{ "title": "Guatemala: Staff Concluding Statement of the 2023 Article IV Mission", "publication": "IMF News, March 14, 2023", "sourceUrl": "https://www.imf.org/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission", "canonical": "https://www.imf.org/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission", "overlayPath": "/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission/index.md", "summary": "Guatemala should continue to build on the achievements made in economic policy. The Guatemalan economy continued to show resilience in 2022, with growth exceeding its potential.", "publishDate": "2023-03-14", "sections": [ { "heading": "Macro overview and recent performance", "content": "- The Guatemalan economy continued to show resilience in 2022, \"with growth exceeding its potential.\"\n- Macroeconomic and financial stability was preserved despite an unfavorable global context—trading partners’ growth slowing down, prices surging, and global monetary conditions tightening.\n- Large remittance inflows and vibrant bank credit to the private sector supported solid private consumption.\n- Large levels of international reserves persist.\n- Stability attributed to prudent monetary and fiscal policies." }, { "heading": "Inflation and monetary policy", "content": "- Inflationary pressures continued to add complexity to the policy mix; initially driven by external factors, but \"second round-effects and demand and supply pressures have been gaining ground.\"\n- The Bank of Guatemala policy rate increases have anchored medium-term expectations.\n- Mission recommendations to support monetary policy effectiveness:\n - Further strengthen operationalization of the inflation targeting framework and ensure swift action to accelerate the pro-growth structural agenda.\n - Gradual transfer of market risk management to the private sector to support the foreign exchange rate’s role as a shock absorber.\n - Recapitalization of the Bank of Guatemala and development of hedging tools for the private sector to manage foreign exchange volatility.\n - Technical measures related to the monetary and operational framework to improve effectiveness of monetary policy." }, { "heading": "Growth outlook and risks", "content": "- Projections (Annual percentage change, unless otherwise specified):\n - Real GDP: 2020 -1.8; 2021 8.0; 2022 4.0; 2023 3.4; 2024 3.5; 2025 3.6; 2026 3.7; 2027 3.8; 2028 3.9.\n - Consumer prices (average): 2020 3.2; 2021 4.3; 2022 6.9; 2023 7.4; 2024 5.5; 2025 4.4.\n - Consumer prices (end of period): 2020 4.8; 2021 3.1; 2022 9.2; 2023 6.4; 2024 5.0.\n - M2: 2021 18.9; 2022 11.6; 2023 11.3; 2024 8.5; 2025 7.6; 2026 7.3.\n - Credit to the private sector: 2021 12.7; 2022 16.0; 2023 14.0; 2024 7.0; 2025 7.5.\n- Outlook remains broadly positive but downside risks include:\n - A sharper U.S. economic slowdown, particularly U.S. labor market weakness, which could reduce remittance inflows.\n - De-anchoring of inflation expectations.\n - Natural disasters.\n - High commodity price volatility.\n- Remittances have been a dominant component of external inflows and a critical buffer; a significant decline would materially affect the most vulnerable and require policy responses." }, { "heading": "Public finances, revenue, and investment agenda", "content": "- Tax administration reforms in 2022 (customs, tax administration enforcement, and digitalization) produced an estimated tax collection outturn of 12.1 percent of GDP.\n- Fiscal indicators and projections (Percent of GDP, unless otherwise specified):\n - Gross domestic investment: 2020 12.8; 2021 17.9; 2022 14.1; 2023 13.8; 2024 14.2; 2025 14.4; 2026 14.7.\n - Private sector investment: 2020 12.2; 2021 15.7; 2022 13.0; 2023 13.2; 2024 13.5.\n - Public sector investment: 2020 1.3; 2021 1.0; 2022 1.1; 2023 1.2.\n - Gross national saving: 2020 17.7; 2021 20.4; 2022 15.4; 2023 15.6; 2024 15.3; 2025 15.1.\n - External saving: 2020 20.2; 2021 19.8; 2022 16.1; 2023 15.8; 2024 -2.4; 2025 0.6; 2026 -0.1; 2027 -0.2; 2028 -0.3.\n - Current account balance: 2020 4.9; 2021 2.5; 2022 1.8; 2023 1.9; 2024 1.6; 2025 1.4; 2026 0.9; 2027 0.4.\n - Trade balance (goods): 2020 -8.1; 2021 -12.6; 2022 -14.8; 2023 -13.8; 2024 -13.6; 2025 -13.1; 2026 -12.8; 2027 -12.5.\n - Exports: 2020 14.3; 2021 13.3; 2022 12.3; 2023 11.8; 2024 11.4.\n - Imports: 2020 21.2; 2021 26.8; 2022 30.0; 2023 28.1; 2024 26.9; 2025 25.9; 2026 25.1; 2027 24.4; 2028 23.9.\n - Remittances (Of which): 2020 17.6; 2021 19.2; 2022 18.4; 2023 17.4; 2024 16.8; 2025 15.2.\n - Change in reserve assets (Increase (+)): 4.1; 0.5; 0.8; 0.7.\n- Central government finances (Percent of GDP unless otherwise specified):\n - Revenues: 10.7; 12.1; 12.0; 11.9.\n - Expenditures (current): 13.9; 12.6; 11.0; 11.5; 11.2; 11.1.\n - Capital: 3.0; 2.4; 2.6; 2.7.\n - Primary balance: -3.2.\n - Overall balance: -1.7; -2.0.\n - Financing of the central government balance: 1.7; 2.0.\n - Net external financing: 0.3.\n - Net domestic financing: 1.5.\n- Central government debt and composition (Percent of GDP):\n - Total debt: 31.5; 30.4; 30.1; 28.6; 27.9; 27.7; 27.6; 27.5.\n - External: 12.9; 12.4; 10.8.\n - Domestic1: 18.0; 17.1; 15.9; 16.2; 16.4; 16.7.\n - Memorandum: GDP (US$ billions): 77.6; 87.0; 93.7; 102.3; 111.0; 119.5; 128.2; 137.7; 148.0.\n - Output gap (% of GDP): -3.1; 0.1.\n - Note: 1 Does not include recapitalization of obligations to the central bank.\n\n- Policy recommendations for public finances and investment:\n - Build on tax administration gains to increase revenue-to-GDP, including understanding factors limiting VAT collection and streamlining tax exemptions.\n - Develop the bases for a comprehensive fiscal reform within a medium-term, multi-year, pro-growth fiscal budget.\n - Strengthen medium-term planning and link national, subnational, and sectoral planning.\n - Make the budget flexible to allow a multi-year infrastructure investment agenda consistent with medium-term targets.\n - Simplify project appraisal and procurement in line with project size; improve portfolio management with clear timelines and specific delivery targets to fast-track projects.\n - Streamline procedures around PPP investments.\n - Implement PIMA/C-PIMA (starting late May 2023) to identify gaps in investment governance and increase high-quality investments." }, { "heading": "Financial sector resilience and reforms", "content": "- The banking sector has proven resilient; limiting factors include an underdeveloped inter-bank market and high levels of informality.\n- The launch of a new digital bank is a positive development.\n- Mission advice:\n - Pass the 2002 Banking Law and Financial Groups reform to align regulatory and supervisory practices with international standards and equip authorities with updated monitoring tools.\n - Publish the Financial Stability Report to communicate with market participants.\n - Encourage banks to disclose balance sheets and financial statements using international accounting standards to lower borrowing costs abroad.\n- Deepening financial sector recommended, with the insurance sector playing a role in managing climate-related risks and promoting sustainable, climate-resilient investments." }, { "heading": "Structural reforms, governance, and investment climate", "content": "- Guatemala is at a critical juncture; strong fundamentals stem from a long record of prudent policies.\n- Recent legal and regulatory advances cited: approval of leasing and insolvency laws, law to simplify requirements and administrative procedures, law encouraging foreign investment.\n- Urgent approvals needed: draft laws on civil service reform and infrastructure.\n- To reach a higher potential growth path the mission recommends:\n - Continue measures to expand the formal labor market, strengthen productivity, and attract investment by widening access to technology and innovation, investing in human capital, and reducing regulatory uncertainty.\n - Scale up efforts to improve governance and legal certainty and guarantee responsible and independent anti-corruption institutions to enhance the business climate and attract investment.\n - Approve legislation on Anti-Money Laundering and combating the financing of terrorism to bring Guatemala in line with international standards and ensure effective implementation." }, { "heading": "Final mission note", "content": "- The mission thanked the Guatemalan authorities for their cooperation and frank discussions throughout the visit.\n\nSource: IMF staff concluding statement of the 2023 Article IV mission to Guatemala.\n\n---\n\n\n References\n\n- Guatemala and the IMF\n- IMF Policy Advice -- A Factsheet\n- Mission Concluding Statements\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission" } ], "bullets": [ "[Markdown version](/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission/index.md)", "[Structured JSON version](/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission/index.json)", "[Bundle manifest](/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission/bundle-manifest.json)", "Published: March 14, 2023", "The Guatemalan economy continued to show resilience in 2022, \"with growth exceeding its potential.\"", "Macroeconomic and financial stability was preserved despite an unfavorable global context—trading partners’ growth slowing down, prices surging, and global monetary conditions tightening.", "Large remittance inflows and vibrant bank credit to the private sector supported solid private consumption.", "Large levels of international reserves persist.", "Stability attributed to prudent monetary and fiscal policies.", "Inflationary pressures continued to add complexity to the policy mix; initially driven by external factors, but \"second round-effects and demand and supply pressures have been gaining ground.\"", "The Bank of Guatemala policy rate increases have anchored medium-term expectations.", "Mission recommendations to support monetary policy effectiveness:", "Projections (Annual percentage change, unless otherwise specified):", "Outlook remains broadly positive but downside risks include:", "Remittances have been a dominant component of external inflows and a critical buffer; a significant decline would materially affect the most vulnerable and require policy responses.", "Tax administration reforms in 2022 (customs, tax administration enforcement, and digitalization) produced an estimated tax collection outturn of 12.1 percent of GDP.", "Fiscal indicators and projections (Percent of GDP, unless otherwise specified):", "Central government finances (Percent of GDP unless otherwise specified):", "Central government debt and composition (Percent of GDP):", "Policy recommendations for public finances and investment:", "The banking sector has proven resilient; limiting factors include an underdeveloped inter-bank market and high levels of informality.", "The launch of a new digital bank is a positive development.", "Mission advice:", "Deepening financial sector recommended, with the insurance sector playing a role in managing climate-related risks and promoting sustainable, climate-resilient investments.", "Guatemala is at a critical juncture; strong fundamentals stem from a long record of prudent policies.", "Recent legal and regulatory advances cited: approval of leasing and insolvency laws, law to simplify requirements and administrative procedures, law encouraging foreign investment.", "Urgent approvals needed: draft laws on civil service reform and infrastructure.", "To reach a higher potential growth path the mission recommends:", "The mission thanked the Guatemalan authorities for their cooperation and frank discussions throughout the visit.", "[Guatemala and the IMF](http://www.imf.org/external/country/GTM/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Mission Concluding Statements](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission/index.md", "json": "/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission/index.json", "bundleManifest": "/en/news/articles/2023/03/14/guatemala-staff-concluding-statement-of-the-2023-article-iv-mission/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T01:53:56.249Z" }