Guatemala is the Country With the Lowest Public Debt in the Region

The country's public debt is the lowest in the region, at USD 22,593 million, the equivalent of about 30% of GDP.

by Astrid Luna

Guatemala City, by Brenda Larios -AGN-. A study by the Voice of America with data from the Central American Institute for Fiscal Studies -ICEFI- and Forbes magazine points out Guatemala as the country with the lowest debt in the Central American region.

The article states: “Guatemala has the lowest debt in the region, while El Salvador and Costa Rica have the highest levels.”

In this sense, the countries with the highest debt usually borrow money from international organizations when tax revenues are insufficient to pay for government projects or expenditures. It is not the case in Guatemala.

The analysis

The report indicates that, in Central America, Guatemala has resorted to this practice the least. As a result, it has the lowest public debt in the region, amounting to 22.593 billion dollars, approximately 30% of the Gross Domestic Product -GDP- according to calculations by ICEFI.

Meanwhile, the countries with the highest public debt are El Salvador, with 76% of its GDP committed, and Costa Rica, with 63%.

Economist Hugo Maul, a researcher at the National Center for Economic Research -CIEN- highlighted that Guatemala has historically been very conservative. It has not been in poverty and high debt like Honduras or Nicaragua in the 1980s. Likewise, Guatemala has not reached a level of debt dependency like El Salvador and Costa Rica, creating a macroeconomic shield.

The assessment

One of the methods used by financial institutions to measure whether a level of debt is appropriate or excessive is by comparing the amount owed with the GDP of each country. In other words, comparing the debt amount with the value of the final goods and services produced by that country.

For example, if a country owes USD 80 million and its GDP is USD 100 million, it owes most of it, and its wealth capacity is reduced.

The report mentions:

Considering the figures included in the government revenue and expenses for each of the countries in the region, it is estimated that, by the end of 2023, the average regional public debt will be reduced to 54% of GDP.

In Central America, the average debt level in the region was 48.5%. After the pandemic, the average debt level rose to 60.6%.

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