At least three administrative factors that the board of the Directorate of Priority Road Infrastructure (Dipp) has not yet resolved have prevented institutional progress and delayed the operation of the model for the maintenance and control of the terrestrial road network approved by the Congress of the Republic.
The implementation schedule reflects delays. The most obvious are the pending tasks related to its functions, powers and powers from the administrative perspective. Regarding the priority sections and the execution of works, progress has been limited.
The International Monetary Fund (IMF) mission, which concluded the Article IV evaluation of Guatemala, recommended on June 5 “unlock deployment of the Priority Road Infrastructure Law. If this requires legislative modifications, these should also guarantee that the financing structure of the Priority Road Infrastructure Directorate does not increase the high budgetary rigidities.”
In addition, he recommended encouraging greater participation of the private sector in infrastructure investment through the approval of port and airport laws, as well as the full application of the Law of Partnerships for the Development of Economic Infrastructure.
These IMF conclusions were given within the framework of the sustainability of the national economy for the coming years, based on possible compensatory measures in the face of a slowdown in family remittances, which represent 20% of the gross domestic product (GDP), as well as the objective of reaching investment grade.
Dipp accumulates arrears
Asked about this matter, the Vice Minister of Finance, Carlos Augusto Melgar Peña, who acts as substitute representative before the Dipp board, confirmed that there are three aspects pending resolution. He indicated that they hope to conclude them in the coming months and that works in different mechanisms to overcome these obstacles, an issue that has been insisted upon.
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During the first semester, the board reduced the frequency of its meetings to two per month. Previously, it held one per week, that is, about four sessions per month.
According to the vice minister, the incorporation of the Dipp into the public finance system is pending, so that it has its own budget structure. He explained that this process has not yet concluded and that work is being done to complete it.
Another pending aspect is the approval of the regulations of the law so that it can come into operation. It is known that several versions of the regulations have been presented, but they have not yet been approved because they are still under review by institutions such as the Attorney General’s Office (PGN).
The law cannot take effect if it does not have regulations.
The Dipp board is made up of a regular representative and an alternate representative of the Ministry of Communications, Infrastructure and Housing; from the Ministry of Public Finance; from the Ministry of Economy; as well as the College of Engineers of Guatemala and the Council of International Transport Users of Guatemala.
Road fund still pending
There is progress in this process, but it is still necessary continue with the institutional architecture, the vice minister remarked during a press conference.
For operational functioning, he explained, the creation of the Fund for Priority Road Projects (Fovip) is necessary, as established by law.
He added that, as long as the legal requirements to transfer the financial resources provided for in the regulations are not completed, Fovip will not be able to be established. In his opinion, this is the second important decision that the board must make.
Later will come the operational phase of the Dipp, which includes its implementation, the review of the road sections and their attention.
“We are still in this phase. Until the Dipp board finishes this cycle, the Ministry of Public Finance will have the authorization to transfer the resources. These phases have not been exhausted and that is why the transfers have not been made,” clarified Carlos Augusto Melgar Peña.
In any case, he stated that the expectation is to conclude these phases in the coming months.
Dipp exists, but does not operate
Juan Carlos Zapata, executive director of the Foundation for the Development of Guatemala (Fundesa), indicated that the Dipp exists as a legal mandate through Decree 24-2024, but not yet in practice. Besides, He maintained that this situation responds to an institutional culture of non-compliance with the law that has been entrenched for years.
Regarding the pending regulation, he stated that, without this secondary standard, the procedures for contracting, supervision and reception of works lack a solid regulatory basis.
Unlock the implementation of the Priority Road Infrastructure Law. If this requires legislative modifications, these should also guarantee that the financing structure of the Priority Road Infrastructure Directorate does not increase high budgetary rigidities.
He added that the financial transfer mechanism has not yet been defined nor does it have its own classifier and budget program.
Likewise, he pointed out that the salary of the Dipp manager, Claudia Lucrecia Cáceres Maldonado, has not been defined either, in accordance with the provisions of the law, which shows that the Implementation of the regulations is not among the priorities.
Regarding the implications of these gaps, the manager stated that the execution of projects under the new model, in which companies from the United States could participate, remains unrealized, which, in Zapata’s opinion, constitutes a breach of the tariff agreement signed with that country.
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The projects prioritized in the Dipp portfolio, such as road corridors, strategic bridges and export routes, cannot begin the contracting process because there is no executing unit with the legal capacity to commit spending.
According to Zapata, this situation generates:
- Delay in the priority road infrastructure portfolio, which constituted the most visible political-institutional asset of Decree 24-2024.
- Loss of execution window. In Guatemala, the effective cycle for executing works runs from March to October. Every month lost in the institutional structure represents one less month of work in the field.
- Negative signals for private investment.
- Reputational risk for the Government.
They propose a route to activate the Dipp
Zapata indicated that, as part of a short-term solution, a roadmap has been drawn up so that, within a period of three to four months, a regulation will be in place and the corresponding government agreement will be issued.
The planned actions are the following:
- The Ministry of Public Finance (Minfin) and the Secretariat of Planning and Programming of the Presidency (Segeplán) lead a technical table with the Ministry of Communications, Infrastructure and Housing (CIV) and the Dipp to approve the regulation urgently.
- A specific budget program is created in the current budget through a budget modification, in accordance with article 33 of the Organic Budget Law.
- An institutional bank account is enabled at the Bank of Guatemala (Banguat).
- A transfer scheme is defined through a special fund with a Dipp subaccount within the Minfin, with quarterly reports to the Comptroller General of Accounts.
According to Zapata, these measures would allow compliance with the law, begin to remunerate the manager in accordance with market conditions and provide the model with an orderly legal basis and full legal certainty.
Dipp still not fully operational
Asked about the implications of several administrative processes still pending, the Guatemalan Logistics Guild (GLG), attached to the Guatemalan Chamber of Industry (CIG), pointed out that, although the Dipp has already been created, it still does not have all the administrative, budgetary and financial mechanisms necessary to operate fully.
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He explained that there is still a lack of rules and procedures that allow receiving, managing and executing resources in an efficient and transparent manner. Without this structure, the institution faces serious limitations in converting planning into executed projects.
Delays raise logistics costs
Like Fundesa, the Guatemala Logistics Guild (GLG) considers that the main consequence has been the delay in the implementation of priority road infrastructure projects.
“For the productive sector, the consequences are tangible. Guatemala faces higher logistics costs than several countries in the region due to connectivity problems, congestion, deterioration of roads and limitations in strategic corridors. Each delay in the modernization of infrastructure implies higher transportation costs, lower productivity, longer transit times and a reduction in national competitiveness,” they noted.
They added that this situation can also generate uncertainty among investors and financing organizations.
Union asks to expedite Dipp operation
Regarding possible short-term solutions, the Guatemala Logistics Guild (GLG) considers that the priority is to complete the pending regulatory and financial instruments so that the Dipp can fully operate.
“At the same time, temporary coordination mechanisms can be established with the Ministry of Finance and other entities to avoid additional delays. It would also be important to define a clear roadmap with deadlines and responsibilities to provide certainty about implementation. The important thing is to prevent administrative challenges from becoming a permanent barrier to the execution of infrastructure that the country urgently needs,” they highlighted.