Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for Guatemala.[1] The authorities have consented to the publication of the Staff Report prepared for this consultation.[2]
Thanks to prudent macroeconomic management, Guatemala has maintained a resilient economy, achieved low inflation, ample policy buffers and, for the last few years, a positive current account; all these factors have contributed to increasingly favorable market access. However, reforms are needed to shift the country into a high investment/high growth equilibrium and to meaningfully reduce poverty.
The macroeconomic outlook remains strong, though there is elevated uncertainty related to changing trade and migration policies abroad. Economic growth is expected to hold at 3.8 percent in 2025, with the sizeable fiscal impulse offsetting the softening in private demand.
External headwinds are expected to keep growth around 3.5 percent in 2026–27, while in later years, growth could converge to 4 percent owing to infrastructure investments and ongoing reforms, including to improve governance and quality of public spending. Inflation is projected to gradually return to the monetary policy target (4 percent ± 1 percentage point). Fiscal deficits of about 3 percent of GDP are expected to persist in the medium term, leading to public debt reaching 30 percent of GDP by the end of the projection period.
The balance of risks is tilted to the downside. Domestically, the political opportunities for advancing necessary reforms remain constrained. Externally, trade policy uncertainty and risks to global growth can heavily impact investment decisions, while shifts in migration policy in destination countries pose risks to remittance-supported spending. Changes in the domestic labor market on account of declining net emigration could be an opportunity, but also pose challenges. Guatemala also remains vulnerable to severe weather events.
Executive Board Assessment[3]
Executive Directors agreed with the thrust of the staff appraisal. They commended the authorities’ prudent macroeconomic policies, which have delivered low inflation and robust policy buffers. They noted that Guatemala’s economy remains resilient and generally well positioned to face external shocks and domestic challenges. Nonetheless, Directors stressed that maintaining growth momentum and achieving sustainable and inclusive growth in the medium term will require determined implementation of reforms including better-quality public spending and continued improvements in governance and the business climate.
Directors generally considered the 2025 expansionary fiscal stance appropriate given softening private demand. Over the medium term, reverting fiscal deficits to historical averages of around 2 percent of GDP would be warranted. In this regard, revenue and expenditure reforms will be essential for maintaining fiscal sustainability while accommodating higher infrastructure and social spending. In particular, Directors highlighted the need to strengthen revenue mobilization, improve the targeting of social programs and the efficiency of public spending, enhance budget planning and execution, and strengthen public financial management. Directors also encouraged increasing reliance on domestic funding, anchored in a credible medium-term debt management strategy.
Directors considered the current monetary policy stance and Banguat’s response to large remittance inflows—guided by an intervention rule—to be broadly appropriate. They encouraged the authorities to continue strengthening monetary policy transmission. They emphasized the importance of improving policy coordination between Banguat and the Ministry of Finance, particularly to alleviate sizable sterilization costs, and supported continued efforts to enhance exchange rate flexibility in a well-communicated manner.
Directors acknowledged the resilience of the financial system and commended the authorities’ efforts to strengthen banking regulation and supervision. They underscored the importance of further expanding risk-based supervision, further developing the macroprudential toolkit, and enhancing oversight of fintech and digital financial services. Directors encouraged the authorities to prioritize revising the 2002 Law on Banks and Financial Groups, completing the transition to International Financial Reporting Standards, advancing the draft Secondary Market Law, approving the e-money law, and implementing the financial inclusion strategy.
Directors emphasized the critical need to enhance governance and advance structural reforms to foster inclusive growth. They urged the authorities to prioritize the 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. Directors commended the authorities for addressing corruption risks in municipal investment projects administered by Department Development Councils (CODEDEs) but stressed the need for stronger oversight and capacity-building for CODEDEs. They encouraged consolidating institutional gains through a medium-term anti-corruption strategy. Continued efforts to formalize the economy and improve the business climate will also be important.
It is expected that the next Article IV consultation with Guatemala will be held on the standard 12-month cycle.
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Table. Guatemala: Selected Economic and Social Indicators |
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I. Social and Demographic Indicators |
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Population 2024 (millions) |
17.9 |
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Gini index (2014) |
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48.3 |
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Percentage of indigenous population (2018) |
43.7 |
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Life expectancy at birth (2022) |
68.7 |
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Population below the poverty line (Percent, 2023) |
55.1 |
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Adult illiteracy rate (2022 |
) |
17.0 |
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Rank in UNDP development index (2022; of 189) |
136 |
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GDP per capita (US$, 2024) |
6,341 |
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II. Economic Indicators |
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Projections |
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2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
2028 |
2029 |
2030 |
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Income and Prices |
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(Annual percent change, unless otherwise indicated) |
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Real GDP |
4.2 |
3.5 |
3.7 |
3.8 |
3.6 |
3.6 |
3.7 |
3.8 |
3.9 |
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Consumer prices (average) |
6.9 |
6.2 |
2.9 |
2.2 |
3.9 |
4.0 |
4.0 |
4.0 |
4.0 |
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Consumer prices (end of period) |
9.2 |
4.2 |
1.7 |
3.2 |
4.0 |
4.0 |
4.0 |
4.0 |
4.0 |
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GDP Deflator (index) |
130.1 |
138.6 |
143.6 |
146.8 |
152.6 |
158.8 |
165.2 |
171.8 |
178.7 |
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GDP Deflator (yoy change) |
6.4 |
6.5 |
3.7 |
2.2 |
4.0 |
4.0 |
4.0 |
4.0 |
4.0 |
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Monetary Sector |
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M2 |
11.1 |
6.8 |
7.8 |
9.3 |
7.9 |
7.4 |
7.0 |
6.7 |
6.4 |
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Credit to the private sector |
15.8 |
14.9 |
12.3 |
11.0 |
10.5 |
9.7 |
8.9 |
8.3 |
8.1 |
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Saving and Investment |
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(In percent of GDP, unless otherwise indicated) |
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Gross domestic investment |
16.6 |
16.5 |
16.7 |
16.5 |
16.8 |
16.9 |
16.9 |
17.1 |
17.3 |
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Private sector |
15.0 |
14.6 |
15.2 |
14.6 |
14.7 |
14.8 |
14.9 |
15.1 |
15.3 |
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Public sector |
1.6 |
1.9 |
1.5 |
2.0 |
2.1 |
2.1 |
2.0 |
2.0 |
2.0 |
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Gross national saving |
17.7 |
19.6 |
19.6 |
19.5 |
19.0 |
18.5 |
17.9 |
17.6 |
17.3 |
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Private sector |
17.1 |
18.4 |
18.1 |
19.4 |
19.0 |
18.6 |
18.0 |
17.7 |
17.5 |
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Public sector |
0.7 |
1.2 |
1.5 |
0.1 |
0.0 |
-0.1 |
-0.1 |
-0.1 |
-0.2 |
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External saving |
-1.2 |
-3.1 |
-2.9 |
-2.9 |
-2.2 |
-1.6 |
-1.0 |
-0.5 |
-0.1 |
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External Sector |
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Current account balance |
1.2 |
3.1 |
2.9 |
2.9 |
2.2 |
1.6 |
1.0 |
0.5 |
0.1 |
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Trade balance (goods) |
-15.0 |
-13.8 |
-14.0 |
-14.2 |
-14.1 |
-13.8 |
-13.6 |
-13.3 |
-13.0 |
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Exports |
14.9 |
12.5 |
11.8 |
11.0 |
10.5 |
10.5 |
10.5 |
10.7 |
10.9 |
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Imports |
29.9 |
26.3 |
25.7 |
25.2 |
24.6 |
24.3 |
24.1 |
24.0 |
23.8 |
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Trade balance (services) |
-1.6 |
-1.3 |
-1.6 |
-1.7 |
-1.7 |
-1.6 |
-1.6 |
-1.5 |
-1.5 |
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Other (net) |
17.7 |
18.1 |
18.5 |
18.8 |
18.0 |
17.1 |
16.2 |
15.3 |
14.5 |
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of which: remittances |
18.8 |
19.0 |
19.0 |
19.4 |
18.5 |
17.6 |
16.7 |
15.9 |
15.1 |
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Financial and capital accounts balance (Net lending (+)) |
0.5 |
2.7 |
2.5 |
2.9 |
2.2 |
1.6 |
1.0 |
0.5 |
0.1 |
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of which: FDI (net) |
-0.8 |
-1.0 |
-0.9 |
-0.7 |
-0.7 |
-0.8 |
-0.9 |
-0.9 |
-1.0 |
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Errors and omissions |
-0.7 |
-0.4 |
-0.5 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
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Change in reserve assets (Increase (+)) |
0.0 |
0.9 |
2.6 |
2.7 |
0.5 |
0.4 |
0.3 |
0.3 |
0.2 |
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Net International Reserves |
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Stock in months of next-year NFGS imports |
6.8 |
6.7 |
7.4 |
8.1 |
7.8 |
7.4 |
7.0 |
6.6 |
… |
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Stock over short-term debt on residual maturity |
4.1 |
4.8 |
5.1 |
5.1 |
5.5 |
5.3 |
5.7 |
6.3 |
… |
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NIR as % of ARA metric |
157.9 |
162.9 |
174.9 |
187.1 |
180.9 |
172.1 |
165.7 |
159.4 |
152.8 |
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Gross international reserves (US$ billions) |
20.0 |
21.3 |
24.4 |
27.7 |
28.4 |
28.9 |
29.4 |
29.9 |
30.3 |
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Public Finances (Central Government) |
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Revenues |
12.6 |
12.5 |
12.4 |
12.4 |
12.4 |
12.4 |
12.4 |
12.4 |
12.4 |
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Expenditures |
14.3 |
13.7 |
13.4 |
15.0 |
15.1 |
15.3 |
15.2 |
15.2 |
15.2 |
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Current |
11.8 |
11.2 |
11.0 |
11.8 |
11.7 |
11.9 |
11.9 |
12.0 |
12.0 |
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Capital |
2.5 |
2.5 |
2.4 |
3.2 |
3.4 |
3.4 |
3.3 |
3.2 |
3.2 |
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Primary balance |
0.0 |
0.4 |
0.7 |
-0.9 |
-1.1 |
-1.2 |
-1.1 |
-1.0 |
-1.0 |
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Overall balance |
-1.7 |
-1.3 |
-1.0 |
-2.6 |
-2.8 |
-2.9 |
-2.8 |
-2.8 |
-2.8 |
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Financing of the central government balance |
1.7 |
1.3 |
1.0 |
2.6 |
2.8 |
2.9 |
2.8 |
2.8 |
2.8 |
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Net external financing |
0.0 |
1.3 |
1.0 |
1.4 |
1.3 |
1.4 |
0.9 |
1.0 |
1.2 |
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Net domestic financing |
1.7 |
-0.1 |
0.0 |
1.2 |
1.4 |
1.5 |
1.9 |
1.7 |
1.7 |
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Central Government Debt |
29.0 |
27.2 |
26.3 |
27.2 |
27.7 |
28.6 |
29.3 |
29.9 |
30.5 |
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External |
11.8 |
11.9 |
11.9 |
12.6 |
13.0 |
13.5 |
13.4 |
13.4 |
13.6 |
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Domestic1 |
17.2 |
15.3 |
14.5 |
14.6 |
14.7 |
15.1 |
16.0 |
16.5 |
17.0 |
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Memorandum Items: |
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GDP (US$ billions) |
95.6 |
104.4 |
113.2 |
120.9 |
130.2 |
140.3 |
151.3 |
163.3 |
176.4 |
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Volume of exports and services (annual percentage change) |
7.5 |
-2.4 |
2.2 |
2.0 |
5.0 |
7.8 |
8.1 |
8.7 |
9.0 |
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Volume of imports and services (annual percentage change) |
4.9 |
5.4 |
9.0 |
5.4 |
6.0 |
6.2 |
6.3 |
6.4 |
6.5 |
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Output gap (% of GDP) |
0.1 |
0.1 |
0.2 |
0.4 |
0.4 |
0.3 |
0.1 |
0.0 |
0.0 |
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Terms of trade (annual percentage change) |
-6.5 |
6.1 |
2.8 |
-1.2 |
-1.1 |
-0.6 |
-0.7 |
-0.1 |
0.0 |
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Source: Bank of Guatemala; Ministry of Finance; and Fund staff estimates and projections. |
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1 Does not include recapitalization of obligations to the central bank. |
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[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.
[2] Option 1: Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The staff report will be shortly published on the www.imf.org/Guatemlala page.
Option 2: Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent.
Option 3: Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The authorities have requested additional time to decide on the publication of the staff report. A final decision is expected not later than 28 days from the Board consideration date.
Option 4 (opt-outs): Under the IMF's Articles of Agreement, publication of documents that pertain to member countries is voluntary and requires the member consent. The authorities have not yet communicated their decision on the publication of the staff report.
[3] At the conclusion of the discussion, the Managing Director, as Chairman of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: www.IMF.org/external/np/sec/misc/qualifiers.htm.
