Public Spending Adequacy and Efficiency in Guatemala: Sectoral Gaps and Priorities

Selected Issues Papers, September 25, 2025

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Guatemala faces the challenge of closing persistent social and infrastructure gaps with one of the lowest public spending levels among developing economies.
The paper provides a preliminary diagnostic of spending adequacy and efficiency in education, health, social assistance, and infrastructure.
The analysis uses an aggregate and sectoral lens, and assesses institutional and PFM constraints hindering the government’s capacity to plan, execute and evaluate allocation of public resources.

Low public spending constrains the state’s capacity to:
- expand service coverage,
- improve quality, and
- reduce long-standing disparities in secondary school attendance, maternal and child health, and access to water and sanitation.
Sectoral focus areas in the diagnostic: education, health, social assistance, and infrastructure.

The paper assesses some of the institutional and public financial management (PFM) constraints that hinder:
- the government’s capacity to plan public resource allocation,
- the government’s capacity to execute public resource allocation, and
- the government’s capacity to evaluate public resource allocation.

Support the government’s efforts to improve the quality of spending across sectors.
Prioritize actions that address both adequacy (insufficient aggregate spending) and efficiency (quality and outcomes of existing spending).