Guatemalan Congress approves $500 million World Bank loan

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GUATEMALA CITY, May 18 (Reuters) – Guatemala’s Congress on Wednesday approved a $500 million World Bank loan that the government says will be used to pay down debt, freeing up funds for social spending.

The loan was backed by the government and its allies and passed with 86 votes in the Central American country’s 160-seat legislature.

Finance Minister Alvaro Gonzalez Ricci said this month that the “indispensable” loan would save funds that could be used for social spending.

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The minister said an annual interest rate of 0.75% would save some 1.8 billion quetzales ($233.7 million) over the 13-year period of the loan by replacing Treasury bills more expensive.

“It is an impossible rate to obtain on the international or local financial markets,” said 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, media reported.

“Let’s hope that the people of Guatemala will raise their voices against this effrontery,” opposition lawmaker Samuel Perez said before voting against the loan.

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Reporting by Sofia Menchu ​​in Guatemala and Brendan O’Boyle in Mexico City; Written by Valentine Hilaire; Editing by Christian Schmollinger, Robert Birsel

Our standards: The Thomson Reuters Trust Principles.

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