Guatemalans Angry About Crime and Inflation Vote for President

(Bloomberg) -- Guatemalans angry about inflation and rising crime look set to reject the ruling party candidate in elections on Sunday.

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Voters in Central America’s largest economy will elect a new president, the 160-member unicameral congress, as well as mayors. With more than 20 candidates vying for the presidency, the race will likely head to a runoff in August.

Some candidates, including frontrunner Sandra Torres, have pledged a crackdown on criminals, imitating the popular policies of President Nayib Bukele in neighboring El Salvador. Torres said she would build four new maximum security prisons and send soldiers to the streets on joint patrols with police officers.

Zury Rios, the daughter of former dictator Efrain Rios Montt, is also promising a war on gangs. She is polling third.

Bukele won admirers across Latin America by using emergency powers to jail tens of thousands of alleged Salvadoran gang members, though human rights groups criticized the lack of due process.

A poll by local pollster Prodatos published Thursday by Prensa Libre showed Torres leading the crowded field with 21.3%, followed by former diplomat Edmond Mulet with 13.4%, and then Rios at 9.1%.

President Alejandro Giammattei is not eligible for reelection. His party’s candidate, Manuel Conde, is polling fourth with 5.8%.

Investor-Friendly

The country of 19 million people has one of Latin America’s lowest public debt burdens and annual fiscal deficits that rarely exceed 2% of gross domestic product. The country is is likely to continue with its investor-friendly policies whoever wins the vote, said Eurasia Group analyst Risa Grais-Targow.

Giammattei, a former prison boss, had also promised to crack down on crime, but has presided over a rising murder rate over the last two years. The government’s popularity was also hit by the inflation rate, which reached a 14-year high earlier this year, though it has since slowed to 6.5%. The high cost of living is voters’ top concern, according to a poll by ProDatos.

Torres, 67, a former first lady, has pledged to enhance social programs that were popular when she was first lady from 2008-2011, which included monthly food rations for the poorest families and cash transfers to mothers of schoolchildren.

Fleeing to the US

More than half of the country’s population lives in poverty, making it a main source of migrants heading to the U.S.

Mulet, a 72-year-old former ambassador to the U.S., has promised to stimulate the economy by making the country more attractive to foreign investors. He’s proposed subsidies for propane gas and for coffee growers, a top export, and said he will create a fund to stabilize gasoline prices. He also favors joint patrols between the military and the police to tackle crime.

Three presidential candidates, including an anti-establishment businessman who surged to the top of polls in May, were barred from running for violating electoral rules on the correct filing of paperwork, or by starting campaigning ahead of the official start of the race.

Guatemalan dollar bonds have returned 2.3% year-to-date. The country was upgraded to BB by both S&P Global Ratings and Fitch Ratings this year and government tapped foreign markets this month with a $1 billion bond issuance due in 2036 and yielding 6.6%.

“We are likely to see a continuation of the conservative fiscal policy that has kept the country’s debt balance low,” said Thomas Jackson, fixed income analyst for Oppenheimer & Co. The new issuance just weeks before the general election is “evidence of the expectation from investors for policy continuation,” he said.

Polls on Sunday are open from 7 a.m. to 6 p.m local time, with initial results expected later Sunday night. A runoff will be held if no candidate wins more than 50% of the vote.

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