GUATEMALA CITY (Reuters) – Guatemala’s congress approved on Wednesday a $500 million loan from the World Bank that the government has said will be used to pay down debt, freeing up funds for social spending.
The loan was supported by the government and its allies and passed with 86 votes in the Central American country’s 160-seat legislature.
Finance Minister Alvaro Gonzalez Ricci said this month that the “indispensable” loan would save funds that could be used for social spending.
The minister said a 0.75% annual interest rate would save some 1.8 billion quetzales ($233.7 million) over the loan’s 13-year period by substituting more expensive treasury bonds.
“It is a rate that is impossible to obtain in international or local financial markets,” Gonzalez Ricci said.
In April, Fitch Ratings revised Guatemala’s rating outlook from stable to positive, citing its strong economic recovery and fiscal consolidation.
Guatemala reached a deal for the loan in 2020 but the government presented it to congress this year.
General elections are scheduled for next year.
Some critics have said the government should not be taking on the loan amid questions about how the funds will be spent, media has reported.
“Hopefully, the people of Guatemala will raise their voice against this brazenness,” opposition lawmaker Samuel Perez said before voting against the loan.
(Reporting by Sofia Menchu in Guatemala City and Brendan O’Boyle in Mexico City; Writing by Valentine Hilaire; Editing by Christian Schmollinger, Robert Birsel)