Bleak Outlook for the next president of Guatemala

Experts agree Alvaro Colom’s successor will face a difficult fiscal, economic and political situation.

Monday, October 31, 2011

First, it will be difficult to achieve the tax reform needed to tackle the decline in tax revenues which is set to continue into 2012. Ricardo Barrientos, Central Institute for Fiscal Studies (ICEFI in Spanish), also said that the losing candidate in the election will become the main opposition, and will complicate any reform attempts or approval of additional financing for the state.

Moreover, the struggle between the factions created by the election campaign could mean the budget for 2012 will not be approved, "which would mean that they will keep the current budget allocations, whether or not they have the resources" which could lead to a reduction in public spending from $804 down to $344 million.

For its part, the private sector has not shown itself to be in favor of tax increases. Andres Castillo, president of the Guatemalan Chamber of Industry, argued that the country has borrowed excessively for 4 years, and that people will no longer accept the tax burden until there are reliable mechanisms to ensure transparency.

The whole picture may be complicated significantly if the global economic situation worsens. Hugo Noe Pino, executive director of ICEFI, explained that there is the possibility of a new global recession, for which it should implement an anti-crisis plan that anticipates a decline in import revenues.



More on this topic

Taxes: When Plans Fail

July 2019

Although Costa Rica and Nicaragua approved fiscal reforms this year, it is predicted that the expected results in terms of tax collection will not be achieved.

The document "Centroamérica: análisis sintético, por país, del desempeño de la recaudación tributaria en 2019", prepared by the Instituto Centroamericano de Estudios Fiscales (Icefi), explains that, in the case of Costa Rica and Nicaragua, the expected results in terms of improved collection are still in doubt.

A New Fiscal Agenda for Guatemala

January 2016

In the opinion of the Central American Institute of Fiscal Studies, the only way to consolidate public finances in a sustainable way is to reduce tax breaks and increase tax collections.

From a statement issued by the Central Institute for Fiscal Studies (Icefi):

The Central American Institute for Fiscal Studies (Icefi) has proposed as a fiscal agenda for development: meeting the public demand for integrity and transparency; effective, efficient and effectual public spending as a tool for inclusive and democratic development; and financial viability with taxation being part of democratic accountability.

El Salvador Businesses Oppose New Taxes

May 2014

The private sector is opposed to the conditions in the third reform package the outgoing government intends to implement, claiming that state expenditures should be reduced first.

More control of public spending and no new taxes are the demands from employers to the government, which aims to increase government revenues with a third reform and the issuance of $800 million in bonds.

Guatemala Wants Out of OECD’s Grey-List

April 2010

The country has exchanged texts with seven countries to sign double taxation agreements.

Additionally, the Public Finances Ministry has invited Pascal Saint-Amans, head of the Tax Transparency Forum at the Organization for Economic Cooperation and Development (OECD), to visit the country.

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