IMF Executive Board Concludes 2026 Article IV Consultation with Guatemala
IMF News, July 29, 2026
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- Published: July 29, 2026
Recent developments and near-term outlook
- Economic activity expanded 4.5 percent y/y through April 2026.
- Headline inflation increased to 2.9 percent y/y in May 2026 (1.7 percent at end-2025), driven by oil price shocks; fuel-price subsidies limited passthrough.
- Core inflation and inflationary expectations are described as well anchored.
- The 2025 fiscal deficit widened to 1.9 percent of GDP, largely driven by capital spending and tax administration gains.
- Public debt is 27 percent of GDP.
- The 2025 current account surplus reached 4.7 percent of GDP; remittances reached a record-high 21 percent of GDP.
- IMF projection: 2026 growth is projected to dip to 3.8 percent before converging to 4 percent in the medium term as public investment and structural reforms yield returns.
- Inflation is expected to stay within the monetary policy target.
- Current account surplus is forecast to narrow as remittances stagnate and private investment picks up.
- El Niño poses a considerable near-term downside risk.
Executive Board assessment — macroeconomic strengths and constraints
- Strengths:
- Prudent macroeconomic management has delivered low and stable inflation, solid fiscal and external buffers, and current account surpluses.
- Ample reserve buffers give Banguat room for monetary maneuver.
- Constraints and vulnerabilities:
- Growth potential constrained by poor public infrastructure, dampening private investment.
- Weak social indicators: high informality and poverty levels.
- Large remittance inflows support consumption but complicate monetary management and weigh on competitiveness.
- Risks are broadly balanced: high energy prices, tighter migration and trade policies could weaken growth and raise inflation; faster-than-expected oil price declines and progress under the bilateral trade agreement with the U.S. are upside risks.
- Domestic risks: implementation constraints and pre-electoral pressures may delay reforms; a severe El Niño is a significant near-term risk.
- Governance developments: timely judicial appointments and recent initiatives (National Anti-Corruption Commission, code of ethics, Integrity and Corruption Prevention Strategy 2025–32) could support progress, but pending legislation on beneficial ownership transparency, whistleblower protection, and public procurement remains important.
Policy priorities and recommendations
- Public investment and infrastructure
- Scale up public infrastructure investment to boost productivity and competitiveness and support external rebalancing.
- Implement PIMA recommendations to reduce bottlenecks and improve project preparation and execution.
- Streamline public procurement to reduce red tape while safeguarding transparency.
- Resolve impasse over operationalization of the priority infrastructure law without exacerbating budget rigidities.
- Mobilize greater private sector participation in infrastructure investment.
- Strengthen Departmental Development Councils (CODEDEs) oversight; contain and better target extraordinary allocations; ensure project continuity through multi-year pipelines (not automatic rollover of unexecuted funds).
- Reinforce oversight capacity of the Comptroller General and the Secretariat for Executive Coordination of the Presidency.
- Fiscal policy and public financial management
- Commence an investment-friendly consolidation in the medium term while improving spending quality.
- Use the Medium-Term Fiscal Framework (MTFF) to anchor consolidation needed to reduce fiscal deficits to 2 percent of GDP in tax policy reforms, while maintaining elevated capital spending and preserving social spending.
- Improve coordination among MinFin, line ministries, and SEGEPLAN on development plans, budget allocations and multiannual targets.
- Increase fiscal revenues above 12 percent of GDP by avoiding measures that erode the tax base, limiting domestic and cross-border tax arbitrage, and undertaking comprehensive tax reforms.
- Review and simplify earmarking in tandem with strengthening the MTFF and multi-year budgeting to preserve predictability of priority spending and reduce costly cash balances.
- Consider a new organic budget law as a vehicle for reforms.
- Strengthen treasury–debt management coordination; increase reliance on domestic funding and develop the local bond market to reduce currency risks and lower Banguat’s sterilization costs.
- Monetary policy and financial sector
- Monetary policy stance is appropriate; improve monetary policy transmission and liquidity management.
- Improve communication of objectives underlying Banguat’s FX market participation and the international reserves’ accumulation rule.
- Complement recent operational framework reforms (narrowed policy corridor, streamlined term-deposit maturities) with strengthened collateral infrastructure, including a central securities depository.
- Strengthen regulations and supervision: adopt IFRS accounting, bolster supervisory capacity, revamp the 2002 Law on Banks and Financial Groups, and invest in cybersecurity resilience.
- Fast-track a new secondary markets law to mobilize domestic savings, strengthen monetary transmission, enhance financial sector competition, deepen domestic financial markets, and build infrastructure to accommodate potential capital inflows.
- Enact a new e-money law to provide regulatory foundation for fintech development and broaden access to formal financial services.
- Financial integrity, governance, and structural reforms
- Approval of the new AML/CFT law is an important step; ensure the law is fully aligned with FATF standards and promptly approve and implement accompanying regulations ahead of the 2027 GAFILAT mutual evaluation.
- Advance pending legislation on beneficial ownership transparency, whistleblower protection, and public procurement.
- Reduce non‑tariff barriers in line with commitments under the trade agreement with the U.S.
- Advance initiatives for geographical and product diversification of exports (including new trade agreements).
- Pursue measures to reduce informality to promote more inclusive and sustainable growth.
- Social safety nets
- Improve targeting and coverage of social safety nets to enhance shock responsiveness.
- In the absence of reliable means-testing capacity, a temporary and contained universal fuel subsidy can help alleviate the social burden of the oil price shock, with a parallel effort to expand the coverage and quality of the social registry to enable more targeted responses going forward.
Key statistics and medium-term projections (selected, as reported)
- 2026: Real GDP projected 3.8 percent.
- Medium term: Real GDP projected to converge to 4 percent.
- Economic activity (through April 2026): 4.5 percent y/y expansion.
- Inflation: 2.9 percent y/y in May 2026; 1.7 percent at end-2025.
- 2025 fiscal deficit: 1.9 percent of GDP.
- Public debt: 27 percent of GDP.
- 2025 current account surplus: 4.7 percent of GDP.
- Remittances: 21 percent of GDP (record-high in 2025).
- Fiscal revenue benchmark referenced: above 12 percent of GDP.
- MTFF target: reduce fiscal deficits to 2 percent of GDP.
- Table highlights (selected entries):
- Population 2024 (millions): 18.4
- Gini index (2014): 48.3
- Percentage of indigenous population (2018): 43.7
- Life expectancy at birth (2022): 71.2
- Population below the poverty line (Percent, 2023): 55.1
- Adult illiteracy rate (2022): 17.0
- GDP per capita (US$, 2024): 6,150
- Real GDP growth: 2023: 3.5; 2024: 3.7; 2025: 4.3; 2026: 3.8; 2027: 3.9
- Consumer prices (average): 2023: 6.2; 2024: 2.9; 2025: 1.6; 2026: 4.0
- M2 growth (selected): 2025: 13.4; 2026: 10.7
- Credit to the private sector (selected): 2025: 7.6; 2026: 8.1
- Gross domestic investment (percent of GDP): 2025: 16.8; 2026: 16.6
- Gross national saving (percent of GDP): 2025: 21.5; 2026: 20.1
- Current account balance (percent of GDP): 2024: 3.1; 2025: 4.7; 2026: 2.8; 2027: 2.2
- Exports (percent of GDP): 2024: 12.5; 2025: 11.8; 2026: 11.6
- Imports (percent of GDP): 2024: 26.3; 2025: 25.7; 2026: 25.2
- Remittances (percent of GDP, selected): 2024: 20.7; 2025: 20.3; 2026: 18.6
- Net international reserves (months of next-year NFGS imports): 2025: 8.9; 2026: 8.7
- NIR as % of ARA metric: 2024: 162.9; 2025: 174.8; 2026: 203.2
- Gross international reserves (US$ billions): 2024: 21.3; 2025: 24.4; 2026: 32.7
- Central government revenues (percent of GDP): 2024: 12.4; 2025: 12.6; 2026: 12.8
- Central government expenditures (percent of GDP): 2024: 13.7; 2025: 14.5
- Central government overall balance (percent of GDP): 2024: -2.7; 2025: -2.6
- Central Government Debt (percent of GDP): 2024: 27.2; 2025: 26.7; 2026: 27.4; 2027: 28.0; 2028: 28.6
Source: Press Release No. 26/269 — IMF Executive Board Concludes 2026 Article IV Consultation with Guatemala (July 29, 2026).