IMF Executive Board Concludes 2025 Article IV Consultation with Guatemala
IMF News, September 8, 2025
Source details
- Canonical URL
- IMF Executive Board Concludes 2025 Article IV Consultation with Guatemala
Other formats
Bibliographic details
- Published: September 8, 2025
Key messages and overall appraisal
- The Executive Board completed the Article IV Consultation for Guatemala. The authorities have consented to the publication of the Staff Report prepared for this consultation.
- Guatemala has maintained a resilient economy with low inflation, ample policy buffers, and, for the last few years, a positive current account, contributing to increasingly favorable market access.
- Reforms are needed to shift the country into a high investment/high growth equilibrium and to meaningfully reduce poverty.
- The macroeconomic outlook is strong but faces elevated uncertainty from changing trade and migration policies abroad and vulnerability to severe weather events.
- Next Article IV consultation expected on the standard 12-month cycle.
Macroeconomic outlook and projections
- Economic growth:
- Expected to hold at 3.8 percent in 2025.
- External headwinds expected to keep growth around 3.5 percent in 2026–27.
- In later years, growth could converge to 4 percent owing to infrastructure investments and ongoing reforms.
- Inflation:
- Projected to gradually return to the monetary policy target (4 percent ± 1 percentage point).
- Fiscal and public debt:
- Fiscal deficits of about 3 percent of GDP are expected to persist in the medium term.
- Public debt reaching 30 percent of GDP by the end of the projection period.
- Balance of risks:
- Tilted to the downside—domestic constraints on advancing reforms; external trade policy uncertainty; risks to global growth; shifts in migration policy affecting remittance-supported spending; changes in domestic labor market from declining net emigration; vulnerability to severe weather events.
Executive Board assessment and policy recommendations
- General assessment:
- Directors agreed with the thrust of the staff appraisal and commended authorities’ prudent macroeconomic policies delivering low inflation and robust policy buffers.
- Guatemala is resilient and generally well positioned to face external shocks and domestic challenges.
- Fiscal policy:
- 2025 expansionary fiscal stance considered generally appropriate given softening private demand.
- Over the medium term, reverting fiscal deficits to historical averages of around 2 percent of GDP warranted.
- Essential actions: strengthen revenue mobilization; improve targeting of social programs; improve efficiency of public spending; enhance budget planning and execution; strengthen public financial management.
- Encourage increasing reliance on domestic funding anchored in a credible medium-term debt management strategy.
- Monetary and exchange rate policy:
- Current monetary policy stance and Banguat’s response to large remittance inflows—guided by an intervention rule—considered broadly appropriate.
- Encourage continued strengthening of monetary policy transmission.
- Emphasize improved policy coordination between Banguat and the Ministry of Finance to alleviate sizable sterilization costs.
- Support continued efforts to enhance exchange rate flexibility in a well-communicated manner.
- Financial sector and markets:
- Directors acknowledged resilience of the financial system and commended efforts to strengthen banking regulation and supervision.
- Encourage expanding risk-based supervision, developing the macroprudential toolkit, and enhancing oversight of fintech and digital financial services.
- Priority actions: revise the 2002 Law on Banks and Financial Groups; complete transition to International Financial Reporting Standards; advance the draft Secondary Market Law; approve the e-money law; implement the financial inclusion strategy.
- Governance and structural reforms:
- Critical need to enhance governance and advance structural reforms to foster inclusive growth.
- Urged adoption of new laws including an AML/CFT Law, a Beneficial Ownership Law, a Public Procurement Law, and a Law for the Protection of Whistleblowers.
- Commended authorities for addressing corruption risks in municipal investment projects administered by Department Development Councils (CODEDEs) but stressed need for stronger oversight and capacity-building for CODEDEs.
- Encouraged consolidating institutional gains through a medium-term anti-corruption strategy.
- Continued efforts to formalize the economy and improve the business climate emphasized.
Selected economic and social indicators (highlights)
- Social and demographic indicators:
- Population 2024 (millions): 17.9
- Gini index (2014): 48.3
- Percentage of indigenous population (2018): 43.7
- Life expectancy at birth (2022): 68.7
- Population below the poverty line (Percent, 2023): 55.1
- Adult illiteracy rate (2022): 17.0
- Rank in UNDP development index (2022; of 189): 136
- GDP per capita (US$, 2024): 6,341
- Selected economic indicators (annual percent change unless otherwise indicated):
- Real GDP: 2022: 4.2; 2023: 3.5; 2024: 3.7; 2025: 3.8; 2026: 3.6; 2027: 3.9
- Consumer prices (average): 2022: 6.9; 2023: 6.2; 2024: 2.9; 2025: 2.2; 2026: 4.0
- Consumer prices (end of period): 2022: 9.2; 2023: 1.7; 2024: 3.2
- M2: 2022: 11.1; 2023: 6.8; 2024: 7.8; 2025: 9.3; 2026: 7.9; 2027: 7.4
- Credit to the private sector: 2022: 15.8; 2023: 14.9; 2024: 12.3; 2025: 11.0; 2026: 10.5; 2027: 9.7
- Saving and investment (In percent of GDP):
- Gross domestic investment: 2022: 16.6; 2023: 16.5; 2024: 16.7; 2025: 16.8; 2026: 16.9; 2027: 17.1; 2028: 17.3
- Gross national saving: 2022: 17.7; 2023: 19.6; 2024: 19.5; 2025: 19.0; 2026: 18.5; 2027: 17.6; 2028: 18.4; 2029: 18.1; 2030: 19.4
- External saving: 2022: -1.2; 2023: -3.1; 2024: -2.9; 2025: -2.2; 2026: -1.6; 2027: -1.0; 2028: -0.5
- External sector:
- Current account balance: 2022: 3.1; 2023: 1.0; 2024: 0.5
- Trade balance (goods): 2022: -15.0; 2023: -13.8; 2024: -14.0; 2025: -14.2; 2026: -14.1; 2027: -13.6; 2028: -13.3; 2029: -13.0
- Exports: 2022: 12.5; 2023: 11.8; 2024: 10.7; 2025: 10.9
- Imports: 2022: 29.9; 2023: 26.3; 2024: 25.7; 2025: 25.2; 2026: 24.6; 2027: 24.3; 2028: 24.1; 2029: 24.0; 2030: 23.8
- Other (net): 2022: 18.8; 2023: 16.2; 2024: 14.5; of which: remittances: 2022: 15.9
- Financial and capital accounts balance (Net lending (+)): 2022: 2.7; 2023: 2.5
- of which: FDI (net): 2022: -0.8; 2023: -0.9; 2024: -0.7
- Change in reserve assets (Increase (+)): 0.9; 2.6; 0.4; 0.3; 0.2
- Net International Reserves — Stock in months of next-year NFGS imports: 6.6
- Stock over short-term debt on residual maturity: 4.1; 4.8; 5.1; 5.5; 5.3; 5.7; 6.3
- NIR as % of ARA metric: 157.9; 162.9; 174.9; 187.1; 180.9; 172.1; 165.7; 159.4; 152.8
- Gross international reserves (US$ billions): 20.0; 21.3; 24.4; 27.7; 28.4; 28.9; 29.4; 30.3
- Public finances (Central Government):
- Revenues: 12.6; 12.4
- Expenditures: 14.3; 13.7; 13.4
- Current: 11.2; 11.7; 11.9; 12.0
- Capital: 2.4; 3.4; 3.3
- Primary balance: -1.1
- Overall balance: -2.6; -2.8
- Financing of the central government balance: 1.3; 2.8
- Net external financing: 1.4
- Central government debt:
- 29.0; 27.2; 28.6; 29.3; 30.5
- External: 13.0; 13.5; 13.6
- Domestic1: 17.2; 16.0
- Memorandum items:
- GDP (US$ billions): 95.6; 104.4; 113.2; 120.9; 130.2; 140.3; 151.3; 163.3; 176.4
- Volume of exports and services (annual percentage change): 7.5; -2.4; 5.0; 8.7; 9.0
- Volume of imports and services (annual percentage change): 4.9; 5.4; 6.0
- Output gap (% of GDP): 0.7; 1.2; 0.1; 0.0; -0.1; -0.2
- Terms of trade (annual percentage change): -6.5; 6.1; -0.6
Source: Bank of Guatemala; Ministry of Finance; and Fund staff estimates and projections.