The Executive Board of the International Monetary Fund (IMF) has completed its Article IV Consultation with Guatemala, reviewing the country's economic situation and outlook. The Guatemalan authorities have agreed to publish the staff report prepared for this consultation.
Guatemala's economy has shown resilience due to careful macroeconomic management, which has resulted in low inflation, solid policy buffers, and a positive current account balance in recent years. These factors have contributed to favorable market access. However, the IMF noted that further reforms are necessary for higher investment and growth, as well as significant poverty reduction.
According to IMF projections, economic growth is expected to remain steady at 3.8 percent in 2025, supported by fiscal stimulus that will offset weaker private demand. Growth is forecasted to be around 3.5 percent in 2026–27, with potential for an increase to 4 percent in later years if infrastructure investments and governance reforms continue. Inflation is anticipated to gradually return toward the central bank’s target of 4 percent (±1 percentage point). Fiscal deficits are projected at about 3 percent of GDP over the medium term, leading public debt to reach approximately 30 percent of GDP by the end of the projection period.
The IMF warned that risks are mainly on the downside. Domestically, political challenges limit reform opportunities. Externally, uncertainties in trade policies and global growth could affect investment decisions, while changes in migration policy abroad may impact remittance-driven spending. Adjustments in domestic labor markets from declining net emigration present both opportunities and challenges. The country also remains exposed to severe weather events.
The IMF Executive Board stated: "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 described Guatemala’s planned expansionary fiscal stance for 2025 as appropriate given softer private demand but recommended returning fiscal deficits closer to historical averages—around 2 percent of GDP—in coming years. They emphasized that revenue and expenditure reforms are vital for long-term fiscal sustainability while accommodating increased infrastructure and social spending.
"In particular," they said, "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."
On monetary policy matters: "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."
The Board recognized progress made by Guatemalan authorities on banking regulation but called for further steps: "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 also encouraged updating key financial laws such as those governing banks’ operations as well as laws related to e-money.
"Directors emphasized the critical need to enhance governance and advance structural reforms to foster inclusive growth," according to their summary statement. "They urged the authorities to prioritize adoption of new laws including an AML/CFT Law [anti-money laundering/combating financing terrorism], a Beneficial Ownership Law, a Public Procurement Law, and a Law for Protection of Whistleblowers." The directors commended anti-corruption efforts at municipal levels but stressed more oversight is needed.
It is expected that Guatemala's next Article IV consultation will take place within twelve months.