Guatemala’s Historic Reserves Amounts to USD 20 Billion 

The current reserves can cover eight months of the country's export needs, much more than the recommended three months.

by Astrid Luna

Guatemala City, by Brenda Larios -AGN.- The Bank of Guatemala -Banguat- reported that, as of September, the monetary reserves exceeded USD 20 billion, a historic amount in the country.

During an interview in LatAm Investor, a UK investment magazine focused on Latin America, Banguat’s president, Alvaro Ricci, stated, “We have more than USD 20 billion in reserves, which can cover eight months of the country’s export needs, far more than the recommended amount of three months.”

The progress

According to Banguat, these reserves have given Guatemala credibility before international investors because they know that Guatemala can handle the dollar requirements of any external shock.

The president of Banguat stated, “The reserves are earning strong returns because of interest rates in the United States. They are also helping to save money on our financing.”

The government recently issued a Eurobond that obtained rates similar to those of investment grade. Additionally, the reserves help ensure the stability of the quetzal.

A study published by Bloomberg Línea, a news platform in Latin America, from September 2022, details that the quetzal has been one of the most stable currencies in the entire region over the last two decades.

The currency that has shown the slightest variation in the last 22 years of the 21st century is the Guatemalan Quetzal.

Monetary reserves

The country can meet foreign currency obligations equivalent to almost a year’s worth of imports due to the amount of dollars that enter the country through family remittances.

The reserves are also obtained by conducting commercial or financial transactions abroad or receiving transfers from other countries. The increase in dollar reserves is the result of a positive balance of payments due to the current account surplus boost driven by high remittances.

Ricci stressed, “We do not have a specific target for our dollar reserves, but we are relaxed because we expect the current account to be balanced by 2025.”

Exchange rate

The Bank’s president noted that the exchange rate in the country helps to moderate this volatility.

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