January 22, 2016
News /
Posted by NCID

On September 6th, 2015 elections in Guatemala took place for the presidency, congress, representatives and municipalities.  The presidential elections coincided with congressional and municipal elections after the previous president, retired-general Otto Pérez Molina, stepped down from office due to protests against his administration and eventual imprisonment, along with vice president Roxana Baldetti.  President and vice president were found guilty of corruption in “La Linea” lawsuit.  Actor James Ernesto Morales Cabrera, best known as Jimmy Morales, won the presidential elections with 67% of the votes over the ex-First Lady, Sandra Torres, who only acquired 33% of the vote.

These elections showed the Guatemalans are tired of corruption and of military rule by the soldiers who fought in the recent civil war.  For this reason, they decided to elect a “fresh face”- someone beloved by the people and had no history of corruption or war.  Jimmy Morales introduced himself into politics as a candidate for mayor of Mixco, in the department of Guatemala in the 2011 election, where he won the third seat.  Two years later, on the 10th of March, 2013, he was elected as leader of the Front of National Convergence party (Frente de Convergencia Nacional), with who he won the presidential election.

With the presidency achieved, Morales establish his cabinet without ex-military personnel with the exception of the Minister of Defense.  He chose this strategy in order to have a more transparent government and avoid internal corruption.  However, one of his biggest criticisms comes from his own party, since it was formed by ex-military where many of them are still in service.  Reducing corruption is Morales’ main objective for his administration, which took office January 14th, 2016.  Guatemala is currently ranked 123rd out of 174 countries in the Index of Corruption Perception in 2015 conducted by Transparency International (Transparency International, 2015), a fall from its 2014 ranking of 115th.  It is one of the most corrupt countries in the region, where only Honduras (126) and Nicaragua (133) rank higher.

Aside from corruption, one of the major challenges Morales has is the increase in poverty in the past decade.  According to the last report (2014) by the World Bank titled “Guatemala Economic DNA” (World Bank, 2014), the poorest 40% of the population makes $1.50 per day in 2012, in comparison to $1.60 per day in 2003.  It is the only country in Latin America who quality of life has declined for the lower class.  The report also confirms that the main factor for the increase in poverty is due to the lack of public investment and poor infrastructure in the country, in addition to low State revenues.  Morales needs to strengthen collecting taxes institutions to combat the informal economy since the majority of small business and citizens are not registered with the government. For this reason, tax evasion is very common and is a big problem for the State.

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As you can see in the graph, companies and informal workers prefer to not establish themselves in the country due to difficulties they would face with the government in terms of bureaucracy and bribery.  The challenge for Morales is that the majority of businesses establish headquarters, but for that he needs to make government institutions more transparent.

According to Morales, he hopes to reduce poverty in half by 2032 with project “K’atun Nuestra Guatemala 2032” (Consejo Nacional de Desarrollo Urbano y Rural, 2012) which it was created by the former president.  He hopes to create jobs, facilitating to businesses resources so that they can expand and hire more people.  According to the World Bank, export businesses are the ones who create the most jobs in the country, doubling businesses who don’t export.  This is because export-oriented businesses and foreign owned companies are easier to finance cheaply, and therefore can create more jobs.

Regardless of all the problems the new president faces, he has received a very warm welcome in the international community.  On his first day in office, different international authorities like the president of Mexico, Enrique Peña Nieto and the vice president of the United States, Joe Biden went to visit.  This warm international welcome sheds hope on the region where important economic and social changes have occurred.

 

Bibliography

 

Consejo Nacional de Desarrollo Urbano y Rural. (2012). K´atun Nuestra Guatemala 2032. Retrieved from K´atun Nuestra Guatemala 2032: Link

Transparency International. (2014). índice de percepción de la corrupción 2014. Retrieved from Transparency International: Link

World Bank. (2014). Guatemala Economic DNA. Retrieved from World Bank: Link