GUATEMALA CITY, (Reuters) – The Guatemalan Congress approved Wednesday a loan of $500 million from the World Bank. This will allow the government to reduce debt and free up money for social spending.

This loan was supported and approved by both the government and allies. It passed with 86 votes from the 160-seat Central American legislature.

Alvaro Gonzalez Ricci, Finance Minister, stated this month that the loan was “indispensable”. This would allow for savings that can be used to fund social spending.

Minister said that a 0.75% interest rate per year would help to save some 1.8 Billion Quetzales (or $2233.7 Million) during the loan’s 13 years. This is by replacing more costly treasury bonds.

Gonzalez Ricci explained that “it is an impossible rate to achieve in the international or local financial market.”

Fitch Ratings reaffirmed Guatemala’s credit outlook in April from stable-positive. They cited Guatemala’s fiscal consolidation and strong economic recovery.

Guatemala made a loan agreement in 2020. However, the government submitted it to Congress this year.

Next year is the time for general elections

Media has reported that some critics believe the government shouldn’t be taking out the loan because of questions over how they will spend the money.

Samuel Perez (opposition lawmaker) stated, “Hopefully, Guatemalans will rise up against this brazenness.” He voted against the loan.