Guatemala urged to raise social spending

11 Jun 18

Guatemala must boost spending on social protection and infrastructure in order to help more citizens escape poverty, says the IMF.

Ester Perez Ruiz, IMF mission chief for the Central American country, said this includes developing capacities to speed up the implementation of budget decisions without “diluting the focus on governance”.

She said: “Higher social and infrastructure spending that raise government expenditure to at least 15% of GDP is key to lifting more Guatemalans out of poverty.”

The IMF says that government policies should focus on strengthening tax administration, implementing tax reform, and taking a better look at revenue streams.

More than half (60%) of Guatemala’s population live in poverty, and the IMF says support should continue for programmes to provide basic services such as healthcare, pre-primary education, access to nutrition and water, and maintaining and expanding road networks.

Guatemala’s economic growth is expected to rise to 3.2% this year as a result of better growth in the US, supportive monetary conditions, and some recovery in budgetary spending.

Perez Ruiz added that the country has made progress in tackling corruption but its efforts could be scaled up.

Since 2014, the General Prosecutors Office has dismantled 178 criminal organisations operating at a national level and confiscated assets worth more than $28.5m.

“Strengthening judicial effectiveness and reinforcing the asset disclosure regime for public officials can help tackle corruption,” she said.

“Furthermore, ensuring transparency with respect to beneficial ownership of corporate vehicles could help avoid conflicts of interest and tackle illicit monetary flows, and ultimately improve governance in the country.” 

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