The CIV and the Codedes fail to start as a bet to boost the economy

The budget execution in the items that have a high public investment component such as roads or the construction of gray work, report a weak mistakes.

In a first quarter it is still premature to say whether the economy will slow down and we would have to wait for the behavior of a second quarter to be clearer a perspective, but there is a context of international uncertainty through the way of family remittances and exports.

In a summons in Congress, the authorities of the Ministry of Communications, Infrastructure and Housing (MICIVI) clarified that only 8% of the road network receives maintenance. On the part of the General Directorate of Caminos, there is no section or work that “starts” public investment and the Road Conservation Executing Unit (COVIAL) maintains active 44 events that are mostly maintenance, between cleanings and bumps of the sections.

The resources destined for infrastructure projects of all kinds are known as public investment, such as road, educational, educational and in general all infrastructure needs in the country.

The main public investment execution arms is the MICIVI, on the side of the road network and the Departmental Development Councils (CODEDES) that receive a contribution from the Value Added Tax (VAT Paz) but that in this budget approved by the Congress of the Republic last November they received an extraordinary contribution of Q5 billion.

What do the figures reflect?

In the area of ​​Micivi road infrastructure development, the execution of the expenditure (as of March 13) is only 2.38% which is what includes for roads or new projects, for an amount of Q73.3 million. The assigned for this year is Q4 thousand 842 million.

This is the most significant allocation that public investment can move.

In the contributions to the Codedes there is a 1.55% execution with Q66.8 million and an allocation of Q4 thousand 322 million. In that same scheme, the contributions of balance to the Codedes Decree 24-2024 Zero Executions as well as the extraordinary contribution Decree 36-2024 approved by the Congress of the Republic for Q5 thousand 12 million.

In other words, as a whole, the assignments for the MICIVI and CODEDES for public investment is Q14 thousand 176 million for this exercise.

For municipalities there is a 24.58% execution for an amount of Q3 thousand 290 million.

What does it mean?

Julio Héctor Estrada Domínguez, president of the Finance Commission of the Congress and Erick Coyoy Analyst of the Social Studies Research Association (thus) provided an explanation on the low execution observed in the first quarter and that they send certain signals in the productive system.

Estrada Domínguez, explained that it is an important factor in the revitalization of the Guatemalan economy and economic growth is also presented by a demand added by public sector services, especially in infrastructure investment, but there the execution is particularly low at the level of the Codedes, the MICIVI and the entire investment part of the Executive.

“You always take a bit to start (public investment) but now it is slowing slower than normal and most importantly is that it dynamizes from now on, because there is an important part of budget for local investment that can boost the economy at the national level, which is the part of the reason for the approval of the spending plan,” he said.

He recalled that this year there is a “noise” in the economy especially in the part of the United States, “with its ups and downs.”

For Coyoy, the Codedes are handling a budget greater than the Q10 billion for this year and it is worrying to observe a “very low rhythm of execution in the investment of 2% in the ordinary contribution and zero percent in the extraordinary contribution, so it is unfortunate since the rainy regime begins in May and the ideal is to make the maximum possible the dry season so that the projects progress more quickly”.

“We are in the mid -March and the execution is very slow and hopefully you can take advantage of the summer because in May with the rains it has been difficult to advance in the road network,” he added.

Estrada Domínguez, reiterated that the most worrying thing is that the non -execution of preventive road maintenance is not being observed, which has to be done before winter, because not cleaning causes leaks, covered drains cause problems in water crosses and they are anticipated that there will be no jobs before the rains begin. “No contingency program has been seen from the Executive, nothing specified,” he said.

Risk for economic growth

One of the arguments that the Ministry of Finance presented for the request of the 2025 Budget, is the public investment component and the authorities of the Central Banking, have projected GDP growth by 2025 of 4% as a central value.

Then, one of the explanations released to achieve that 4% growth path that is positive for this year, is explained by the execution of state spending to invest in infrastructure and increase productivity; That the execution of public spending arises in scheduled times, to achieve a 91% execution for the end of the year. The conditions can improve if one hundred percent of the expense is achieved.

For Estrada Domínguez, this first quarter cannot be so critical in terms of public investment, but the key will be the second quarter, and there was continuation in Codedes projects because they allowed them to drag the funds not executed last year.

“The next quarter, which, if the works are not started and advanced with a lot of road infrastructure, they will get into, there will be a rise, there will be no investment and that will weaken the growth of GDP that is expansive spending,” said the president of the Finance Commission.

The analyst of Thuses is of the idea that undoubtedly if there is no execution of public spending for the following quarter, if economic growth will affect this year that is 4% that would be improved that of 2024, which is linked to maintain the dynamism of family remittances and public investment is expedited and that has a better performance than last year.

“If the performance of the investment execution does not improve, it will definitely be difficult to achieve that better growth rate, and would be rather to figures similar to last year,” he said.

He assured that in that context there is still no clear measures of the new United States government, and costume exports last January already had a 20%decrease, which is the product of uncertainty, so that the government and minfin should make more agile in execution to compensate for any negative effect on the economy due to the fall of exports or by family transfers.

Cyclic measures

The measures against cyclicals are those, that when the international trend of the economy is towards the decline, which, in the case of Guatemala, follows a negative behavior of exports or that if the tendency of remittances were to deceleration or fall, public investment would be the mechanism of compensating that loss of dynamism.

This would be the mechanism to contribute to economic growth, but that implies, in which the government’s execution capacity must be improved, but now there is no remarkable change and we would have to wait for initiatives to be thinking.