Monday, February 2, 2009

Inflation Less than Expected

The panel of economic analysts participating in a survey of inflation expectations put the inflation rate for January at 9.2 percent, a figure lower than forecast for January in the December survey.

The monthly publication by the Bank of Guatemala (Banguat) to measure expectation of inflation showed more optimism about the behavior of inflation in January. That figure fell 1.05 points or 8.77 percent from the previous month's survey.

Analysts project that for the end of 2009 and for 2010 the cost of living reaching 7.72 percent and 7.28 percent respectively. That figure is expected to decline 1.43 points or 10.63 percent for 2009, and 1.46 points or 10.23 percent for 2010. According to the survey, factors that could explain this optimism are the fuel price and the performance of monetary policy.

However, the forecast growth for 2009 is 2.9 percent below the figure for December, when it was estimated at 3.3 percent. According to analysts, the main factors that could affect the growth of economic activity is how well fiscal policy performs, the international price of oil, price stability, and interest rates, among other factors.

The confidence index of the survey also declined, standing at 18.18, down 8.14 percent from the index recorded in December.

The index is based on four questions answered by the panel of experts. One of the questions is whether they expect the country to show improved economic performance in the next six months, of which one hundred percent said no. As to whether the current situation is positive for investment, 63.6 percent are not sure and rest said that it's a bad time for investment. 54.5 percent of respondents believed that the business climate will worsen in six months, compared to the last period. When asked whether the economy is better than a year ago, 81.8 percent answered no.

10,000 Motorcyclists Caravan to Esquipulas

More than 10,000 motorcyclists participated on Saturday in the "Caravana del Zorro" which starts from Constitution Square in Guatemala City. Some of the motorcyclists arrived as early as 4:00 AM. At 7:00 AM the flag dropped for the massive motorcade to begin. The route travels from Guatemala City to the Basilica of Esquipulas to pay homage to the Santo Cristo Negro.

As the thousands of motorcyclists gathered in the central square, the metropolitan Archbishop Cardinal Rodolfo Quezada gave them his blessing. More motorcyclists join the motorcade as it progresses. The ceremony before the event was attended by Mayor Álvaro Arzú and Vice President Rafael Espada, who is a lover of two-wheeled vehicles. The mayor spoke to the audience about the tradition of the Caravana del Zorro. The mass pilgrimage began in 1961 with six motorcyclists.

On this occasion the Caravan was led by Eddy Villadeleón, son of the late Ruben Villadeleón, aka Zorro, in whose memory the pilgrimage is named Caravana del Zorro. Many motorcycles were creatively decorated. There were also whole families, children, parents, and couples, participating in the pilgrimage.

According to organizers, the motorcade usually begins to arrive at Esquipulas around noon.

Congress Brings Fonpetrol to Life

Disregarding the warnings of environmentalists and the silence of the executive branch, Congress released the official journal of the Petroleum Fund Act, which distributes royalties from oil production in Guatemala, but also extends the oil extraction contracts.

The new law is called the Law of the Fund for Economic Development of the Nation, to be known from now on as "Fonpetrol" under Decree 71-2008, which enters into force tomorrow.

The legislature considers that the law allows the state to encourage the use of the wealth of the country, mainly the oilfields.

Royalties that the oil exploiters must pay will be set at 5 percent. 20 percent of the funds will be distributed between the Departmental Development Councils in each department of the country in proportion to their population. 3 percent will go to the agencies responsible for monitoring and remediation of protected areas, and the rest will go into a government pool.

The new law also decrees "The contract for oil shall be 25 years. The MEM may approve a single extension of up to 15 years, if the economic terms are favorable to the State."

Environmental groups warned that it was not possible to extend all contracts automatically because some are located in sensitive areas of the Maya Biosphere.

The president refused to sanction or veto the law in question, so he left everything in the hands of Congress.