June 15, 2010 / 2:13 AM / 10 years ago

Guatemala storm rebuilding to cost up to $1 bln

* Costs after storm seen between $650 mln-$1 bln

* President suggests transparency could help secure funds

* Bridges, roads damaged, coffee farmers hit

GUATEMALA CITY, June 14 (Reuters) - Rebuilding in Guatemala after a devastating tropical storm last month could cost up to $1 billion and the country must prove to international donors that it is making every effort to raise revenues through taxes, President Alvaro Colom said on Monday.

“We are getting strong support from the international community but Guatemala has to demonstrate that it has a high tax level and transparency,” said Colom, who is pushing for fiscal reform to help fund the national budget.

About 160 people died in Guatemala when Tropical Storm Agatha dumped days of rain on Central America in late May bursting river banks and causing mudslides.

Bridges, roads and more than 100,000 homes were destroyed Coffee farms were also badly damaged, which could reduce Guatemala’s crop by 3 percent.

Colom, touring one of the hardest hit parts of the country in the eastern department of Izabal, said it would cost between $650 million and $1 billion to repair damaged infrastructure.

Guatemala has received some international aid already — Japan donated $220,000 in equipment and building materials, the United States gave hundreds of thousands dollars in emergency relief and the European Union has pledged three million euros for the recovery effort.

Colom’s fiscal reform proposal, which includes raising income taxes, has faced stiff criticism from Guatemala’s powerful business chamber and opposition politicians.

The bill has stalled in Congress and will not be reconsidered until August. Guatemala has one of the lowest tax collection rates in Latin America.

“It’s no secret that Guatemala has stayed behind in the area of fiscal reform. We have to do something to prove ourselves to the international community,” Colom said.

The government could tap the central bank for a loan if needed.

Guatemala, which prides itself on high-quality coffee beans that can be sold for a premium price, saw its 2009/10 harvest at 3.76 million 60-kilogram bags before the storm.

Some ripening coffee cherries were knocked off of trees because of Agatha’s heavy rains and growers worry the humidity and wet conditions could further damage their crops with fungus. Coffee was also hit when the Pacaya volcano near Guatemala City exploded before the tropical storm spewing ash on farms. (Reporting by Sarah Grainger)

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