VZCZCXYZ0001
PP RUEHWEB

DE RUEHGT #1586/01 2192334
ZNR UUUUU ZZH
P 072334Z AUG 07
FM AMEMBASSY GUATEMALA
TO RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
INFO RUEHZA/WHA CENTRAL AMERICAN COLLECTIVE
RUEHME/AMEMBASSY MEXICO 4443

UNCLAS SECTION 01 OF 03 GUATEMALA 001586 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
TREASURY FOR TREASURER ANNA CABRAL 
 
E.O. 12958: N/A 
TAGS: EFIN ECON SMIG PGOV GT
SUBJECT: U.S. TREASURER CABRAL DISCUSSES FINANCIAL 
INCLUSION DURING JULY 26 TO 29 VISIT TO GUATEMALA 
 
 
Sensitive but unclassified.  Please protect accordingly. 
 
¶1.  (U) Summary.  U.S. Treasurer Anna Cabral visited 
Guatemala July 26-29 to promote the Treasury Department's 
Latin America Regional Financial Inclusion Initiative.  The 
Treasurer met with senior government officials, private 
sector businessmen and representatives of financial 
institutions to discuss the local financial environment and 
to announce a regional conference to be hosted by Treasury in 
Washington later this year.  The consultations highlighted 
the importance of financial inclusion coupled with financial 
education and the productive use of remittances.  All agreed 
that public confidence in Guatemala's financial system needs 
to be improved and that the majority of the rural areas are 
underserved and lack basic financial services.  End Summary. 
 
------------------- 
Financial Inclusion 
------------------- 
 
¶2.  (U) During a July 26-29 visit to Guatemala, U.S. 
Treasurer Anna Cabral met with representatives from the 
public, private and non-profit sectors to promote the 
Treasury Department's Latin America Regional Financial 
Inclusion Initiative.  This initiative aims to promote 
financial inclusion of all sectors of the population in 
Guatemala, Honduras, El Salvador and Mexico.  Cabral focused 
on how to expand access to banks and other financial services 
to Guatemalans, the majority of whom function exclusively in 
a cash society.  She also discussed the role remittances play 
in the local economy and how to encourage recipients to 
better use this form of income. 
 
¶3.  (U) The public, private and non-profit sectors provided 
similar insights into Guatemala's financial system, most 
notably its lack of access and public confidence.  They noted 
that although the Central Bank managed the banking crisis 
well in 2006, there is still a lack of confidence, especially 
in rural areas, in the financial system.  Representatives 
from micro-finance institutions (MFI) and leading banks in 
Guatemala asserted that remittances were the only real 
impetus pushing the rural populations to use the banks, and 
that the main barriers to financial inclusion were lack of 
confidence in the banking system, financial education, 
illiteracy and language.  There are 23 indigenous languages 
spoken in Guatemala, and the literacy rate is only 69 percent 
among adults 15 years and older according to the World Bank. 
 
--------------------------------------------- ------ 
MFI Roundtable: Legislation and Information Sharing 
--------------------------------------------- ------ 
 
¶4.  (U) FENACOAC (National Federation of Savings and Credit 
Cooperatives) hosted an MFI roundtable for Treasurer Cabral 
which included representatives from Genesis Empresariales, 
FUNDEA (Foundation for Business and Agricultural 
Development), BanRural Bank and FINCA International 
(Foundation for International Community Assistance). 
Treasurer Cabral afforded each representative the opportunity 
to share his experience and opinion regarding the major 
barriers to financial inclusion in Guatemala.  The 
representatives emphasized the need for greater transparency 
and financial education.  Currently, there are four draft 
legislative proposals that would improve transparency and 
information sharing in the areas of micro-finance, reciprocal 
collateral, moveable property, and non-profit micro-finance 
organizations.  No one expressed confidence, however, that 
these proposals would move forward quickly because it is an 
election year and a couple of the bills are still trapped in 
the "research" stage. 
 
¶5.  (U) The participants also pointed to lack of financial 
education as a critical barrier to financial inclusion. 
There is no real formal education program to capture children 
at an early age to create a more financially literate 
society.  Genesis Empresariales, BanRural and FENACOAC 
already have programs in place to educate families about the 
importance of putting remittances to productive use rather 
than solely consumption.  BanRural claims to manage 53 
percent of the approximately USD 4 billion remittances coming 
into Guatemala.  FINCA and BanRural identified women as the 
key to increasing financial inclusion and literacy.  BanRural 
has a two-tier program for remittances, the first for savings 
and the second for micro-credit.  The bank allows women to 
use their remittances and the sustained frequency with which 
they arrive as collateral for micro-credit projects.  The 
lack of education is a systemic problem that affects not only 
Guatemalans in country, but also Guatemalans living in the 
 
GUATEMALA 00001586  002 OF 003 
 
 
U.S. sending remittances to their families. 
 
¶6.  (U) Finally, the group identified the lack of information 
sharing as another barrier to financial inclusion.  The banks 
and cooperatives do not share information about clients or 
their credit histories.  There are a handful of credit 
bureaus both public and private, but each has its own area of 
specialization and they do not share a common vision or 
centralized information system. 
 
--------------------------------------------- --------------- 
Banking Roundtable: Remittances Transforming the Financial 
Sector 
--------------------------------------------- --------------- 
 
¶7.  (SBU) Citibank hosted a bank roundtable that included 
representatives from five major banks and the Banker's 
Association.  According to the group, the key barrier to 
financial inclusion was Guatemala's lack of a financial 
infrastructure.  BanRural appeared to be the most innovative 
bank, taking the lead in increasing financial services and 
access to rural areas in Guatemala.  It has provided ATM 
machines in five Mayan languages as well as machines equipped 
with technology that enables use by the illiterate 
population.  The other banks are slowly expanding their 
financial services in areas such as micro-credit and 
insurance policies, and the number of bank branches with 
employees from the local communities who speak indigenous 
languages to better accommodate the volume of remittances 
flowing into rural areas. 
 
¶8.  (U) The bank representatives urged the Treasurer to focus 
on increasing the financial inclusion of the one million 
undocumented Guatemalans living and working in the U.S.  They 
believed that if Guatemalans in the U.S. changed their 
banking habits and increased their consumption of financial 
services, the Guatemalans receiving the remittances here 
would follow suit.  Treasurer Cabral agreed and encouraged 
Guatemala to look to replicate Mexico's model using its 
Consulates within the U.S. to educate and help immigrants 
open bank accounts in the U.S. 
 
---------------------- 
Government Perspective 
---------------------- 
 
¶9.  (SBU) The President of the Central Bank Antonieta de 
Bonilla told Treasurer Cabral that BanRural motivated other 
large banks to focus on rural communities and increase 
services to that sector.  She commented that the informal 
sector of the economy is a huge barrier to financial 
inclusion and that more needs to be done to educate 
Guatemalans about the benefits of using formal financial 
institutions.  Treasurer Cabral announced a regional 
conference to be hosted by the U.S. Department of Treasury 
later this year.  Bonilla was receptive to the idea of a 
regional conference and suggested that the Ministry of 
Education be included on the guest list.  Willy Zapata from 
the Superintendency of Banks noted the conference was a good 
idea but that it would be useful for participants to have 
something to take away from it, such as a manual, to which 
they could refer back upon their return to Guatemala. 
 
¶10.  (SBU) Foreign Minister Gert Rosenthal agreed to provide 
Treasurer Cabral with the names of Guatemalan Consuls in the 
U.S. who could attend the conference and collaborate on 
financial inclusion issues, especially for undocumented 
Guatemalans in the U.S.  He hoped the conference would 
include some form of technical assistance for Guatemala and 
provide case studies from other countries.  Currently, 
Guatemalan Consulates in the U.S. are working with BanRural 
and Banco Industrial to lower the margins on remittance 
transactions and encourage the use of banks due to security 
concerns.  Rosenthal mentioned that the Consulate in New York 
City reached an agreement with Chase Bank to accept the 
Guatemalan consular ID card as proof of identity when opening 
a bank account in the U.S.  He said that GOG needed to be 
careful about linking the Consulates too closely with the 
U.S. Department of Treasury as many immigrants in the U.S. 
fear government agencies due to increasing workplace 
enforcement actions and deportations. 
 
----------- 
Conclusions 
----------- 
 
¶11. (U) The final highlight of Treasurer Cabral's visit to 
Guatemala was meeting with cooperatives and micro-credit 
 
GUATEMALA 00001586  003 OF 003 
 
 
recipients in Guatemala City, Antigua and the Mayan, 
Indigenous town of San Juan, Sacatepequez.  The site visits 
provided a first-hand view of the opportunities and 
challenges of the local financial sector.  The Treasurer took 
time to speak with clients about their experiences and the 
services that they have received from the cooperatives.  They 
noted that they were able to expand the inventory and 
production of their small businesses resulting in greater 
profits as a result of their micro-credit loans. 
 
¶12.  (U) The public, private and non-profit sectors were 
pleased with their meetings and discussions with Treasurer 
Cabral during her three-day visit to Guatemala and welcomed 
the opportunity to participate in the regional conference in 
Washington later this year. 
 
¶13.  (U) The cable was cleared by the Department of Treasury. 
Derham