Guatemala Raises Banking Regulations Compliance Standards
Guatemala has made significant strides in improving its credit rating, thanks to its resilient economy, long-standing macroeconomic stability, and cautious fiscal and monetary policies. As a result, major agencies have upgraded the country’s credit rating, boosting investor confidence.
Inflation Expectations Decrease
In April 2023, Guatemala’s annual inflation rate decreased to 8.32%. In response, the Bank of Guatemala raised interest rates to 5%, aiming to control inflationary pressures. This move aligns with global central banking authorities’ efforts to address similar issues.
Private Sector Credit on the Rise
Private sector credit has seen significant growth, reaching GTQ213,048.90 million in March 2023. The Guatemalan banking and financial system is overseen by the Banking Superintendence (SIB), which ensures compliance with laws and regulations aimed at preventing money laundering and financing of terrorism.
SIB’s Oversight Role
The SIB’s Special Verification Intendancy (IVE) and the Guatemalan Financial Intelligence Unit monitor financial transactions, ensuring that banking institutions adhere to strict regulations. The country’s financial system comprises 18 banks, 11 financial companies, and various other entities operating under a framework promoting stability and transparency.
Banking System Performance
Recent data shows that the banking system reported total net assets of GTQ486,323 million in 2022, representing an interannual increase of 11.9%. This growth is attributed mainly to increases in credits, investments, and availabilities. Liabilities also rose by 11.7% due to growth in savings deposits, term deposits, checking accounts, and credits obtained.
Profit Before Tax
Profit before tax reached GTQ10,427 million, a 36.4% increase compared to December 2021.
Civil and Commercial Justice System
Guatemala’s civil and commercial justice system is undergoing a transition towards electronic procedures, aimed at enhancing court efficiency and reducing recovery and foreclosure times.
Recent Legislative Developments
Other recent legislative developments aimed at promoting economic growth and investment include:
- A new Leasing Act
- An Act to Promote Investment of Foreign Capital
- A new Insolvency Act
- Amendments to the country’s Free Trade Zones Act
These changes have created new challenges for businesses and investors, requiring expertise in structuring contracts, secured transactions, and compliance with local banking regulations.
Mayora & Mayora’s Banking and Finance Practice Group
To address these challenges, Mayora & Mayora’s Banking and Finance Practice Group is dedicated to providing clients with comprehensive support. The group offers tailored solutions for both local and transnational projects, including counseling on investment and finance, ensuring compliance with local regulations, and more.
With a team of experienced professionals, the practice group provides expert guidance on structuring contracts, secured transactions, and compliance with local banking regulations. Contact us to learn more about how we can support your business needs in Guatemala.