GUATEMALA
Fiscal trade-off: incurring debt to reduce deficit

With the approval of the 2006 Budget, which includes plans to increase debt with multilaterals to finance the budget deficit, foreign debt payments in 2006 will represent twice those approved under the first year of Óscar Berger´s administration. The new strategy of reducing the deficit represents a significant change in the structure of the public debt, particularly in the use of sector loans from multilateral organizations to cover more than half of the budget deficit. However, analysts are concerned that this new trend creates an illusion of income that is not sustainable. The situation intensifies when considering that the new role being played by the multilaterals could limit future resources for social projects.

GUATEMALA
New proposals to fight corruption

The Executive will put forward a proposal to reform the State Contracts Law, toughen sanctions on corruption, strengthen the Regulatory Bureau for State Purchases (DNCAE), and make the information system on state contracts (Guatecompras) compulsory for all institutions handling public funds. Seven municipalities will face sanctions for not taking part in Guatecompras.

GUATEMALA
State institutions "captured" by corruption

The most serious concern for a programmer specializing in anti-virus services is to ensure that their own anti-virus program is virus free, otherwise instead of providing a "cure", the problem is only multiplied. A similar situation faces State institutions in charge of fighting corruption. The "captured" State is characterized by anti-corruption institutions which act as a shield around corrupt activities. The increasing commercialization of State-society relations becomes particularly damaging when there are no institutions _ either within or outside the State _ capable of addressing the problem. In this context, it is worrying that most of the six State institutions responsible for overseeing expenditure have been tarnished by accusations of corruption in recent years.

HONDURAS/NICARAGUA
Abuses reported in Biosphere

Over the past few years, the Honduran and Nicaraguan governments have been working together to establish a cross-border Biosphere in the Mosquitia region, which spans both national territories. The Biosphere was created with the support of the Central American Commission on Environment and Development (CCAD) and the World Bank Global Environmental Fund. However, indigenous groups from both countries have made a public complaint about irregularities that threaten their communities and the Biosphere itself.

REGION/GUATEMALA
Trade increases with ideological opponents

Recent business and political summits in Central America indicate the desire of isthmus governments to strengthen foreign trade relations, regardless of ideological conflicts. In Guatemala's case, attempts to establish commercial ties with China continue despite public declarations supporting regional efforts to politically back Taiwan.

PANAMA
2006 budget: debt payments increase

The budget for 2006, sent to the Legislative Assembly September 25, includes a US$315 million increase in National Debt payments, and an increase in the budget for the Presidency. The government hopes to receive substantial revenues through the introduction of higher direct and indirect taxes. Nevertheless, the government will not achieve a deficit of under 2% of the GDP.