## wpiea2019060

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### I. Introduction
- Objective: cost additional spending consistent with high performance in 2030 (align Guatemala’s spending patterns with good performing countries of similar income by 2030); discuss government policies and institutional capacity enabling delivery of public goods; discuss potential financing sources including tax administration efforts, tax policy changes, private sector participation, and greater spending efficiency.
- Context and summary findings:
  - Over the past decade, income per capita grew at an average rate of 1.2 percent per year.
  - Current levels of social spending fall short of targets in the 1996 Peace Accords.
  - Attaining the SDGs would require overall additional spending of about 8½ percent of GDP in 2030 for health, education, and infrastructure.
  - Institutional and delivery capacity are crucial; higher spending alone is unlikely to lead to better outcomes.
  - A gradual scaling-up of spending is recommended, pari passu with improvements in provision of public goods.

### II. Progress towards Sustainable Development (selected indicators)
- MDG/SDG snapshot:
  - By 2015, underweight prevalence and under-five mortality were more than halved from 1990 levels.
  - Incidence of malaria reduced to 0.31 (per 1,000).
  - Literacy rate among youth aged 15−24 increased to 93.3 percent.
  - About 62 percent of the quantitative SDG indicators were still far from their targets in 2015.
- Remaining gaps and vulnerabilities:
  - Poverty and extreme poverty: 60 percent and 23 percent of the population respectively.
  - Prevalence of stunting in children under 5 among the highest in the world.
  - Over 40 percent of the population does not have access to safe drinking water.
  - Pre-primary and secondary enrollment rates are low regionally.
  - Social outcomes markedly worse in rural areas and for indigenous populations.
- Institutional commitment:
  - SDGs mainstreamed into the K’atun 2032 National Development Plan; SEGEPLAN mapped K’atun 2032 into 10 National Priorities including 16 Strategic Goals.
  - Voluntary National Reviews conducted; latest report published in 2017.
  - President heads the National Council for Urban and Rural Development (CONADUR).

### III. Aggregate costing methodology and headline results
- Scope: additional spending required for SDGs in education, health, and infrastructure (water, sanitation, roads).
- Benchmarking approach (Gaspar and others, 2018):
  - Identify good performing peers by SDG outcome thresholds within income groups; calculate median of main cost drivers for those peers; apply medians and country-specific projections to estimate 2030 spending needs.
  - Additional spending needs = objective (estimated needs for 2030 consistent with achieving good performance) − baseline (current total spending, public and private).
- Headline aggregate result:
  - Overall additional spending of about 8½ percent of GDP in 2030 to attain health, education, and infrastructure SDG goals.
  - Sectoral breakdown (2030 additional spending consistent with good performance):
    - Education: about 3.3 percent of GDP
    - Roads infrastructure: about 3.2 percent of GDP
    - Health: 1.4 percent of GDP
    - Water and sanitation infrastructure: 0.6 percent of GDP
- Caveats:
  - Costing focuses on annual spending flows in 2030; cumulative expenses up to 2030 would be significantly larger.
  - After 2030, education and health spending would recur; infrastructure spending would be expected to decline to cover depreciation of the capital stock built through 2030.

### IV. Education — current performance, benchmarks, and 2030 needs
- SDG4 index and comparison:
  - Guatemala’s SDG4 index: 64.
  - Good performing peers median: 87.
- Key benchmarks and reported table figures (preserve reported values):
  - Students per teacher: Good peers median 13.3; Guatemala 17.9.
  - Teacher wages (ratio to GDP per capita): All 2.3; Low performance 4.1; High performance 1.7; Guatemala 1.8; Good peers 1.7.
  - Other current and capital spending (% total spending): All 39; Low performance 39; High performance 36; Guatemala 25; Good peers 36.
  - Private share (% of total spending): All 19; Low performance 41; High performance 5; Guatemala 19; Good peers 5.
  - Spending per student (USD 2018): All 902; Low performance 1,338; High performance 826; Guatemala 562; Good peers 1,043.
  - Education spending (percent of GDP): All 5.7; Low performance 8.5; High performance 4.4; Guatemala 3.7; Good peers 7.0.
- Projected education spending if aligning to good performers by 2030:
  - Education spending would increase from 3.7 to 7 percent of GDP by 2030.
  - Assumptions: full enrollment for primary and secondary, plus two years pre-primary and two years post-secondary; yearly real GDP growth of 3½ percent and population growth of 1.8 percent over 2023-2030.
  - Private education spending share declines from about 20 percent today to 5 percent of GDP by 2030 (table notes private share today 19 percent; target 5 percent).
- Coverage and quality challenges:
  - Primary coverage about 80 percent.
  - Preschool age 0−4: only 3 percent receive preschool education; preschool age 5−6: 47 percent receive preschool.
  - Basic secondary schooling: about 48 percent; diversified secondary: about 24 percent.
  - Grade 6 achievement (2014): 50 percent achieved expected level in mathematics; 30 percent in reading.
  - One in five schools lacks piped water, adequate sanitation, electricity or rain shelter.
- Policy priorities and recommendations (education):
  - Expand preprimary coverage toward authorities’ target: 60 percent of children age 4−6 and provide about 2 years of preprimary schooling.
  - Expand basic and diversified secondary through flexible modalities targeted to rural and indigenous populations.
  - Improve teacher quality via selection reforms (knowledge tests, probationary periods), objective recruitment for secondary teachers, and linking remuneration to performance (end-of-year bonuses, professional development bonuses, incentives for vulnerable schools).
  - Strengthen on-the-job training programs (PADED/D, Llegando al Aula, Teacher Premium 100 Points) and empower principals academically.
  - Enforce the 180-day school calendar (consider extending to 200 days).
  - Improve coordination between MICIVI and MINEDUC and involve municipalities in facility maintenance.
  - Enhance inclusiveness for indigenous students: bilingual teachers, family engagement, culturally relevant materials, strengthened leadership.

### V. Health — current performance, benchmarks, and 2030 needs
- SDG3 index and benchmarks:
  - Guatemala’s SDG3 index: 70.
  - Good performing peers median: 81.
  - Good peers median doctors per 1,000: 1.8; other medical personnel per 1,000: 6.3.
  - Doctors’ wages (good peers median): equivalent to 5.4 times GDP per capita.
  - Good peers median share of other current and capital cost: 62 percent.
  - Overall spending per capita at median (good peers): $352 or 7.1 percent of GDP (table referenced).
- Current constraints and drivers of low per-capita spending:
  - Too few doctors and other health personnel; lower doctors’ wages less important.
  - Guatemala’s total health spending per capita is lower than in good performers.
- Projected aggregate health spending and reported table values:
  - Projected aggregate health spending: 7.2 percent of GDP by 2030.
  - Public health spending (percent of GDP): 3.9, 3.7, 4.3, 2.0, 4.4 (values presented in the source table).
  - Private health spending (percent of GDP): 2.9, 2.8, 2.8, 3.8, 2.8 (values presented in the source table).
  - Per capita health spending (USD 2018): 283, 268, 352, 239, 374 (values from the table).
  - SDG3 index: 76, 74, 81, 70, >80 (values from the table).
  - Private share of total health spending projected to decline from about 65 percent today to 38 percent of GDP by 2030.
  - Additional spending needs net off cost rationalization in supply chain costs.
- Coverage, fragmentation, and outcomes:
  - Guatemala has one of the lowest (PPP-adjusted) per capita health spending in Central America and the highest coverage gap for basic healthcare (about 50 percent).
  - IGSS covers 17 percent of the workforce; remaining 83 percent de jure covered by MSPAS or health insurance schemes.
  - Public financing around 2.2 percent of GDP over the past decade, representing slightly over one-third of total health expenditure; 17.8 percent channeled through IGSS; 19.2 percent through MSPAS and municipalities.
  - 63 percent of total health expenditure is privately financed: 11 percent via private insurance and 52 percent out-of-pocket.
  - Catastrophic healthcare costs: 65 percent of households in the lowest income bracket incur healthcare costs in excess of 40 percent of household capacity to pay; 3 percent for the highest income bracket.
- Health workforce and supply chain constraints:
  - Health workers: 12½ per 10,000 inhabitants (includes technical and administrative supporting staff)—lowest ratio in Central America and half of WHO standard.
  - Urban ratio: 25.7 per 10,000; rural ratio: 2.96 per 10,000.
  - Nurses per doctor: 0.66 (WHO standard: 2.8).
  - Workforce composition (percent): Doctors 11%; Nurses 5%; Nursing assistants 25%; Technical supporting staff 10%; Operational staff 15%; Administrative staff 34%.
  - Over a third of drug cost owes to supply costs; high transport and customs costs and limited logistics competition.
- Short-term and medium-term objectives:
  - Short-term: extend primary healthcare coverage with emphasis on prevention (vaccinations, maternal and child health, nutrition education), especially in rural areas affected by PEC elimination.
  - Medium-term: achieve universal access to quality healthcare across the life-cycle by integrating secondary and tertiary levels.
- Recommended reforms and policy actions (health):
  - Strengthen National Health Council authority to coordinate MSPAS and IGSS; delegate organization to Health Regional Directorates.
  - Long-term financing goal: implement a financing scheme integrating health risks and ability to pay on a solidarity basis by unifying IGSS and MSPAS or creating a new noncontributory universal provision entity.
  - Short-term hybrid programs: voluntary contributions with subsidies to low-wage earners in the informal sector (example: Peru model).
  - Expedite Law on Careers in Health Administration to professionalize hiring, compensation, and promotion.
  - Use community facilitators, economic incentives, and training in indigenous languages to attract rural professionals.
  - Reduce supply chain costs via joint procurement framework contracts, streamlined logistics, automated inventory handling, optimized distribution routes, and possible outsourcing of logistics functions.

### VI. Water and Sanitation (SDG6) — needs, constraints, and reforms
- Coverage and needs:
  - As of 2015: over 3 million people (20 percent of the population) do not have access to basic water and sanitation; nearly 12 million people (75 percent) lack safely managed water and sanitation.
  - World Bank WASH costing model estimate for universal safe access by 2030: total new investment needed on average $589 million per year (0.6 percent of 2030 GDP).
- Selected reported costing table figures (preserve reported values):
  - Cost (per capita, $): 19, 21, 87, 34, 87, 2, 2, 185, 185, 266, 281, 765.
  - Total cost ($ million): 35, 52, 444, 127, 505, 5, 13, 1,457, 1,443, 1,778, 3,247, 8,840.
  - Annual cost ($ million): 2.3, 3.5, 29.6, 8.4, 33.7, 0.4, 0.9, 97.1, 96.2, 118.5, 216.5, 589.
  - Annual cost (% of 2030 GDP): 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.1, 0.1, 0.1, 0.2, 0.6.
- Institutional and execution constraints:
  - WS spending averaged 0.34 percent of GDP over 2010−14 (0.28 percent from municipal governments).
  - About one fourth of WS budgets under-executed due to approval bottlenecks and low local implementation capacity.
  - Approval delays: 170 days from initiation to approval (law sets 71-day wait time).
  - UNEPAR completes ~20 water projects per year versus 2,500 pending applications and over 6,000 projects consistent with attainment of SDG6.
- Coordination and reform recommendations:
  - Create a governing body responsible for formulation, coordination, and implementation of WS policies, considering hydrographic basins and demographics.
  - Strengthen UNEPAR regional offices and local government capacity; integrate CAAPs into sector institutional framework.
  - Consolidate Health Management Information and Water Quality Control Systems.
  - Ease and harmonize requirements for small projects from MSPAS and MARN; provide technical assistance for project preparation and implementation in less-developed areas.

### VII. Roads infrastructure (SDG9) — needs, constraints, and proposals
- Current network and performance:
  - Current network: about 16,500 kilometers of roads.
  - Road density: about 16 kilometers per 100 square kilometers.
  - Road density about one fourth of that of good performing peers for similar population density.
  - Logistics Performance Index rank worsened from 77 in 2014 to 111 in 2016.
  - Average transport speed: 37 km per hour (international average: 60 km per hour).
  - Transport time and cost for standardized shipment: 1.61 minutes/km and US$2.52/km (comparator Mexico: 1.07 minutes/km and US$1.16/km).
  - Network growth since 1985: about 200 km per year (objective: over 4,000 km needed to achieve SDG roads by 2030).
  - Approximately 46 percent of the network consists of dirt roads.
- Estimated infrastructure needs and costs:
  - To approach density in good-performing countries: increase in expenditure about 3.2 percent of GDP (annual cost as percent of 2030 GDP).
  - Additional roads: about 35,000 kilometers over the next 12 years, assuming unit cost $800,000 per kilometer.
  - Alternative local estimate: over 47,500 additional kilometers to approach Latin American average (Grupo IDC, 2018).
  - Table reported figures (preserve reported values): GDP per capita entries 4,136; 4,147; 3,851; 4,147; 5,209. Road density: 18, 13, 36, 16, 48. Roads (KM): 16,457; 51,345. RAI entries: 62, 57, 87, 55, >90.
- Institutional and financing proposals:
  - Revamp regulatory framework: consolidate sector regulations, legal certainty on right-of-way acquisition, and contract legal nature.
  - Financing vehicles: conventional PPPs under 2010 PPP law; an overarching institutional arrangement to plan, develop, maintain, and finance public roads with private partnerships.
  - Place any new institutional arrangement inside central government with clear mandate and accountability to Minister of Finance for approval and fiscal risk oversight.

### VIII. Enhancing delivery capacities and institutional priorities
- Core message: institutional and delivery capacity are crucial to ensure additional government spending delivers desired SDG outcomes; higher spending alone is insufficient.
- Challenges: provision shortfalls, segmentation in health/education/infrastructure services, weak coordination, under-execution of budgets.
- Key institutional recommendations:
  - Prioritize building state capacities commensurate with scale of challenges.
  - Adopt a well-prioritized national agenda with medium-term budget framework and national investment strategy.
  - Improve public-sector personnel management: complete personnel census, align pay with performance, reform Laws on the Civil Service and Salaries in Public Administration.
  - Improve procurement and execution: shift Comptroller’s activities to preventive/concurrent auditing; provide clear procurement interpretations; adopt results-based budgeting and ex-post program evaluation tools (e.g., Observatory of Social Spending).

### IX. Financing strategy, sequencing, and tax reform options
- Overall financing need:
  - Additional spending to achieve health, education, and infrastructure SDGs: about 8½ percent of GDP in 2030.
- Sequencing:
  - Near term: use existing fiscal space to frontload part of spending increase through a temporary deficit increase without endangering debt sustainability.
  - Medium term: fund higher spending through higher revenues and integral fiscal reform over the next ten years.
- Financing sources and roles:
  - Tax reform and tax administration improvements.
  - Spending efficiency gains.
  - Private sector participation (larger role for roads).
  - Public financing expected to cover most additional needs for health, education, water and sanitation as a matter of solidarity.
- Tax administration priorities:
  - Reinforce VAT controls with risk-based auditing.
  - Strengthen large-taxpayer office management.
  - Improve use of tax information to correct non-compliance.
  - Enhance tax collection enforcement faculties (including easier implementation of bank secrecy provisions).
  - Implement customs post-clearance audit program.
- Identified tax policy options and estimated fiscal yields (percent of GDP) — reported table figures:
  - Increase in VAT to 15 percent: 1.20
  - Use three rates for ISRPI 7.5; 20; 32.5%: 0.90
  - Increase ISC rates on gasoline (30%) and diesel (60%): 0.40
  - Increase ISRAL rate by 3 percentage points, as part of a comprehensive reform: 0.40
  - Introduce ISC for telecommunications (10% rate): 0.20
  - Include ISC in VAT base: 0.15
  - Apply dual regime only to natural persons at 10%: 0.10
  - Introduce banking VAT (FAT): 0.05
  - Increase ISC on non-alcoholic beverages: 0.05
  - Phase out IUSI deductions on ISO: 0.05
  - Total identified fiscal yield: 3.50
  - Note: To reach 4½ percent of GDP of additional revenues from tax reform, further measures equivalent to 1 percent of GDP should be identified.
- Spending efficiency and public-sector management:
  - Guatemala ranks among Latin America countries where wasted spending is lowest, but inefficiencies remain in procurement, wage bill, and transfers.
  - Efficiency gains and institutional reforms could raise available resources and complement revenue measures.
- PPPs and fiscal risks:
  - PPP law can mobilize private financing for infrastructure; ensure value-for-money and limit contingent fiscal risks; require fiscal risk oversight by Ministry of Finance.

### X. Appendix I — Costing methodology (summary)
- Education: set 2030 parameters (teacher salaries, pupils per teacher, share of non-compensation expenses) to medians of good performing countries (SDG education index > 80) with GDP per capita $3,000−$6,000 in 2016.
- Health: set 2030 medical personnel and non-compensation expense shares to medians of good performing countries (SDG health index > 70) with GDP $3,000−$6,000 in 2016.
- Roads: regression to estimate additional kilometers needed to raise Rural Access Index to 90 percent; cost per kilometer assumed $800,000; add 5 percent for depreciation.
- Water and sanitation: World Bank methodology estimating population in need (Hutton and Varughese, 2016).
- Adjustments: validated with authorities and development partners; administrative data used to update medical professionals; road needs averaged with local estimates; cost per kilometer set to $800,000; additional spending reported as percentage points of GDP for 2030.

### XI. Appendix II — Tax reform options (summary table)
- Reported tax policy measures and estimated yields (percent of GDP) — preserve reported values:
  - Increase in VAT to 15 percent: 1.20
  - Use three rates for ISRPI 7.5; 20; 32.5%: 0.90
  - Increase ISC rates on gasoline (30%) and diesel (60%): 0.40
  - Increase ISRAL rate by 3 percentage points, as part of a comprehensive reform: 0.40
  - Introduce ISC for telecommunications (10% rate): 0.20
  - Include ISC in VAT base: 0.15
  - Apply dual regime only to natural persons at 10%: 0.10
  - Introduce banking VAT (FAT): 0.05
  - Increase ISC on non-alcoholic beverages: 0.05
  - Phase out IUSI deductions on ISO: 0.05
  - Total identified fiscal yield: 3.50
  - Additional measures equivalent to 1 percent of GDP needed to reach 4½ percent of GDP revenue target from tax reform.

*Prepared by Esther Perez and Mauricio Soto; IMF staff calculations and analysis drawn from wpiea2019060 (IMF PDF chapter content).*

### References .............................................................................................................

### wpiea2019060 - References .............................................................................................................

### I. Introduction
- Raising Guatemalans’ living standards is key to capitalizing on the demographic dividend expected to occur over the next two decades.
- Over the past decade, income per capita has grown at an average rate of 1.2 percent per year.
- Current levels of social spending fall short of the targets enshrined in the 1996 Peace Accords.
- Most countries with similar income per capita in 1980 currently outperform Guatemala.
- The paper’s focus is threefold:
  - Cost the additional spending consistent with high performance in 2030 (bringing Guatemala’s spending patterns in line with good performing countries of a similar level of income by 2030).
  - Discuss government policies and institutional capacity aspects enabling delivery of public goods.
  - Discuss potential sources of financing including tax administration efforts, tax policy changes, private sector participation, and greater spending efficiency.
- Key summary findings:
  - Attaining the SDGs would require a sizable increase in spending: about 8½ percent of GDP in 2030 for health, education, and infrastructure.
  - Institutional and delivery capacity are crucial; higher spending alone is unlikely to lead to better outcomes.
  - A gradual scaling-up of spending is recommended, pari passu with improvements in provision of public goods.
- Paper organization:
  - Section II: evaluates Guatemala’s progress towards sustainable development.
  - Section III: methodology and costing of spending needs for attaining key SDGs.
  - Section IV: discusses improvements needed in provision of education, health, and infrastructure (water, sanitation, roads).
  - Section V: discusses a possible financing strategy.
  - Section VI: concludes.

### II. Progress towards Sustainable Development
- Guatemala’s MDG progress:
  - By 2015, prevalence of underweight and mortality in under-five children were more than halved from their 1990 level.
  - Incidence of malaria was reduced to 0.31 (per 1,000).
  - Literacy rate among youth aged 15−24 increased to 93.3 percent.
  - Guatemala made less headway, or lost ground, in absolute and relative poverty, maternal mortality, and school enrolment in preprimary and secondary education.
  - About 62 percent of the quantitative SDG indicators were still far from their targets in 2015 (SEGEPLAN, 2015).
- Development outcome gaps (selected indicators):
  - Poverty and extreme poverty are at 60 and 23 percent of the population respectively.
  - Prevalence of stunting in children under 5 years old is among the highest in the world.
  - Infant and maternal mortality rates are well above Latin American and Caribbean averages.
  - Over 40 percent of the population does not have access to safe drinking water.
  - Pre-primary education and secondary school enrollment rates are low in regional comparison.
  - Social outcomes are markedly worse in rural areas and for indigenous populations.
- Institutional commitment:
  - The authorities have embraced the Sustainable Development Goals (SDGs) and mainstreamed them into the K’atun 2032 National Development Plan.
  - SEGEPLAN mapped the K’atun 2032 into 10 National Priorities including 16 Strategic Goals.
  - Guatemala conducts Voluntary National Reviews; latest report published in 2017.
  - The President heads the National Council for Urban and Rural Development (CONADUR).

### III. Spending required to achieve key SDGs (methodology and aggregate results)
- Scope:
  - Focus on additional spending required for SDGs related to investments in human capital and physical infrastructure: education, health, and infrastructure (water, sanitation, roads).
- Benchmarking methodology (Gaspar and others, 2018):
  - Identify good performing countries by SDG outcome thresholds within income groups (e.g., SDG education index level of 80 out of 100).
  - Calculate median of main cost drivers for these good performing peers.
  - Use median values and country-specific projections (economic growth, demographics) to estimate spending needs for 2030.
  - Additional spending needs = objective (estimated needs for 2030 consistent with achieving good performance) − baseline (current total spending, public and private).
- Aggregate costing headline:
  - Overall additional spending of about 8½ percent of GDP in 2030 to attain health, education, and infrastructure SDG goals.
  - Breakdown of 2030 additional spending consistent with good performance:
    - Education: about 3.3 percent of GDP.
    - Roads infrastructure: about 3.2 percent of GDP.
    - Health: 1.4 percent of GDP.
    - Water and sanitation infrastructure: 0.6 percent of GDP.
- Caveat:
  - The costing exercise focuses on annual spending flows in 2030; cumulative expenses up to 2030 would be significantly larger.
  - After 2030: education and health spending would recur; infrastructure spending would be expected to decline to cover depreciation of the capital stock built through 2030.

### Education: current performance, benchmarking, and 2030 needs
- SDG4 index:
  - Guatemala’s SDG4 index reaches 64.
  - Median among good performing peers is 87.
- SDG4 index construction: net primary school enrolment rate, expected years of schooling, literacy rate for population aged 15−24.
- Good performers’ median benchmarks (education) and Guatemala comparisons:
  - Students per teacher: good peers median 13.3; Guatemala 17.9.
  - Teacher wages (ratio to GDP per capita): good peers median 1.7; Guatemala 1.8 (overall table shows 2.3 in 2016 for Guatemala).
  - Other current and capital spending (% total spending): good peers median 35.7 percent (table lists 36); Guatemala 25 percent (table lists 39 in some columns—preserve table values as reported).
  - Yearly spending per student (USD 2018): good peers median $826; Guatemala $562 (table: Spending per student (USD 2018) — All: 902; Low performance: 1,338; High performance: 826; Guatemala: 1,043 — preserve these exact reported values where presented).
- Projected education spending if aligning to good performers by 2030:
  - Education spending would increase from 3.7 to 7 percent of GDP by 2030.
  - Assumptions: full enrollment for primary and secondary education, plus two years of pre-primary education and two years of post-secondary education; yearly real GDP growth of 3½ percent and population growth of 1.8 percent over 2023-2030.
  - Most increase should occur in the public sector: private education spending share declines from about 20 percent today to 5 percent of GDP by 2030 (table notes private share today 19 percent; target 5 percent).
- Table 2 results (exact reported figures preserved):
  - GDP per capita: 2016 — 4,185; 2030 — 4,224 (table shows additional columns and values; preserve as shown).
  - Population (thousand): All 38,074; 2016 low/high performance columns and Guatemala 68,763 / 16,910 / 16,582 / 21,424 (table structure preserved as presented).
  - Main factors: Students per teacher ratio 17.6 (All); Low performance 21.2; High performance 13.3; Guatemala 17.9; Good peers 13.3.
  - Teacher wages (ratio to GDP per capita): All 2.3; Low performance 4.1; High performance 1.7; Guatemala 1.8; Good peers 1.7.
  - Other current and capital spending (% total spending): All 39; Low performance 39; High performance 36; Guatemala 25; Good peers 36.
  - Student age population (% total population): All 38; Low performance 42; High performance 31; Guatemala 52; Good peers 44.
  - Enrollment rate (preprimary to tertiary): All 69; Low performance 64; High performance 69; Guatemala 52; Good peers 80.
  - Private share (% of total spending): All 19; Low performance 41; High performance 5; Guatemala 19; Good peers 5.
  - Education spending (percent of GDP): All 5.7; Low performance 8.5; High performance 4.4; Guatemala 3.7; Good peers 7.0.
  - Public: All 4.6; Low performance 5.0; High performance 4.1; Guatemala 3.0; Good peers 6.6.
  - Private: All 1.1; Low performance 3.4; High performance 0.2; Guatemala 0.7; Good peers 0.3.
  - Spending per student (USD 2018): All 902; Low performance 1,338; High performance 826; Guatemala 562; Good peers 1,043.
  - SDG4 index: All 78; Low performance 75; High performance 87; Guatemala 64; Good peers >80.

### Health: current performance, benchmarking, and 2030 needs
- SDG3 index:
  - Guatemala’s SDG3 index reaches 70.
  - Median among good performing peers is 81.
- SDG3 index construction includes 14 variables: maternal, neonatal and under-5 mortality rates, HIV prevalence, and healthy life expectancy at birth.
- Good performers’ median benchmarks (health) and Guatemala comparisons:
  - Doctors and other medical personnel per 1,000 people: good peers median 1.8 doctors and 6.3 other medical personnel per 1,000.
  - Doctors’ wages: good peers median equivalent to 5.4 times GDP per capita.
  - Share of other current and capital cost: good peers median 62 percent.
  - Overall spending per capita at median: $352 or 7.1 percent of GDP (table referenced).
- Guatemala’s total health spending per capita is lower than in good performers.
- Main drivers of low per-capita spending in Guatemala:
  - Too few doctors and other health personnel.
  - To a much lesser extent, lower doctors’ wages.
- If Guatemala aligned inputs with good performing countries, health spending would increase from 5.8 percent of GDP to (continuation beyond provided text; preserve that health spending would increase from 5.8 to — text cuts off here).

*Prepared by Esther Perez and Mauricio Soto; IMF staff and external collaborators contributed to analysis and discussions during missions in Guatemala.*

### 7.2 percent of GDP by 2030, and the share of private health spending would gradually

### wpiea2019060 - 7.2 percent of GDP by 2030, and the share of private health spending would gradually

### Health spending and benchmark results
- Projected aggregate health spending: 7.2 percent of GDP by 2030.
- Public health spending (percent of GDP): 3.9, 3.7, 4.3, 2.0, 4.4 (values presented in the source table under "Public").
- Private health spending (percent of GDP): 2.9, 2.8, 2.8, 3.8, 2.8 (values presented in the source table under "Private").
- Per capita health spending (USD 2018): 283, 268, 352, 239, 374 (values from the table).
- SDG3 index: 76, 74, 81, 70, >80 (values from the table).
- Private share of total health spending: decline from about 65 percent today to 38 percent of GDP by 2030.
- Additional spending needs net off cost rationalization in supply chain costs.
- Data sources noted: IMF staff calculations using Garcia-Escribano, Prady and Soto (2018), and Gaspar and others (2019). National Health Accounts 2016 used for data on doctors and other medical personnel and their compensation; for private doctors, compensation imputed assuming 85 percent of private health spending corresponds to remuneration.

### Water and sanitation infrastructure needs (SDG6)
- As of 2015:
  - Over 3 million people (20 percent of the population) do not have access to basic water and sanitation.
  - Nearly 12 million people (75 percent of the population) lack safely managed water and sanitation.
- World Bank WASH costing model estimate to achieve universal safe access to water and sanitation by 2030:
  - Total new investment needed on average: $589 million per year (0.6 percent of 2030 GDP).
- Table 4 reference: IMF staff calculations using World Bank (2017).
- Selected table figures (population/coverage/costs by category):
  - Total target population (million): 1.9, 2.4, 5.1, 3.7, 5.8, 2.4, 5.5, 7.9, 7.8, 6.7, 11.5, 11.5.
  - Population unserved in 2015 (million): 0.8, 0.9, 0.3, 2.2, 1.0, 0.9, 0.7, 6.4, 3.0, 5.2, 6.7, 11.9.
  - Population growth 2015-2030 (million): 1.5, 1.5, 4.8, 1.5, 4.8, 1.5, 4.8, 1.5, 4.8, 1.5, 4.8, 6.3.
  - Cost (per capita, $): 19, 21, 87, 34, 87, 2, 2, 185, 185, 266, 281, 765.
  - Total cost ($ million): 35, 52, 444, 127, 505, 5, 13, 1,457, 1,443, 1,778, 3,247, 8,840.
  - Annual cost ($ million): 2.3, 3.5, 29.6, 8.4, 33.7, 0.4, 0.9, 97.1, 96.2, 118.5, 216.5, 589.
  - Total cost (% of 2030 GDP): 0.0, 0.0, 0.4, 0.1, 0.5, 0.0, 0.1, 1.4, 1.4, 1.7, 3.1, 8.3.
  - Annual cost (% of 2030 GDP): 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.0, 0.1, 0.1, 0.1, 0.2, 0.6.

### Roads infrastructure needs (SDG9)
- Current road network: about 16,500 kilometers of roads.
- Road density: about 16 kilometers of road per 100 square kilometers of area.
- Relative performance: road density is about one fourth of that of good performing peers for roughly similar population density.
- Methodology: road infrastructure gap measured as target road density minus current road density; target determined by GDP per capita, population density, and Rural Access Index (RAI).
- Estimated cost to approach density observed in good-performing countries:
  - Increase in expenditure: about 3.2 percent of GDP (annual cost as percent of 2030 GDP).
  - Additional roads: about 35,000 kilometers over the next 12 years, assuming a unit (construction and maintenance) cost of $800,000 per kilometer.
- Alternative local estimate: over 47,500 additional kilometers to approach the Latin American average in road kilometer per capita (Grupo IDC, 2018).
- Table 5 selected figures:
  - GDP per capita entries: 4,136; 4,147; 3,851; 4,147; 5,209.
  - Road density: 18, 13, 36, 16, 48.
  - Roads (KM): 16,457; 51,345.
  - Rural Access Index (RAI): 62, 57, 87, 55, >90.
  - Annual cost (percent of 2030 GDP): 3.2.

### Enhancing delivery capacities and institutional priorities
- Key message: Institutional and delivery capacity aspects are crucial to ensure additional government spending delivers the desired SDG outcomes.
- Challenges: existing provision shortfalls and segmentation in health, education, and infrastructure services.
- Policy implication: need for a well-prioritized agenda and building state capacities commensurate with the challenges.

### Education: coverage, inclusiveness, quality, and policy priorities
- Coverage:
  - Primary level coverage: about 80 percent.
  - Preschool (age 0−4): only 3 percent receive preschool education (source table: "Only 3 (47) percent of children aged 0−4 (5−6) receive preschool education" — preserved as presented).
  - Preschool (age 5−6): 47 percent receive preschool.
  - Basic secondary schooling: about 48 percent of children receive basic secondary.
  - Diversified secondary schooling: about 24 percent receive diversified secondary.
  - Average annual spending per student (2016): US$562, representing about 68 percent of the investment made in well-performing countries with similar per-capita income.
- Inclusiveness and outcomes:
  - Grade 6 achievement (2014): 50 percent achieved expected level in mathematics; 30 percent in reading (General Directorate of Educational Evaluation and Research, DIGEDUCA).
  - Regional and demographic disparities: illiteracy rate in Quiche 37 percent (four times that in the department of Guatemalan); years of schooling for rural/poor about half those for urban/nonpoor.
- Infrastructure constraints:
  - One in five schools lacks piped water, adequate sanitation, electricity or rain shelter (Ortega, 2012).
  - Lack of updated infrastructure census and inadequate coordination between MINEDUC and MICIVI hinder planning and maintenance.
- Main policy priorities and recommendations:
  - Expanded coverage:
    - Increase preprimary coverage to about 2 years of schooling (authorities’ enrollment target: 60 percent of children age 4−6).
    - Continue expanding basic and diversified secondary using flexible schemes (distance education, Core Family Education groups, other modalities) targeted to rural and indigenous populations.
  - Improved teachers’ quality:
    - Allocate greater weight to knowledge tests and classroom probationary periods in primary teacher selection.
    - Use objective criteria and competitive exams for secondary-teacher recruitment.
    - Link teacher remuneration to performance via:
      - End-of-year bonus contingent on school's completing the 180-day calendar or students’ achievement in mathematics or reading.
      - Professional development bonus for completion of a university degree.
      - Incentives for well-performing teachers to take assignments in vulnerable schools.
    - Strengthen on-the-job training programs (Academic Program for Teachers’ Professional Development, PADED/D, Llegando al Aula, Teacher Premium 100 Points).
    - Empower school principals to guide teachers academically and pedagogically.
  - Enforcement of school calendar:
    - Recognize centers that abide by the 180 teaching days, five hours a day; consider penalties for noncompliance.
    - Consider extending to a 200-day school year as in other Central American countries.
  - Improved infrastructure:
    - Better coordination between MICIVI and MINEDUC.
    - Greater involvement of municipalities in maintenance of education facilities.
    - Optimize territorial distribution of school buildings.
  - Enhanced inclusiveness for indigenous students:
    - Promote access to bilingual teachers in rural areas.
    - Involve parents in preprimary education.
    - Integrate community culture into curricula.
    - Reinforce school principal leadership.
- Box 1 (lessons for supporting indigenous students) — preserved key lessons:
  - Engage families and provide extra support; examples include abecedarian models and family/teacher pre-year engagement.
  - Monitor progress with daily teacher records and community recognition ceremonies.
  - Strong school leadership and committed principals linked to improved indigenous outcomes.
  - Support teachers with culturally relevant materials and programs (e.g., "Show Me Your Math Program" example).

*Italicized source attribution: IMF staff calculations and analysis drawn from the provided chapter content.*

### 25.      Guatemala faces significant challenges in providing healthcare coverage, both

### wpiea2019060 - 25.      Guatemala faces significant challenges in providing healthcare coverage, both

### Healthcare coverage and outcomes
- Guatemala has one of the lowest levels of (PPP-adjusted) per capita health spending amongst Central American countries and the highest coverage gap for basic healthcare (about 50 percent).
- Access to hospitals and specialized care is concentrated in Guatemala City and Quetzaltenango; poor and rural areas have minimal (or no) access.
- Large regional and ethnic disparities:
  - Only 30 percent of indigenous women give birth in healthcare facilities staffed by qualified practitioners.
  - Maternal mortality for indigenous women reaches 163 per 1,000 births (versus national averages of 50 percent and 113 per 1,000 births, respectively).
- Under-five mortality trends and regional variation are highlighted (figures referenced).

### Fragmentation of provision and coverage gaps
- Providers: Ministry of Health and Social Services (MSPAS), Guatemalan Social Security Institute (IGSS), private clinics and hospitals, and non-governmental organizations operate separately with duplication and discrimination by ability to pay, job situation, and geography.
- IGSS provides healthcare for 17 percent of the workforce (in formal employment); remaining 83 percent would de jure be covered by MSPAS or health insurance schemes.
- Annual per capita expenditure of the MSPAS is approximately one-fifth of that for IGSS beneficiaries.
- Health posts and health centers covered about one-fifth and one-fourth of the population, respectively, in 2013.
- Cancellation of the Program for Extended Coverage (PEC) in 2014 (PEC had extended coverage for primary healthcare to around 4.5 million since 1997) led to declines in vaccination rates and outbreaks of measles and poliomyelitis.

### Financing structure and financial burden on households
- Healthcare financing composition:
  - 63 percent of total health expenditure is privately financed.
    - Of that, 11 percent is channeled through private insurance companies and 52 percent is out-of-pocket spending.
  - Public financing has remained around 2.2 percent (of GDP) over the past decade and represents slightly over one-third of total health expenditure:
    - 17.8 percent channeled through the IGSS.
    - 19.2 percent channeled through the MSPAS and the municipalities.
- Catastrophic healthcare costs:
  - 65 percent of households in the lowest income bracket incur healthcare costs in excess of 40 percent of the household’s capacity to pay.
  - 3 percent for those in the highest income bracket.

### Health workforce and supply chain constraints
- Health workforce shortages and distribution:
  - Guatemala has 12½ health workers per 10,000 inhabitants (including technical and administrative supporting staff)—the lowest ratio in Central America and half of the WHO standard.
  - Urban ratio: 25.7 per 10,000; rural ratio: 2.96 per 10,000 (almost ten times higher in urban areas).
  - Nurses per doctor: 0.66 nurses per doctor (WHO standard: 2.8).
  - Health workforce composition (In percent): Doctors 11%, Nurses 5%, Nursing assistants 25%, Technical supporting staff 10%, Operational staff 15%, Administrative staff 34%.
- Supply chain costs:
  - Over a third of cost of drugs owes to supply costs.
  - Supply Chain Costs in the Health Sector (Index, 100 = best) places Guatemala in upper band (figure referenced).
  - High transportation and customs clearance costs and lack of competition among logistics providers cited.

### Short-term priority and medium-term objective
- Short-term priority:
  - Extend primary healthcare coverage with emphasis on prevention (vaccinations and immunizations, maternal and child health, and nutrition education), especially in rural areas affected by PEC elimination.
- Medium-term objective:
  - Achieve universal access to quality healthcare services across the life-cycle by integrating secondary (curative and rehabilitation services) and tertiary (hospitals) healthcare levels.

### Recommended reforms and policy actions (health)
- Improved healthcare governance:
  - Strengthen the National Health Council’s authority to coordinate MSPAS and IGSS delivery, seek synergies, and avoid duplication.
  - Delegate financial and operational organization to Health Regional Directorates to align MSPAS provision with regional needs.
- Financing strategy:
  - Long-term goal: implement a financing scheme with increased cross subsidies integrating health risks and ability to pay on a solidarity basis, by either:
    - Unifying healthcare services provided by IGSS and MSPAS, or
    - Creating a new entity in charge of universal provision financed through a noncontributory scheme.
  - Short-term options: hybrid programs combining voluntary contributions with subsidies to low-wage earners in the informal sector (example cited: Peru’s subsidized healthcare for those in poverty and extreme poverty).
- Improve incentives for healthcare workers:
  - Expedite the Law on Careers in Health Administration to professionalize the workforce and establish transparent hiring, compensation, and promotion mechanisms.
  - Use community facilitators, economic incentives, and training in indigenous languages/medical practices to attract and retain professionals in rural areas.
- Reduce supply chain costs:
  - Implement framework contracts for joint purchases by MSPAS and IGSS of essential drugs.
  - Streamline logistics, automate inventory handling, optimize distribution routes, and consider outsourcing logistics functions to increase efficiency and free resources for care provision.

### Water and Sanitation (WS) infrastructure challenges
- Coverage and access:
  - Guatemala has adequate hydrological resources yet one quarter of Guatemalans lack a water connection in their home.
  - Nearly half of all Guatemalans lack access to safely managed sanitation.
  - Large departmental disparities: Sololá near-universal access; Alta Verapaz, Chiquimula, El Progreso, Petén, and Santa Rosas dependent on untreated surface water.
  - Large portions of poor, rural, and indigenous people spend over 30 minutes a day collecting water.
- Institutional capacity and execution:
  - WS spending averaged 0.34 percent of GDP over 2010−14 (of which 0.28 percent from municipal governments).
  - About one fourth of WS budgets were under-executed due to approval bottlenecks and low local implementation capacity.
  - Approval process delays: 170 days from initiation to approval (compared with the 71-day wait time set by law).
  - UNEPAR currently completes some 20 water projects per year versus 2,500 pending applications and over 6,000 projects consistent with attainment of SDG6.
- Coordination issues:
  - Multiple actors: SEGEPLAN approves WS projects; MSPAS and MARN regulate WS services; local governments provide WS through Drinking Water Administrative Committees (CAAPs); INFOM assists local governments via UNEPAR.
  - Poor coordination among MSPAS, MARN, INFOM, and SEGEPLAN creates burdens for local governments.
- Recommended WS reforms:
  - Create a governing body responsible for formulation, coordination, and implementation of WS policies, considering water endowment by hydrographic basins and demographic trends.
  - Strengthen UNEPAR regional offices and local governments’ capacities; integrate CAAPs into sector institutional framework.
  - Consolidate Health Management Information and Water Quality Control Systems.
  - Ease and harmonize requirements for small projects from MSPAS and MARN.
  - Provide technical assistance for project preparation and implementation in less-developed areas.

### Roads infrastructure challenges and proposals
- Performance and costs:
  - Guatemala’s Logistics Performance Index rank worsened from 77 in 2014 to 111 in 2016 (out of 160 countries).
  - Average transport speed: 37 km per hour (international average: 60 km per hour).
  - Transport time and cost for a standardized shipment to domestic port of export: 1.61 minutes/km and US$2.52/km (example comparator: Mexico 1.07 minutes/km and US$1.16/km).
- Network size and quality:
  - Road network: about 16,500 km; provides about 1 meter of roads per inhabitant and 151 meters per square km (CAPDR: 3.7 and 413 meters respectively).
  - Network growth since 1985: about 200 km per year (vs. objective of over 4,000 km needed to achieve SDG for roads by 2030).
  - Approximately 46 percent of the network consists of dirt roads; 54 percent dirty roads indicated elsewhere.
- Proposed expansion:
  - A local consultant envisions expansion to about 65,000 km; new layout linking the country’s 10 largest cities, 22 departmental capitals, and 22,000 population centers; primary network to connect ports, airports, border crossings, national and intermediate capitals, and tourist destinations.
- Institutional and financing reforms:
  - Revamp regulatory framework to consolidate sector regulations, provide legal certainty on right-of-way acquisition, and contract legal nature.
  - Financing vehicles could include:
    - Conventional Public-Private Partnerships (PPPs) under the 2010 PPP law.
    - An overarching institutional arrangement to plan, develop, maintain, and finance public roads with private sector partnerships.
  - Place any newly created institutional arrangement inside the central government and assign a clear mandate and accountability to the Minister of Finance for approval and fiscal risk oversight to limit fiscal risks and secure value-for-money.

### Overall financing strategy for SDGs
- Achieving the SDGs will require a sizable increase in total and public spending from currently low levels.
- Additional spending needs to achieve health, education, and infrastructure goals amount to about 8½ percent of GDP.

*Source: wpiea2019060 - 25. Guatemala faces significant challenges in providing healthcare coverage, both (IMF PDF chapter content).*

### 2030. Guatemala can only

### 2030. Guatemala can only

### Financing needs for SDG-related spending
- Additional spending consistent with good performance in human and physical capital related SDGs is sizable: about 8½ percent of GDP in 2030 to attain health, education, and roads, water, and sanitation infrastructure SDG goals.
- Sectoral additional spending in 2030:
  - Education: 3.3 percent of GDP
  - Roads: 3.2 percent of GDP
  - Health: 1.4 percent of GDP
  - Water and Sanitation: 0.6 percent of GDP
- The costing exercise reports additional spending in percentage points of GDP:
  - For education and health, the difference between the share of GDP in spending consistent with high performance in 2030 and current spending as a share of GDP.
  - For physical capital (roads, water and sanitation), the annualized spending required to close infrastructure gaps between 2019 and 2030.

### Potential sources of financing and sequencing
- Near term:
  - Guatemala can use existing fiscal space to frontload part of the needed increase in spending on health, education, and public infrastructure through a temporary increase in the deficit without endangering debt sustainability.
- Medium term:
  - Higher spending should be funded through higher revenues and an integral fiscal reform over the next ten years.
- Potential financing sources listed (in percent of GDP for sector needs and potential contributions):
  - Tax reform (aggregate potential summarized in Appendix II)
  - Tax administration efforts
  - Spending efficiency gains
  - Private sector participation
- Sectoral financing approach:
  - Health, education, and water and sanitation: expected that most additional financing be provided publicly as a matter of solidarity, given currently low provision levels for the poor, rural, and indigenous populations.
  - Roads: private sector participation should help fill a relatively larger part of the roads financing gap.

### Enhancing tax capacity and tax policy recommendations
- Tax administration priorities:
  - Reinforce VAT controls, with emphasis on risk-based auditing.
  - Strengthen the large-taxpayer office management.
  - Improve the use of tax information to correct non-compliance.
  - Enhance tax collection enforcement faculties (including through easier implementation of bank secrecy provisions).
  - Implement a customs post-clearance audit program to deter non-compliance and facilitate trade.
- Tax reform context:
  - Government tax revenue as a share of GDP is amongst the lowest in the world and far off Guatemala’s revenue mobilizing potential and the aspirational objectives set in the 2000 Fiscal Pact.
  - Continued tax administration efforts and a comprehensive tax reform can permanently raise revenues over the next ten years.
- Revenue earmarking and flexibility:
  - Revenue mobilization should be supplemented with measures to raise spending efficiency and flexibility.
  - Scale back revenue earmarking and mandatory spending floors; couch spending objectives within a medium-term budget framework.

### Spending efficiency, public-sector management, and execution
- Efficiency gains and public spending:
  - Guatemala stands out as one of the countries in the Latin America region where wasted spending is the lowest, but inefficiencies remain in public procurement, the wage bill, and targeted transfers.
  - Tools such as the Observatory of Social Spending would help promote results-based budgeting and ex-post evaluation of program performance.
- Public-sector personnel and pay:
  - Better aligning pay with performance and reforming regulations of the Laws on the Civil Service and Salaries in Public Administration are important milestones.
  - Completing the public-sector personnel census should help make hiring more transparent and eliminate ghost positions.
- Improving budget execution while maintaining governance:
  - Reforms of the Procurement Law increased oversight but slowed execution; measures to speed up execution include:
    - Shifting the General Comptroller’s activities towards preventive capacities and concurrent auditing.
    - Providing clear interpretation of procurement norms and applying unified criteria to protect public employees from arbitrary auditor decisions.
    - Adopting a medium-term budget framework with a national investment strategy embedded within a multi-year investment budget.

### Private sector participation and fiscal risks
- Guatemala’s Public-Private Partnership law can increase private sector participation to mobilize additional financing for infrastructure.
- Key considerations: ensure value-for-money vis-à-vis traditional procurement and limit contingent fiscal risks from PPP projects.
- Spending in crucial areas for growth and development should, in turn, improve debt sustainability.

### Institutional environment and broader development implications
- Development requires institutional changes to enhance delivery capacities and reduce segmentation in provision of public goods to secure access for all Guatemalans.
- The K’atun 2032 National Development Plan signals national ownership and commitment, but more determined efforts are needed to meaningfully improve living standards.
- Historical progress under MDGs by 2015 included:
  - Prevalence of underweight and under-five mortality more than halved from 1990 levels.
  - Incidence of malaria significantly reduced.
  - Literacy rate among youth aged 15−24 increased to over 93 percent.
- Remaining shortfalls include maternal mortality and school enrollment in preprimary and secondary education.

### Appendix I — Costing methodology (summary)
- Focus: education, health, and selected infrastructure (roads and water and sanitation).
- Methodology follows Gaspar and others (2019) and accounts for Guatemala’s projections for economic growth and demographics.
- Adjusts for spending efficiency and intersectoral synergies.
- Education: set 2030 key parameters (teacher salaries, pupils per teacher, share of non-compensation expenses) to median values observed in good performing countries (SDG education index > 80) with GDP per capita between $3,000 and $6,000 in 2016.
- Health: set 2030 key parameters (medical personnel, doctors and other medical personnel per population, share of non-compensation expenses) to median values observed in good performing countries (SDG health index > 70) with GDP between $3,000 and $6,000 in 2016.
- Roads: regression analysis to estimate additional kilometers needed for projected population and GDP per capita changes over 2016−2030 and to raise the Rural Access Index to 90 percent; cost per kilometer assumed $800,000; add five percent of total cost to account for depreciation.
- Water and sanitation: World Bank methodology estimating population in need of basic and improved access (Hutton and Varughese, 2016).
- Adjustments for Guatemala: validated with authorities and development partners; adjusted number of medical professionals to reflect administrative data; updated road infrastructure needs using the average of methodology and local estimates; cost per kilometer set to $800,000 to reflect local estimates.
- Reporting: additional spending summarized as percentage points of GDP for 2030.

### Appendix II — Tax reform options (percent of GDP)
- A technical assistance mission (2016) identified significant additional potential revenue from tax policy reform. Options and fiscal yield (percent of GDP):
  - Increase in VAT to 15 percent: 1.20
  - Use three rates for ISRPI 7.5; 20; 32.5%: 0.90
  - Increase ISC rates on gasoline (30%) and diesel (60%): 0.40
  - Increase ISRAL rate by 3 percentage points, as part of a comprehensive reform: 0.40
  - Introduce ISC for telecommunications (10% rate): 0.20
  - Include ISC in VAT base: 0.15
  - Apply dual regime only to natural persons at 10%: 0.10
  - Introduce banking VAT (FAT): 0.05
  - Increase ISC on non-alcoholic beverages: 0.05
  - Phase out IUSI deductions on ISO: 0.05
  - Total identified fiscal yield: 3.50
- Note: In order to reach 4½ percent of GDP of additional revenues from tax reform, further measures equivalent to 1 percent of GDP should be identified.

*Source: IMF staff, “2030. Guatemala can only” (excerpt).*

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_Source: https://www.imf.org/-/media/files/publications/wp/2019/wpiea2019060.pdf_