## Guatemala: Staff Concluding Statement of the 2025 Article IV Mission _IMF News, June 23, 2025_ ## Source details **Canonical URL:** [Guatemala: Staff Concluding Statement of the 2025 Article IV Mission](https://www.imf.org/en/news/articles/2025/06/23/guatemala-staff-concluding-statement-of-the-2025-article-iv-mission) ## Other formats - [Markdown version](/en/news/articles/2025/06/23/guatemala-staff-concluding-statement-of-the-2025-article-iv-mission/index.md) - [Structured JSON version](/en/news/articles/2025/06/23/guatemala-staff-concluding-statement-of-the-2025-article-iv-mission/index.json) - [Bundle manifest](/en/news/articles/2025/06/23/guatemala-staff-concluding-statement-of-the-2025-article-iv-mission/bundle-manifest.json) ## Bibliographic details - Published: June 23, 2025 --- ### Mission summary - An IMF mission led by Mr. Alexander Culiuc visited Guatemala City during June 10-20, 2025 for the 2025 Article IV consultation. - Key assessment: prudent macroeconomic management has supported Guatemala’s resilience, delivering low inflation, robust policy buffers and a sustained current account surplus. - Policy thrust: accelerate reform implementation and enhance policy coordination to achieve stronger, more inclusive growth and poverty reduction. ### Recent economic developments, outlook, and risks - Growth and inflation - Real GDP grew by 3.7 percent in 2024. - Headline inflation fell to 1.7 percent in May 2025; core inflation remains near 4 percent. - Growth projected at 3¾ percent in 2025; beyond 2025 growth projected to slightly exceed 3½ percent. - External sector and buffers - Current account surplus narrowed to 2.9 percent of GDP in 2024. - Remittances stabilized at 19 percent of GDP. - International reserves reached US$27.1 billion. - Public debt remains low—under 27 percent of GDP—and Guatemala is now only one notch below investment grade. - Monetary policy setting - Banguat kept its policy rate unchanged at 4.5 percent since the 25bps cut in November 2024. - Fiscal developments - August 2024 supplementary budget prioritized infrastructure and social spending; targeted deficit of 2.7 percent of GDP; realized deficit was 1 percent of GDP. - The 2025 budget is expansionary; original deficit target 3.2 percent of GDP; a supplementary budget raised the deficit to 3.8 percent of GDP. - Risks - Balance of risks tilted to the downside: domestic political tensions could impede legislative progress; intensified/protracted global trade disputes could dampen investment. - Specific external risk: proposed 3.5 percent excise tax on remittances in U.S. policy discussions could disrupt remittance-supported consumption. - Upside: lower net emigration could boost domestic employment if matched by efforts to expand formal private-sector jobs. ### Fiscal policy (findings and recommendations) - Short-term assessment - The 2025 expansionary fiscal stance is appropriate to cushion expected softening in private demand. - Execution constraints may limit capital spending; projected deficit around 2½ percent of GDP, below the revised budget of 3.8 percent. - Transfers to Departmental Development Councils (CODEDEs) are historically high at 1.3 percent of GDP and require close oversight. - Medium-term strategy - Revert deficits toward historical levels (around 2 percent of GDP) while preserving infrastructure and social spending. - Strengthen revenue mobilization (continue efforts from the Tax Administration (SAT): mandatory electronic invoicing, enhanced border enforcement, robust audits). - Complement compliance measures with comprehensive tax policy reforms in the medium term. - Improve expenditure quality: systematic expenditure reviews, embed the National Development Plan into annual and multi-year budgets, and a new Public Procurement law to ease capital spending bottlenecks. - Improve targeting in social programs; strengthen the Medium-Term Fiscal Framework and multiannual budget planning with realistic, sector-informed projections. - Financing strategy - Emphasize greater reliance on domestic financing under a sound medium term debt management strategy (MTDS) to: - (i) reduce real appreciation pressures, - (ii) help develop the domestic financial market, - (iii) reduce currency risks, - (iv) lower costs of monetary policy operations incurred by Banguat. - Recommendations: consolidate domestic issuances, introduce shorter-maturity instruments, regularly publish the MTDS and annual borrowing plans. ### Monetary and exchange policies - Current stance and transmission - The ex-ante real policy rate is at 1 percent, within the estimated neutral real rate range (1–2 percent). - Given uncertainty from U.S. tariff measures and supply chain risks, maintain current policy stance while waiting for clarity. - Passthrough of policy rate to deposit rates has recently increased; scope to further strengthen monetary transmission by developing financial markets, increasing competition, and reducing reliance on reserve requirements. - FX and remittances - Banguat’s FX participation rule balances higher consumption and external competitiveness; the external position is stronger than fundamentals and desirable policies imply, and the current account gap should be closed by raising investment. - Banguat’s sterilization to manage remittance inflows incurs costs; closer coordination with MinFin and greater use of domestic debt to finance the budget could reduce these costs. - Long-term financial strength of Banguat requires consistent enforcement of legal provisions mandating the budget to cover central bank losses. ### Financial sector - System soundness - Banking system remains sound with solid capital and liquidity buffers and strong profitability. - Regulatory and supervisory progress - Enhanced credit risk regulations, more robust stress testing, broader regulatory coverage, and voluntary inclusion of savings and credit cooperatives in the Credit Risk Information System. - Priorities and reforms - Reinforce efforts by expanding risk-based supervision and strengthening oversight of fintech and digital financial services. - Adopt revisions to the 2002 Law on Banks and Financial Groups, transition to International Financial Reporting Standards, advance the draft Secondary Market Law, approve the e-money law, and continue implementation of financial inclusion strategy elements. ### Governance and structural agenda - Legislative priorities - Revise AML/CFT Law to align with international standards; adopt Beneficial Ownership Law; adopt Public Procurement Law; adopt Law for the Protection of Whistleblowers. - GAFILAT mutual evaluation expected in 2027; delays in the AML/CFT law could complicate progress to investment grade. - Institutional and anticorruption measures - Consolidate institutional progress: creation of the National Commission Against Corruption and rollout of probity offices across executive institutions; develop a medium-term anti-corruption strategy. - Investment and competitiveness - Accelerate infrastructure investment via amendments to the law on Partnerships for Development of Economic Infrastructure and a new law on ports to close gaps and crowd in private investment. - Continue efforts to formalize the economy and improve the business environment to prepare for lower net emigration impacts on the labor market. ### Key statistics and projections (selected) - Recent levels and balances - Headline inflation: 1.7 percent in May 2025. - Core inflation: near 4 percent. - Remittances: 19 percent of GDP (stabilized). - International reserves: US$27.1 billion. - Public debt: under 27 percent of GDP. - Banguat policy rate: 4.5 percent (unchanged since 25bps cut in November 2024). - Fiscal outcomes and budgets - August 2024 supplementary budget targeted deficit: 2.7 percent of GDP; realized deficit: 1 percent of GDP. - 2025 original budget deficit target: 3.2 percent of GDP; supplementary budget raised deficit to 3.8 percent of GDP. - Selected items from "Guatemala: Selected Economic Indicators" (as presented) - Real GDP: 3.5 (2023), 3.7 (2024), 3.8 (2025), 3.6 (2026) - Inflation (average): 6.2 (2023), 2.9 (2024), 2.4 (2025), 4.0 (2026) - Current Account Balance (percent of GDP): 3.1 (2023), 2.5 (2024), 1.7 (2025), 1.3 (2026), 0.7 (2027), 0.2 (2028) - Trade Balance (goods and services, percent of GDP): -15.1 (2023), -15.5 (2024), -15.9 (2025), -15.8 (2026), -15.4 (2027), -15.0 (2028), -14.7 (2029) - Remittances (percent of GDP): 19.0 (2023), 18.8 (2024), 18.0 (2025), 17.1 (2026), 16.3 (2027), 15.5 (2028) - Financial Account ("+" = net lending): 2.7 - Total Revenues (percent of GDP): 12.5 (2023), 12.4 (2024) - Tax Revenues (percent of GDP): 11.7 (2023), 11.8 (2024) - Total Expenditure (percent of GDP): 13.7 (2023), 13.4 (2024), 15.0 (2025), 15.1 (2026), 15.3 (2027), 15.2 (2028) - Current Expenditure (percent of GDP): 11.2 (2023), 11.0 (2024), 11.9 (2025), 12.0 (2026) - Capital Expenditure (percent of GDP): 3.2 (2023), 3.4 (2024), 3.3 (2025) - Primary Balance (percent of GDP): 0.4 (2023), -1.0 (2024), -1.1 (2025), -1.2 (2026) - Overall Balance (percent of GDP): -1.3 (2023), -2.6 (2024), -2.8 (2025), -2.9 (2026) - Gross Central Government Debt (percent of GDP): 27.2 (2023), 26.3 (2024), 27.1 (2025), 28.0 (2026), 28.9 (2027), 29.6 (2028), 30.2 (2029) ### Policy priorities (summary recommendations) - Sustain prudent macroeconomic management while accelerating reform implementation and enhancing policy coordination. - Use existing fiscal space in the short term to finance priority infrastructure and social spending, with strong oversight of CODEDEs transfers. - Implement medium-term revenue reforms, including comprehensive tax policy reform, and strengthen expenditure efficiency and multi-year budgeting. - Adopt a well-calibrated financing strategy emphasizing domestic market development and regular MTDS publication. - Maintain current monetary policy stance for now, strengthen monetary transmission, and coordinate with MinFin to manage sterilization costs. - Advance financial sector reforms: risk-based supervision, fintech oversight, legal and accounting standards updates, and laws to deepen markets. - Prioritize governance and structural reforms: AML/CFT, Beneficial Ownership, Public Procurement, Whistleblower protection, anti-corruption strategy, and laws to accelerate infrastructure investment. *Source: IMF staff concluding statement of the 2025 Article IV mission to Guatemala.* --- ## References - [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) - [The IMF and Good Governance -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/the-imf-and-good-governance) - [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) _Source: https://www.imf.org/en/news/articles/2025/06/23/guatemala-staff-concluding-statement-of-the-2025-article-iv-mission_