The Tax Burden on the Economy of Guatemala

The World Bank cites weak economic growth, low tax collection and low public investment as the factors affecting productivity and preventing greater economic development from being achieved.

Friday, September 12, 2014

Less taxes and consequently poor tax collection, coupled with limited public spending, are preventing Guatemala from achieving a better level of socioeconomic development, despite having achieved timid growth rates of GDP in recent years. reports that "... Of a total of 186 economies compared, the country ranks last in the amount of revenue relative to the size of its economy, with a rate of less than 12%, while the world average is 26%. Fiscal weakness which is evident from low collection has a gap Q1.2 billion. "

"... The limited fiscal space reduces the state's ability to invest, from the country's account 14% of Gross Domestic Product (GDP) goes on such spending, the lowest percentage in the world. The average investment in Latin America is 21%. "

According to the report, this low level of investment affects productivity and limits the economy's capacity for growth. According to economist Marco Hernández at the World Bank, the country 's low-income country reduces the possibility of making public investments, while private investment is also low due to factors such as insecurity and quality of infrastructure. "

Read here the full report on Guatemala's Economic DNA.

¿Busca soluciones de inteligencia comercial para su empresa?

More on this topic

More Taxes: An Idea That Appeals to Governments

September 2020

In this scenario of economic crisis, falling tax revenues and the need to finance recovery programs, in Guatemala and Costa Rica it is already proposed to increase current taxes and create new ones.

Guatemalan authorities are already beginning to discuss the fiscal policy they will apply in 2021, when the economy will have to face the effects of the economic crisis generated by the covid-19 outbreak.

El Salvador as seen by the IMF in May 2018

May 2018

The entity recognizes the continued economic recovery, but warns that potential growth is below the desirable level, debt remains high, and wide financing gaps are projected for 2019 and in the future.

From a statement issued by the IMF:

On May 11, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with El Salvador.

Guatemala As seen by the IMF - March 2018

March 2018

Supported by greater growth in the US economy, better monetary conditions and a moderate boost in government spending, growth should accelerate gradually until it reaches a rate of 3.6% in 2019.

The mission of the International Monetary Fund (IMF) recognizes the macroeconomic stability that has been achieved, but warns of a need to approve a fiscal reform that allows the tax burden to be increased to at least 15% of GDP, and allocate that additional income to public investment, especially in social development, particularly pre-primary education, preventive health care and greater pension coverage.

Nicaragua Gets B+ Credit Rating

December 2015

The upward trend in economic growth, prudent fiscal policy and debt reduction explain the B + grade with a stable outlook given by Fitch Ratings.

From the press release by Fitch Ratings:

Fitch Ratings-New York-16 December 2015: Fitch Ratings has assigned first-time ratings to Nicaragua as follows: