Last week, we mentioned five urgent structural changes for Guatemala, among them one fundamental principle: spend better, not more. Several readers suggested expanding on this idea, especially because the current government is falling into precisely that mistake. And it is not only a technical problem; it is an ideological one. Most officials in the current administration are followers of John Maynard Keynes, a British economist who, after the Great Depression of 1929, proposed that governments could spend more public money to reactivate the economy during times of crisis. However, Keynes was thinking about developed countries with accumulated wealth, not poor economies that must borrow in order to spend. Keynes never recommended spending without limits, nor borrowing to finance clientelism or projects without impact. That is a historical mistake of enormous proportions.
The nations that are wealthy today did not become rich by spending uncontrollably. First, they established economic freedom, clear rules, and conditions favorable to trade and private enterprise. Only after those societies had accumulated wealth did some governments —such as the British government— use public spending to reactivate the economy during recessions. But there is one key detail that tropicalized Keynesians ignore: this spending is financed through debt, and debt is not free. Every quetzal borrowed today is a quetzal our children will pay tomorrow, with interest.
That is precisely the danger described by Adam Ferguson, the Scottish thinker contemporary to Adam Smith. Ferguson warned that nations enter decline when they spend more on debt interest than on strategic investment or national defense. That is how the Spanish Empire fell. That is how the French monarchy collapsed before the Revolution. And that is how, since 2004, the United States has crossed that red line by spending more on interest payments than on defense, one of the reasons behind the massive cuts and global retrenchment now promoted by Donald Trump.
And Guatemala? Here, the government believes we are lightly indebted, but the numbers tell a different story. The 2025 budget amounts to Q. 148.5 billion, equivalent to 15.8% of GDP. Public debt is already 27% of GDP, a level that continues to rise year after year, driven by scattered social programs and projects whose social profitability is practically nonexistent. Interest payments absorb 2.7% of GDP, more than the entire public health budget (barely 2.45% of GDP). In other words, we have already crossed our own Ferguson limit. Today, we pay more for debt than for healthcare. And the official response is… to borrow even more.
That additional spending is not focused on major transformations or strategic infrastructure. The government allocated Q. 12.5 billion to public investment projects, of which Q. 4.3 billion went to the CODEDES, which are responsible for planning and executing projects in each department. However, to date, the CODEDES have executed zero quetzales. Zero. We borrow money, we pay interest… and there are no projects. Only paperwork, speeches, and good intentions.
If the Arévalo government truly wants to transform Guatemala, it should stop spending blindly and begin building bridges between the potential of its people and the opportunities the market can offer them. Either we spend intelligently, or we mortgage everyone’s future.
But the problem is not only execution; it is vision. Let us examine a concrete case: Alta Verapaz, the department containing some of the poorest and most isolated municipalities in the country. In Panzós, San Agustín Lanquín, San Miguel Tucurú, and Santa María Cahabón, more than 97% of the population lives in poverty. What does the government propose? Six projects for Panzós: a community center, three school expansions, a health post, and the improvement of one street. None of it has begun. Nothing. And when projects did begin —such as the diversified education institute in the municipality in 2024— all that exists is a plot of land and a few lonely columns.
Now imagine something different. Instead of 118 scattered projects throughout the department, with no real impact, what would happen if the government decided to build a first-class highway connecting Panzós with Teculután, the nearest commercial and logistical center? Today, that journey takes four and a half hours; with a four-lane highway, it would take only 60 minutes. The cost: Q. 400 million, less than 3% of what was allocated for public investment projects.
With a poverty rate of only 34%, Teculután is the most prosperous municipality in the region, largely thanks to its role as a logistics hub on the CA-9 highway, which connects trade between the Highlands, the Caribbean, and the Eastern region. That highway would open a future of employment and investment for the 120,000 people living in the four poorest municipalities in Guatemala. That single highway would do more for poverty in Alta Verapaz than any social program designed behind a desk.
The message is clear: we do not need to spend more, we need to spend intelligently. Development is not a rain of small projects without impact, but the construction of real opportunities for wealth and progress. And those opportunities are not born from debt or bureaucracy; they are born from the connection between people and markets, between effort and reward.
Poverty is not fought with speeches or useless growth of the state bureaucracy, but with roads that take us out of the jungle of incompetence and lead us directly to prosperity. If the Arévalo government truly wants to transform Guatemala, it should stop spending blindly and begin building bridges between the potential of its people and the opportunities the market can offer them.
Either we spend intelligently, or we mortgage everyone’s future. Every quetzal wasted today is a door closing for our children and grandchildren. They will inherit our decisions, our mistakes, or our indifference. There is nothing else.
