The monetary authorities have delineated a series of actions that could positively influence future country risk assessments. To this is added the recent Review of article IV by the International Monetary Fund (IMF)whose results will be presented this week.
In parallel, the Foundation for the Development of Guatemala (Fundesa), which integrates the country risk table, proposes measures to climb positions and reach the investment grade. This objective represents a positive signal for potential investors, as it would facilitate the attraction of foreign direct investment (FDI), would improve the conditions for the issuance of Eurobons and strengthen the reputation of the national financial system.
Obtaining an investment grade rating is equivalent to a “recommendation letter” by the evaluation agencies, and is an improvement of perspective.
Current context
In an uncertain global environment, Standard & Poor’s (S&P) Global Ratings improved the Guatemala qualification of BB to BB+, highlighting macroeconomic stability, economic resilience and official measures aimed at strengthening governance, transparency, fight against corruption and infrastructure investment.
S&P assigned a stable perspective, indicating that it does not provide changes in the next 12 months. This week, the IMF mission, headed by Alexander Culiuc, will announce its preliminary conclusions.
Urgent roadmap
One of the strategies raised is to maintain constant communication with the agencies, in order to show progress and shorten the evaluation cycles.
The goal is for the three main agencies to locate Guatemala to a step of the investment grade. For example, It is sought that Moody’s ahead of its evaluation, originally scheduled for 2027, and that Fitch Ratings considers to improve its qualification in 2026.
“The immediate objective is to advance the strategy for Fitch to evaluate the country in 2026 and place us to a step of the investment grade. Subsequently, Moody’s would be requested an early evaluation,” said Johny Gramajo Marroquín, economic manager of the Bank of Guatemala (Banguat).
To specify this goal, The three main agencies would place the country at a step from the investment grade, which would allow to opt for a new improvement from 2027.
Conditions
Despite the proximity, Guatemala must still fulfill certain economic and institutional criteria. According to Gramajo, some agencies consider that the country deserves that qualification, except for its Gross Domestic Product level (GDP) per capita, which should increase by about US $ 5,000 annually.
Currently, it is estimated that GDP per capita adjusted by purchasing power parity is US $ 14,000, while the average in countries with similar qualification is around US $ 19 thousand.
Agencies do not require reaching that value, but showing sustained advances towards that level.
Internal aspects
Institutional reforms are required, among which the approval of the Priority Road Infrastructure Law, the Law of Competition and the modifications to Decree 16-2010 of alliances for the development of economic infrastructure.
A better country risk rating would allow to reduce interest rates, which would benefit consumers, companies and the State. DIt is the perspective of the private sector, the investment grade would expand access to credit lines and reduce the cost of state debt.
Investment is required
Juan Carlos Zapata, executive director of Fundesa, said that public investment represents only 1.6% of GDP, and that it should increase to 4% for the total investment to go from 16% to a range from 25% to 27%, similar to that of other countries.
“To improve the country risk rating, public investment in roads and other priority projects must be increased, in addition to advancing in the legislative agenda,” he concluded.
Move the GDP
The GDP per capita is still far from the average of countries with similar grades, and the greatest challenges are found in governance and institutionality, said Johny Gramajo del Banguat.
In addition, he stressed that Guatemala exceeded the Nominal GDP barrier of US $ 100 billion in 2023, reaching US $ 103 billion; In 2024, US $ 114 billion is foreseen and in 2025, US $ 120 billion.
Gramajo said that necessary actions and reforms must be taken, and an immediate increase in capital is not required.