Guatemalan lawmakers halt budget that sparked protests

Guatemalan legislators suspended processing of the 2021 budget on Monday after violent protests broke out over the weekend, putting in limbo next year’s funding of major infrastructure projects and 99.7bn quetzales (US$12.8bn) in planned spending. 

The president of the national assembly, Allan Rodríguez, announced that the budget package, which the body approved on November 18, would not be referred to the executive branch to be signed into law, suspending the process “for the sake of governance.”

Rodríguez also declared that a list of accusations made by opposition groups were false, including a claim that the budget was debated and approved behind closed doors, citing many dozens of public forums that included the participation of various political factions, civil groups and NGOs.

Proposed funding for the infrastructure projects amounts to 2.88bn quetzales, or 63% of the 4.56bn quetzales outlined in the 2021 budget proposal to address the pandemic and stimulate economic reactivation. 

The emergency fiscal spending to be funded through bonds is set to increase Guatemala’s fiscal deficit next year to 4.9% of GDP or 30.1bn quetzales – an integral factor in Moody’s decision earlier this month to change the sovereign outlook to ‘negative’ from ‘stable.’

The final bill also included the approval of an IMF loan for US$594mn to support next year’s budget and US$20mn from development bank BIRF targeting pandemic-related health spending.

TIMELINE

The current political crisis began to unfold following a heated exchange between President Alejandro Giammattei (pictured) and vice president Guillermo Castillo, after which Castillo suggested that both submit their letters of resignation on November 20, “for the good of the country.” 

In that meeting, Castillo reportedly called into question “anomalies”, likely tied to criticism that has been heard in recent months over the spending of emergency funds and the questionable choices of early-stage infrastructure projects billed as economic reactivation projects. 

If congress is unable to revise the budget before year-end, Castillo proposed that the 2020 budget debate be repeated and a budget overhaul session be called to wrap up the changes in January.

In an explosive statement after a meeting with Giammattei and others, Castillo said he asked the president to veto the budget and send it back to congress for revisions, and when he did not he called for their resignations.

He added that he does not share the president’s position on many issues and is rarely consulted for his opinion and, as such, campaign promises on how the new administration would cooperate are not being met.

“I have clearly told the president that things aren’t right," said Castillo, who acknowledged that he has “little communication” with the president. “I was elected vice president and together – with Giammattei – we promised to take the reins as the population required, but it has not been as expected.” 

FIERY PROTESTS

On November 21, clashes between groups of protesters and riot control agents of the national civil police (PNC) were seen in the capital near the congress building, which suffered damage from fires caused by a group of people who were protesting in front of the legislative palace.

Other demonstrations occurring elsewhere in the capital’s downtown area on Saturday were peaceful until, allegedly, the PNC used tear gas to disperse the crowds after they failed to dissipate after three hours.  

Giammattei, a three-time presidential candidate before winning in a problematic election in 2019, gained national notoriety for his work as the nation’s director of the prison system.

Reports on Monday indicated that 16 people had been admitted to local hospitals for injuries and breathing difficulties after the clashes on Saturday.

Giammattei, on Sunday, condemned the violence and requested assistance from the Organization of American States (OAS) to help organize dialogue with opposition groups to discuss the budget and how it might better respond to the COVID-19 crisis and two major hurricanes impacting the country this month.

In the statement announcing the OAS move, the president said that the “systematic acts of violence against national institutions, which all Guatemalans have witnessed in recent days, do not represent legitimate means of exercising freedom of expression; on the contrary, these acts are nothing but a means through which minority groups seek to force a true coup d'état.”