In 2012, Sergio de la Torre, the economy minister of Guatemala, was given a task that looked far from easy. The country’s president, Otto Pérez Molina, asked Mr de la Torre to transform the country's economy into one of the most competitive in Latin America.
But such a tall order was something that Mr de la Torre relished, coming from a background of being the chief executive of one of Guatemala's leading apparel and embroidery companies – Reto, Promocionarte y Accesorios Textiles – as well as serving as president of the country’s Board of the Chamber of Industry. And the results have been impressive.
The World Bank says that Guatemala – with a population of 15.1 million people and a GDP of $58.4bn – has one of the most reformist governments in the world. According to its global Doing Business report for 2014, the country was ranked in 79th spot among 189 economies worldwide, an improvement of 14 places on its 2013 ranking.
“In January 2012, when I took on the economy minister’s job, the president asked me to set a competitiveness agenda for each of the main ministries of state,” says Mr de la Torre, who also represented the country's private sector on the central bank’s monetary policy committee for nine years. “We sat ambitious goals in, for example, agriculture, industry and transport, and they are starting to bear fruit.”
Mr de la Torre says that the country has some of the best economic fundamentals in Latin America. According to the International Monetary Fund, Guatemala's economy is expected to expand by 3.5% this year, combined with a lowish inflation rate of 4%, an unemployment rate of 4%, and general government gross debt of 25% of GDP. The country's economy is rated one notch below investment grade and one of the economic team’s main goals is to achieve this coveted status as soon as possible.
Guatemala is also embarking upon a programme of infrastructure projects that will transform the country, including 10 public-private partnerships expected to be put out to tender this year. Among these, a massive $12bn inter-oceanic ‘dry corridor’ – a 373-kilometre highway and railroad linking the country’s Pacific and Atlantic coasts by 2019 – is planned.
One of the most important projects is a railway between Puerto Quetzal, the country’s main Pacific port, and the border with Mexico. In May this year, 300 kilometres of track between the two countries – closed since Hurricane Stan hit in 2005 – was restored. Carlos Slim, the Mexican business magnate who is the world’s richest man, says that he is interested in investing in an advanced railway system connecting the countries and also in oil and gas exploration in Guatemala.
Taking the initiatives
Another major initiative is to create a mass transport system that connects the bus terminal at Centra Norte in the north of Guatemala City with the terminal at Calzada Atanasio Tzul in the south of the city. It is projected that some 300,000 passengers will use the service every day.
In January, Pemex, the Mexican state-owned oil giant, and the Guatemalan government announced plans to build a $1.2bn, 600-kilometre gas pipeline linking the two countries and giving local manufacturers access to cheaper energy.
“It is vital that Guatemala is strategically integrated with Mexico in terms of energy supplies and transportation,” says Mr de la Torre. “Not only does this give us access to cheaper forms of energy such as shale gas, but it provides us with greater access to the North American Free Trade Agreement bloc, which could be a huge boost to Guatemalan exports.”