Guatemala MOF website offline over 10 days triggers alarms about transparency and public spending

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By LatAm Reports Editor

Analysts and sectors agree that the biggest concern is the impact on transparency of fiscal closure operations.

Since Monday, November 27, the fall of the platforms of the Ministry of Finance, the highest authority in the administration of fiscal policy in Guatemala, was reported. The problem persists, and although the authorities of that portfolio say they are working to solve it, doubts and criticism increase.

Restrictions on State procurement processes in Guatecompras, operations in the Integrated Accounting System (Sicoin) and the Integrated Financial Administration System (SIAF) are three platforms managed by the Ministry of Public Finance and have been continuously having 10 days with problems to re-establish themselves.

The Ministry of Finance reported that, as a result of recent cyber attacks on its internal computer infrastructure, which led to the isolation of systems, including the State Procurement and Procurement Information (Guatecomras), this platform is still in “extensive work” by the Directorate of Information Technologies, as the administrator of the technological resources of this portfolio, with the aim of restoring its functioning.

In addition, the General Directorate of Procurement of the State, as the governing body of the Guatecompras system, published last Monday in the Diario de Centro América resolution 023-2023, by which it authorizes executing units not to compute the period from Tuesday, November 28 to Tuesday, 5 December, only for the registration and publication of documents to be made in that period.

In a radio interview, Finance Minister Edwin Martínez said that they have already filed the complaints with the Public Prosecutor’s Office, to clarify where the cyber attack came from, which, he said, was external – and, apparently, from machines that are in Poland.

The fall of the Ministry of Finance system arises at a time of rugged political transition that has focused on several fronts, both in the electoral and judicial matters, widespread discontent among the population towards the current government authorities and against the approval of the 2024 budget, supported by the unreelected deputies, of Q124 thousand 879 million.

If this happened in any company that bills about Q112 billion a year, Guatemala’s annual budget in 2023 would be a tragedy and a very serious crisis. The amount of time the system takes down is too great. For any company of a similar magnitude, solving the fall of a server or its main system would be the number one priority. Having your system, down, generates irrecoverable costs and operations,” said Fernando Estrada Domínguez, director of the Statistics Commission of the Guatemalan Chamber of Construction (CGC),

Asked about the impact of the fall of the system, independent political scientist Douglas González said that the message sent by the Ministry of Finance is very negative, as citizens and the Comptroller General of Accounts do not know what processes of purchases, contracts and acquisitions have been made in the last 10 days.

In his view, this is worse than a state of calamity, in which Minfin and the executing units are dispensed to publish on the portals. On the other hand, the fall of the Sicoin implies that there are no records of what operations have been carried out in the four subsystems that make up it: budget, accounting, treasury and public credit.

“In the context of a transition process, what implies is a loss of confidence in the current authorities of that ministry and irreparable institutional damage to the confidence and reputation that the Ministry of Finance has before international financial agencies,” he warned.

Delicate

Juan Carlos Zapata, executive director of the Guatemalan Development Foundation (Fundesa), said: Is it extremely delicate, since it generates a lot of mistrust, especially with everything that has happened. This shows our country’s institutional weakness in the face of cyber attacks, so we hope it can be resolved soon.

For former Finance Minister Rolando Del Cid Pinillos, in the midst of the process of political transition this situation may have been planned internally or externally, since the two cyberattacks that this ministry suffered were coordinated when payrolls were being operated – payroll payment – payrolls and the work of the burden to the Guate payrolls system, so I see that there is a bad intention on the issue to fail to pay the state’s payroll and the suppliers themselves, and it was not fortuitous, but intentional.

Implications

To the question of what problems are you generating in operations in public entities and can be reflected?,rick Coyoy, former vice minister of finance and analyst of the Association of Research of Social Studies (Asíes), commented that, because payments to suppliers and State personnel are made through electronic bank transfers, the National Treasury cannot approve payments until the Sicoin is out of service, which will cause late payments from all the units of the Executive Agency.

November’s payroll payments were allegedly made on time, leaving doubts about the nature of the system suspension, because, if widespread, it would not have been possible to make such payments.

For his part, Ricardo Barrientos, the former vice minister of finance and researcher of the Central American Institute of Fiscal Studies (Icefi), indicated that one of the consequences of this fall in the system will be the delay of the operations of the Treasury portfolio.

Estrada Domínguez pointed out that the situation is limiting the operation of several institutions, which may delay the implementation of various entities, including the most priority, such as health or emergency services. All this causes delays in the people in charge of registering operations, not only in Finance, but all the institutions used by Sicoin and Guatecompras, he said.

A few days after the tax shutdown

Those consulted also presented a prospect of implications and scope for approaching the tax closure.

Zapata considered that it can have an impact on the way purchases and public spending are perceived in these months where it definitely pays for the bad image of perception of corruption.

For Coyoy, at the end of the fiscal year, the recorded expenditure figures may not correspond to what was actually implemented because entities may not be able to register all transactions that occurred during the suspension of the systems. The Ministry of Finance will be able to enable the first days of January 2024 to record late expenses, but since the 2023 budget cannot be affected, they will do so only in an accounting manner so some expenses may go unnoticed.

The same position is agreed by the representative of the Guatemalan Chamber of Construction, in the sense that this affects information in time and accurate, since by not being up to date, there may be problems of order and control. This, it’s a high time in spending and execution and having so much time standing the system is serious, he said.

Political scientist Douglas González said that it is a technical problem, from the point of view of the internal controls obligations established in the Budget Law and its regulations, in the SICOIN manuals and the Recruitment Act. And in his opinion, the Comptroller’s Office must request reports and Congress must summon the responsible officials to be held accountable.

How do you have to dimension the problem?

Given the current situation, there is a reading of how to dimension the problem of cyberattack, from a technical-financial perspective.

Coyoy stressed that it is a problem that further reduces transparency in the use of public resources. The systems are designed to operate continuously via the Internet, which allows you to know minute by minute all transactions registered. He recalled that since the beginning of the operations of the systems in this modality in 2004, there had been no such long suspension, which leaves doubts about the institutional capacities of the Ministry of Finance to manage them. The new administration should pay particular attention to these aspects in order to ensure the proper functioning of the systems in order to ensure the correct and timely recording of costs, he said.

For Zapata there is a technical weakness in the prevention of cyber attacks, where there is no clarity about the country’s ability to react in a timely manner. This does a lot of damage to Guatemala’s position on transparency.

Estrada Domínguez, did an exercise in making an estimated calculation based on the nation’s budget and the number of days that the system has stopped; let’s assume that the budget was linear and executed in about Q306 million a day, but if we adjust it, since it is not linear and we use a restriction variable of 70% to adjust the non-linear expenditure, we can estimate that more or less by the system Q210 million per day and has been stopped for 10 days.

This equates to about more than Q2 billion that could be affected or delayed in their registration by the fall in the system. This amount is assuming that only the registration is being delayed, without taking into account that information can be lost. We hope that the Ministry of Finance will have its proper backup systems and backups per day so that there is no loss of information and information and operation can be restored with due transparency. With the greatest urgency to restore everything to normal, as possible.

Del Cid Pinillos pointed out that the finances of the executive are very affected, and due to the fiscal closure there are many operations that can be left out of the system, but that based on a resolution issued by the Ministry of Finance, makes it mandatory for all institutions to upsize their events and hide something in the systems is very little difficult, so it will have to act in a technical way.

Risks-Country

This situation can also generate noise from country risk-resilation agencies.

For Gonzalez, risk qualifiers are closely following Guatemala’s case. An anomaly like this may involve serious questions about the credibility of the finance authorities and will surely have some penalties in the tax transparency index, in which an effort was made in previous years to improve.

And Estrada Domínguez said that agencies measure the issue of perception a lot. This can be delicate if the perception of trust with accurate and transparent information by the “falla) in the main system of the State is affected.

An additional delay in this system crisis, it could be one of the variables that take into account this type of risk qualifiers. We hope that, with their proper support and as transparency as possible, these systems will be restored as urgently and as a matter of priority, in order to recover and have accurate information as soon as possible,” said the representative of the Chamber of Construction.

Finally Del Cid Pinillos considered that this can be a disadvantage, because the country is very well, solvent, appetizing bonds in the international market, proper management of the macro-economy, but events like this, that escape the good use of the Ministry of Finance, are because the systems have not had the security, in terms of the scaffolding of the systems, and there is no system that guarantees security, and to avoid this type of cyberattacks, which also happened in Costa Rica last year, and that is now the case in Guatemala.

Honduran Deputy Minister of Security escapes assaniation attempt unharmed

The Deputy Minister of Security, Julissa Villanueva, suffered an attack on Tuesday night when she was driving in her vehicle in a sector of the capital.

The official was passing through the Americas colony, near Toncontín Airport, when two strangers fired at her van.

Villanueva explained that he was passing with his assigned staff, when he noticed that his driver made a strange turn. The reason was because they heard at least two firearm detonations, in the direction of the car.

Fortunately, Villanueva came out unharmed and is under the guard of his security personnel. The bullets hit the vehicle, but it was armoured and protected the occupants.

“I’m fine, but I feel uncomfortable being told to hear gunshots, however, I told them to calm down or calm down and investigate because they’re really going to kill me these people,” he told Radio America.

The official recalled that she has received intimidation in recent weeks with unknown messages, this messages increased after the complaint she made where casings of the National Police were discovered in the massacre of prisoners in the National Women’s Penitentiary of Social Adaptation (PNFAS), located in Támara.

So far, the Minister of Security, Gustavo Sánchez, has not spoken out about the attack confirmed by the same undersecretary.

Several patrols and police officers moved to the area of the attack to collect the investigations, according to EL HERALDO after mobilizing to the site.

Attack one day after complaint

The attack on the Deputy Minister of Security occurred a day after she reported that she had been threatened through messages and social networks.

In an interview with the HCH channel, Villanueva said that the threats and intimidations have come out of the same institution where she works.

I’m not going to tolerate anyone obstructing my work and I have a scientific technical unit that works with me, a team of experts who investigate, how I won’t know if from the networks, when tracking the messages, they leave this same Secretariat, they leave this very Secretariat,” he said.

The coroner recalled that when she was at the head of the Interventing Commission at the National Penitentiary Institute (INP), after the massacre of 46 women prisoners, she had many obstacles in her work, as it also happened when she tried to investigate the murder of football fan Wilson Pérez in northern Honduras and in other emblematic cases.

The Deputy Minister of Security has not announced who would be behind the threats against her.

This article has been translated from the original which first appeared in El Heraldo