Project description

Title: Advice on fiscal policy in Guatemala
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ)
Country: Guatemala
Lead executing agency: Ministry of Finance (Minfin)
Overall term: 2009 to 2011

Context

In recent years the Guatemalan Government has launched a comprehensive package of reforms in the area of fiscal policy. The goal is to generate additional tax revenues and thus support the sustainable social and economic development of the country. At the same time it is aiming to establish a fairer, less regressive tax system, greater transparency and improved quality of expenditure. The German Federal Ministry for Economic Cooperation and Development (BMZ) is supporting the Guatemalan Government’s comprehensive reforms through the ‘Programa de Apoyo a la Política Fiscal Orientada al Crecimiento Económico y la Equidad Social’.

Objective

A more enabling environment is established for an efficient and transparent fiscal policy that is better aligned with Guatemala’s development objectives.

Approach

This individual measure is financed via a fund and focuses primarily on the priority areas of technical, organisational and process advice by international, regional and national long-term and short-term experts. The Ministry of Finance receives support in creating the political, legal and institutional conditions to align fiscal policy with the achievement of Guatemala’s medium- to long-term development objectives.

The priority areas of the project are:

Macroeconomic diagnoses: Preparation of studies on the economic and social crisis in Guatemala, as well as evaluating the impact of macroeconomic policy

Tax reform: Assistance in the implementation of the ongoing tax reform, particularly in the area of income tax, and preparation of proposals for addressing structural problems in the tax system (combating tax avoidance and evasion, strengthening tax assessment and collection procedures on the basis of legal principles)

Tax transparency: Preparation and presentation of readily understandable information on budget revenues and their use, for general distribution to the population (realisation of citizens’ rights to information)

Municipal financial management: Strengthening Guatemala’s local tax system