IMF Executive Board Approves US$594 Million in Emergency Assistance to Guatemala to Help Address the COVID-19 Pandemic

IMF News, June 10, 2020

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Canonical URL: IMF Executive Board Approves US$594 Million in Emergency Assistance to Guatemala to Help Address the COVID-19 Pandemic

Provide timely resources to counter the economic and social impact of the COVID-19 pandemic.
Help meet urgent balance of payments needs stemming from the COVID-19 pandemic.
Catalyze additional support from other development partners.
Improve confidence and catalyze support from other external partners.

Guatemala faces severe impacts from the COVID-19 pandemic including:
- Faltering external demand.
- Declining remittances.
- Disruption of economic activity due to necessary lockdown and social distancing measures.
- Severely worsened external and fiscal positions.
Structural challenges:
- Extensive reliance on remittances amplifies pandemic effects.
- Limited healthcare coverage, especially among poor and rural populations, poses a substantial challenge to virus containment.
Despite strong fundamentals, the existing economic and social model proved vulnerable to the outbreak.

Increasing healthcare spending.
Increasing transfers for the most vulnerable.
Monetary policy easing.
Expanded liquidity provision.
Supportive prudential measures, including temporary easing of credit risk regulations to facilitate loan restructuring.
Commitment to monitor banks’ exposures and levels of provisioning to ensure financial system stability.
Intent to maintain an accommodative monetary policy stance and exchange rate flexibility.
Authorities committed to keep monetization of the deficit temporary and limited.
Priority actions noted:
- Narrowing the tax gap.
- Rationalizing non-essential spending to contain the fiscal deficit.

RFI support will help address urgent balance of payments and fiscal needs, improve confidence, and catalyze support from other external partners.
The authorities have marshaled a sizable and well-targeted fiscal response to counter COVID-19, shoring up healthcare facilities, protecting the most vulnerable, and mitigating the impact on firms and employees.
Guatemala’s low debt levels allow for temporary fiscal support while preserving debt sustainability.
The Guatemalan authorities reaffirmed their commitment to ensure that emergency financing is used effectively, transparently, and through reinforced governance mechanisms.

International Monetary Fund — Press Release No. 20/241 (June 10, 2020).