Guatemala minister casts light on 'humanizing' the economy

BNamericas caught up with Guatemala's economy minister Rubén Morales Monroy at the LatAm Leaders Forum in Miami, Florida, in September.

BNamericas: You mentioned in your speech at the conference the idea of "humanizing" the Guatemalan economy. What does this actually mean?

Morales Monroy: The concept of humanizing means thinking of people first in different types of public policy. Even though we have to establish a goal like economic growth – which we have put at 5.1% annual growth starting from 2018 – this is not the most important indicator. The most important thing is that growth benefits people. So economic growth and productive activity that brings in capital to the country but that doesn't produce sufficient jobs or jobs of sufficient quality, or that could severely hurt the environment, is not what we want. This is what we mean by humanizing the economy. It means re-thinking the function of government policy.

BNamericas: What has changed in Guatemala over the course of the last year since Otto Pérez Molina was removed from office?

Morales Monroy: The biggest thing that has changed is the attitude of the Guatemalteco. The businessman, the young person, government officials, media officials and the justice system have all transformed. Systems don't change on their own. People change. In the case of businesses, organizations have pushed training programs and conferences about the changes they want to see as investors, entrepreneurs and employers. Young people are much more aware of what they can do for their country, they have become empowered, and this is as a result of what happened last year. No one led them; it was a group of students who led the change. They are aware of their role, and this continues. In terms of the justice system, there's a bigger commitment to advancing the ongoing corruption cases with the public prosecutor's office. This is a trend that is ongoing, and the country is waiting to see what else will happen, whether there will be more cases. We don't know when it might end. It's a process that has advanced and is still advancing.

BNamericas: Apart from corruption, what are the great challenges that Guatemala now faces to sustain growing?

Morales Monroy: One of the biggest challenges is the need to increase public investment. Guatemala has public investment of 1.5% of GDP approximately, which is very small, almost zero. Our economic policy aims to get to 5.7% of GDP, and this will have to come through debt and public-private relationships. For this to happen, we also need to increase our tax rate from 10 to 13% of GDP. So this triad of public investment, debt and taxes is the most relevant for us. We need to, of course, be effective in our public investment, getting to the right parts of the cities where it's most needed. There are important infrastructure projects as well, but getting our public funds to certain urban nodes is important.

The energy sector is very important and has grown a lot since it was liberalized 20 years ago and has allowed for a lot of private investment. Right now we need better electricity distribution. We are at about 91-92% of [full distribution], but that 8% [including many homes] is quite a lot.

And another important objective and challenge is education – education for the young, to give them a chance at employment, but also so that they can start their own ventures.

BNamericas: Focusing a little on energy, can you tell me whether the Siepac [Central America electricity] interconnection project has had an impact in Guatemala? What about the natural gas pipeline plans with Mexico?

Morales Monroy: Siepac is advancing. It's a very ambitious project that still needs to find the right path to facilitate the exchange of energy and private investment. The interconnection with Mexico works well, especially in terms of what Guatemala buys from Mexico. So interconnection is very important for Guatemala. In terms of the pipeline project, it's a process that has been in discussion. It has not been defined. It could be a pipeline that [terminates] in Guatemala at an industrial zone, but it could also continue to El Salvador. But using natural gas would be good for the country as a cleaner energy source and cheaper.

BNamericas: Can you talk a little bit about the extraction industry and how the government is working to improve the relationship with communities?

Morales Monroy: Mining – you have to look at case by case. There are two important mines in the country that are operating normally at this time. There is another that has had a problem with communities that has not yet been resolved. And in a fourth case a company decided to close a mine because its permits ran out. As a government, we're working with communities to show them the benefits of extraction projects and energy projects both for the country and also directly for them in terms of jobs. Bit by bit, it has stabilized. We're on a good path with the relationship between the energy and mining ministries and the ministry of labor in terms regulation of the law [ILO convention] 169 on consultation with communities. [This] is one more tool for social stability and intelligence and is a means of averting conflicts.