Guatemalan Maverick Aims at Mining Royalties as Vote Nears

  • Comedian Jimmy Morales says current levy is `unjust'
  • Goldcorp and Tahoe Resources both operate mines in Guatemala

The comedian leading Guatemala’s presidential race proposed changing the mining royalty as both contenders in the Oct. 25 runoff pledge to boost job growth and improve transparency in Central America’s largest economy. 

Jimmy Morales, who has joked about draining the country’s polluted Lake Amatitlan and filling it with alcohol, parlayed his success as a television personality into a victory in the country’s first-round election on Sept. 6. In a debate on Monday, he said a 1 percent royalty on metals mining, which affects companies including Canada’s Goldcorp Inc. and Tahoe Resources Inc., is "an injustice," without specifying what he would do with it. Attempts to boost royalties in recent years have failed.

“We have to abide by the law, but if necessary, revise the law,” Morales said. “I’m not against mining, but we need to give the population a sense of certainty. If the law is unjust, no one is going to want to respect it.”

Guatemala has the lowest level of tax collection in Latin America, and the lowest of any ‘BB’-rated country at just 11.5 percent of gross domestic product, according to Fitch Ratings and the United Nations. That limits the government’s ability to stem gang violence, improve infrastructure and respond to natural disasters, including a landslide that killed at least 152 people last week.

Not Corrupt

Running under the slogan that he is “neither corrupt nor a thief,” the 46-year-old Morales has struck a more serious tone in the campaign after leaving behind his “Moralejas” TV show, which translates as “the moral of the story.” If elected he said he would make it easier for entrepreneurs to access seed capital in order to create jobs and alleviate poverty. He added that he will wait until the 2016 budget is approved to determine how he would finance a projected deficit of 1.9 percent of GDP.

Challenging Morales, former First Lady Sandra Torres said she would target government spending by granting public-private concessions for jails and that she would use five billion quetzals ($650 million) in already-approved loans to finance government operations during the first six months of 2016.

"Financing is one of the biggest problems our country has," she said, proposing to restructure Guatemala’s tax revenue service and create a registry of social program beneficiaries to make spending more transparent.

The candidates debated against a backdrop of public fury over a series of corruption scandals that forced President Otto Perez Molina to resign in September and have sent a former vice president and central bank chief to jail, awaiting trial. Perez Molina, who was replaced by 79-year-old former lawmaker Alejandro Maldonado, has said he is innocent.

The next president takes office Jan. 14.

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