Wednesday, April 16, 2008

Colom's Speech Less Than Anticipated

April 16, 2008

The government announced last week that president Álvaro Colom would announce 32 economic measures to stabilize or reduce prices of the “ canasta basica” or “basic basket”, including price caps on items such as beans, rice, flour, and fuel, subsidies, and employee bonuses. The announcements implied that some of the measures were quite strong and that they would be laid out specifically in a nationally televised address last Sunday. But that's not quite how it went Sunday night. Colom did speak about a package of medium and long-term strong economic measures to attenuate the economic crisis but the presentation was short on details.

The president did announce four measures that “should have an immediate impact”. He said that he's looking for an agreement “in solidarity” with private business and cooperatives in order to achieve a reduction or stabilization of prices on basic necessities. Details were not given but it is known that since last week the president has been seeking accords with the various business associations in the agricultural, commercial, industrial, and financial sectors because, according to Colom, some of the measures being planned are “a little strong”.

Also announced was a “program of solidarity” involving a state investment of Q1.47 billion in grain production, rural development, improved accessways, construction of 40,000 homes, and assistance to small and mid-size businesses. Colom indicated that measures will be adopted to maintain the price of propane at its present level at least until December of this year, and steps will be taken to save energy in all public institutions. Specific details were not forthcoming as to how prices will be maintained or reduced.

The president confirmed that Guatemala is passing through a period of difficulty for the economy, aggravated by the high price of oil, which affects transport and generation of electricity. He discussed the fact that many countries have started to produce biofuels made from food grains and this drives up the price of those food grains. Colom also pointed out that the economic problems in the United States are connected to the problems in Guatemala.

Previous governments have not put in place measures to deal with a crisis of this type”, Colom said, and added that his administration is taking this opportunity to spend the time and effort to put plans and measures in place to deal with such problems now and in the future.

So not much detail was given in the president's Sunday address although there was some new information. As more on this story unfolds, it will be reported here.