 25,383 million), or 17.8% of GDP. That authority would allow the incorporation of up to Q1,900 million (USD 248.7 million) without going through the ordinary legislative process. The National Economic Research Center notes that Guatemala's 2027 budget proposal raises public debt to 29.4% of gross domestic product. (Illustrative image Infobae) The projected deficit would be lower only than the 4.91% recorded in 2020, during the covid-19 pandemic. The requested net public borrowing would reach 3.64% of GDP, also the second highest level of the last two decades, after the 5.44% of that year. The National Economic Research Center (CIEN) presented these projections in its technical analysis Budget Alert. The public debt balance had closed 2023 at 27.2% of GDP, following an upward trend since 2004, when it stood at 20.9%. CIEN economist Lourdes Lavarreda detailed during the presentation that: "Of the proposed Q192,045.1 million, 41.1% (Q78,992.9 million) are current transfers and capital transfers, and 28.9% of this amount (Q22,799.7 million) would be financed with public debt." The State Obligations charged to the Treasury, which include transfers to other levels of government and decentralized entities, would account, together with debt service, for 51.4% of the budget. This distribution responds to constitutional norms and specific laws that allocate a large share of public resources in advance. The Ministry of Communications, Infrastructure and Housing would receive its smallest share of the budget since 2004. The proposal concentrates resources on education and public debt payment, a trend that persisted throughout the 2012-2025 period. Operating expenses would continue to gain weight relative to investment spending, according to CIEN. That composition reduces the resources available for public works and infrastructure development. Debt service would represent 12.81% of total expenditures in 2027, below the 13.16% recorded in 2025 and the average of 14.36% observed between 2020 and 2023. However, the proposal increases the share of amortizations by incorporating Q2,600 million to cover the net shortfalls of the Bank of Guatemala. The projected tax burden would be 12.07% of GDP, a level the research center considered attainable because its central estimate stands at 12.11%. Tax revenues could range between Q126,106.9 million and Q138,106.9 million, a range that encompasses the projections of the Tax Administration Superintendency. The forecast, however, falls below the 13.0% of GDP established by the Semilla Movement's 2024-2028 Government Plan for 2027. The budget also includes a lump sum of other direct and indirect taxes totaling Q7,326 million, equivalent to 5.6% of total tax collection. That proportion exceeds the 2.1% contemplated in the 2024 budget proposal and the 2.2% included in the 2025 one. CIEN also questioned an additional lump sum of Q4,467.6 million as a budgetary provision, considering it an allocation with little transparency. Primary education would account for 49.7% of the resources allocated to strategic results. Despite that concentration, the target proposes that sixth-grade students improve by only 0.8 percentage points in mathematics and 2.1 percentage points in reading over seven years. If those goals were met, by 2029, 51.5% of sixth-grade students would have satisfactory or excellent proficiency in mathematics, while 49.5% would achieve it in reading. The projections contrast with the results of the Program for International Student Assessment, known as PISA. Guatemala recorded declines between 2022 and 2025 of 10.0 percentage points in mathematics, 37.0 percentage points in reading, and 22.0 percentage points in science. The deterioration was used by CIEN to contrast the targets included in the proposal for the education system. The bill would also include provisions that would conflict with existing regulations. Articles 28 and 142 would contravene Article 38 of the Budget Organic Law, which requires unexecuted cash balances to be returned to the National Treasury at the close of each fiscal year. Articles 18, 23, and 122 would clash with Article 33 Bis of that law. In turn, Articles 17, 102, 103, 111 to 114, 137, 142, and 143 would restrict competition in public procurement processes, according to CIEN's analysis.