Guatemala achieves very low overall compliance with international standards and codes, with a score of 7.5 out of 100 in our Standards Compliance Index. Guatemala's compliance in the area of macroeconomic fundamentals is weak. However, the country has embarked on a financial sector reform program with the assistance of the World Bank, the International Monetary Fund, and the Inter-American Development Bank since 2004 and is bringing financial supervision closer to international standards where currently no information exists. It also launched a real-time gross settlement system in 2006 and is working to make its anti-money laundering regime compliant with established standards. Nonetheless, Guatemala does not apply the International Auditing Standards, and there is insufficient information publicly available as to its compliance in the areas of accounting, corporate governance, and the insolvency framework.

Macroeconomic Policy and Data Transparency

Guatemala is not a subscriber to the International Monetary Fund's (IMF) Special Data Dissemination Standard (SDDS). However, it has participated in the less stringent General Data Dissemination System (GDDS) since 2004. In its 2005 "Report on the Observance of Standards and Codes," the IMF observed that most of the published statistics were neither entirely accurate nor reliable due to the paucity of source data, and identified shortcomings in national accounts and balance-of-payments data. The IMF concluded, however, that the legal framework for statistical activity in Guatemala is broadly adequate, and that institutions display a commitment to make further statistical progress and disseminate data through the Internet. In addition, the IMF advised that stricter public-sector implementation of the law requiring data requests is needed, and urged improvements in the methodological basis. More »

According to the International Monetary Fund's (IMF) Financial Sector Assessment Program of 2000, the Guatemalan authorities - with assistance from the World Bank, the IMF and the Inter-American Development Bank - embarked on a financial sector reform program aimed at comprehensively addressing problems in Guatemala's financial sector. Since then, newly enacted laws have given Guatemala a state of the art financial sector legal framework, including the 2002 Central Bank Law that establishes the maintenance of price stability as the fundamental objective of the central bank. The law also redefines the instruments of monetary policy and addresses most of the shortcomings of previous legislation, but, even though the law increased its autonomy, the Bank of Guatemala is still not fully independent of the government. Nonetheless, the IMF's 2006 Article IV Consultation commended the Guatemalan authorities for having increased transparency in monetary policy. Still, the publicly available information is insufficient to rate Guatemala's compliance with the IMF's Monetary Policy Transparency standard. More »

Guatemala continues to progress in important aspects of fiscal policy transparency, according to the International Monetary Fund's (IMF) 2006 Report on Observance of Standards and Code (ROSC) on Fiscal Transparency. However, further improvements are required in order to achieve compliance with the IMF's Code of Good Practices on Fiscal Transparency. Of special importance is the adoption of internationally accepted standards for classifying public entities, the expansion of budget documentation, the redefinition of executive and legislative fiscal functions, and improvements in the evaluation and selection procedures for public investment. The 2006 IMF ROSC also suggested that there should be formal limits to the opportunity to amend the budget, once it has been approved, and called for an expansion of the Integrated Financial Administration System's (SIAF) coverage to include all the entities that comprise the general government. In addition, the IMF called for the establishment of legal protections against political interference in tax administration; the introduction of transparent, merit-based hiring; a reduction of the number of entities and activities that are exempt from the Procurement Law, and the strengthening of the external audit function. More »

Institutional and market infrastructure

The National Law Center for Inter-American Free Trade, in a 2002 publication on bankruptcy law developments in Latin America, explains that Guatemalan legislation only covers insolvency and bankruptcy with respect to procedural matters. Substantive rules in the Commercial Code were repealed in 1970. In Guatemala, individual and commercial debtors are governed by the same bankruptcy rules. The 1963 Civil and Mercantile Procedure Code provides for three types of proceedings: (1) voluntary insolvency, (2) involuntary insolvency, and (3) bankruptcy. With respect to financial institutions, Decree 9/2002 introduced a mechanism for transferring assets and liabilities between these institutions when they face economic difficulties. Overall, however, there is insufficient information publicly available as to Guatemala's compliance with the Principles and Guidelines for Effective Insolvency and Creditor Rights Systems developed by the World Bank. More »

According to the Deloitte & Touche Tohmatsu IAS Plus website, Guatemala replaced national Generally Accepted Accounting Principles (GAAP) with International Financial Reporting Standards (IFRSs), effective for 2002 financial reports. In a 2007 overview of the use of IFRSs in Guatemala, Deloitte & Touche Tohmatsu reports that IFRSs are required for all domestic listed and unlisted companies. However, since 2002, the International Accounting Standards Board (IASB) has been continuously revising IFRSs, and there is no publicly available information as to Guatemala's compliance with the most recent set of IFRSs. More »

In a 2007 publication on corporate governance in Guatemala, Alvarado-Riedel and Cofino identify the Code of Commerce as the primary source for corporate governance regulations in Guatemala. The Code covers the formation, types, and differences of business associations, shareholder issues, and governance matters. In addition, the Consumer Protection Law, the Securities and Goods Market Law, the Banks and Financial Groups Law, and the Competition Law Bill contain provisions on specific corporate governance issues within the respective industry. Shareholders appoint members of the board or a sole administrator at the shareholders meeting and grant them the powers, faculties, and authorizations they need to manage the company. The board owes a duty of care to the shareholders, the company, and its creditors, and is liable to them for any damages or losses it causes. With respect to the equitable treatment of shareholders, Alvarado-Riedel and Cofino point out that minority shareholder rights and protections are very weak in Guatemala. Overall, there is insufficient information publicly available as to Guatemala's compliance with the Organization for Economic Cooperation and Development Principles of Corporate Governance. More »

According to the 2006 Institute of Public Accountants and Auditors of Guatemala (IGCPA) self-assessment, Guatemalan Generally Accepted Auditing Standards (GAAS) are set by the Professional Council of Economic Sciences (Colegio Profesional de las Ciencias Economicas) of the IGCPA. The IGCPA states that Guatemalan GAASs are not based on International Standards on Auditing (ISAs) issued by the International Federation of Accountants (IFAC). More »

A 2005 report by the World Bank notes that one of the major financial sector reforms underway in Guatemala (with assistance from the World Bank) is to enact anti money laundering (AML) legislation that complies with international norms. The U.S. Department of State (DoS) reported in 2007 that Guatemala was on the Financial Action Task Force (FATF) list of Non-Cooperative Countries and Territories (NCCT) until 2004. However the report noted that reforms implemented have brought the country closer to complying with international standards, and the FATF removed Guatemala from the NCCT list in 2004. The Law Against Money and Other Assets Laundering (Decree 67/2001) states that money laundering is punishable by prison terms ranging from 6 to 20 years, and fines equal to the value of the assets, instruments, or products resulting from the crime. Guatemala has passed legislation criminalizing terrorist financing and according to the 2007 U.S. DoS report this new legislation brings Guatemala's regime to combat the financing of terrorism more in line with FATF Special Recommendations on Terrorist Financing and the United Nations Security Council Resolution 1373 Against Terrorism. The financial intelligence unit (FIU) in Guatemala is the Intendencia de Verificación Especial (IVE), which operates within the Superintendence of Banks as established by Decree 67-2001. The IVE is responsible for supervising financial institutions. More »

In its 2006 report on the national payment system, the Central Bank of Guatemala (CBG) states that a reform strategy to modernize the country's payment system has been developed and was finally set forth in the 2004 "Matrix of Modernization of the Payment System." The reform aims to strengthen the payment system, implement modern technological tools to improve the efficiency in the operations settlement, apply international standards, and enhance institutional cooperation. Particularly, according to the CBG, the modernization project incorporates the Bank for International Settlements Core Principles for Systemically Important Payment Systems (CPSIPSs). Guatemala operates a Real Time Gross Settlement System, known by the acronym LBTR, which was launched on January 27, 2006. Banking and public entities with deposit accounts at the CBG as well as other entities authorized by the CBG may carry out online and real time financial transactions through the LBTR. More »

Financial Regulation and Supervision

In its 2007 Doing Business Guide, the U.S. Department of Commerce states that the implementation of financial sector regulatory reforms, such as the enactment of the Banking and Financial Groups Law, the Financial Supervision Law, and the Central Bank Law, has brought the Guatemalan banking supervisory framework more into line with international standards. However, the International Monetary Fund (IMF), in its 2006 Article IV Consultation with Guatemala, points out that further improvement needs to be made. Particularly, bank supervision and regulation as well as the legal authority of supervisors must be strengthened. Effective consolidated supervision and enhanced risk assessment should be applied to financial conglomerates. On-shore bank operations should be protected from problems arising in off-shore affiliates. Moreover, credit classification and provisioning rules should be tightened, and connected lending and exposure of unhedged borrowers to exchange risks should be limited. Overall, however, there is insufficient information publicly available as to Guatemala's compliance with the Bank for International Settlements' (BIS) Core Principles for Effective Banking Supervision. More »

In 2004, the World Bank reported that Guatemalan authorities with assistance of the World Bank, the International Monetary Fund (IMF), and the Inter-American Development Bank (IDB) elaborated on a financial sector reform program, which was based on the findings in the Financial Sector Assessment Program (FSAP) conducted in the second half of 2000. The reform startegy focuses on financial sector legal and regulatory reforms, bank regularization and consolidation, as well as the strengthening of the Superintendence of Banks (SdB). In 2005, the International Bank for Reconstruction and Development (IBRD) reported that Guatemala made significant progress in its financial sector reform program. For example, the Guatemalan Congress approved five financial sector laws in 2001 and 2002, namely the Monetary Law, Banking and Financial Groups Law, Bank Supervision Law, Central Bank Law, and Money Laundering Law. According to the IBRD, these laws cover many shortcomings, which were revealed in the 2000 FSAP. The IBRD further stated that additional bills were submitted to Congress, such as a new Capital Markets Law. However, there is insufficient information publicly available as to Guatemala's compliance with the Principles of Effective Securities Regulation developed by the International Organization of Securities Commissions (IOSCO). More »

A Financial System Assessment Program (FSAP) was carried out jointly by the World Bank and International Monetary Fund (IMF) in 2000. Subsequently, the Guatemalan authorities began a comprehensive reform of its financial sector with backing from the World Bank, the IMF, and the Inter-American Development Bank. As noted in the 2005 International Bank for Reconstruction and Development's (IBRD) Country Assistance Strategy Report, Guatemala has made significant progress in reforming its financial sector, and several deficiencies in the legal framework that were identified by the 2000 FSAP have been remedied. As of 2005, the Government was preparing a draft Insurance Law, among other legislative texts. Authorities have agreed with the World Bank that the new Insurance Law should follow supervision standards issued by the International Association of Insurance Supervisors (IAIS). However, no further information regarding Guatemala's compliance with the Insurance Core Principles (ICPs) promulgated by the IAIS in 2003 is publicly available. More »

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Credit Ratings

Moody's Ba2/Positive

Fitch BB+/Stable

Standard & Poor's BB/Positive

Macroeconomic Data

2007 GDP (Current Prices): 33.7 billion USD (IMF)

2007 GDP (Per Capita): 2,532 USD (IMF)

2008 GDP (Growth Forecast): 4.8% (IMF)

2008 Inflation (CPI): 8% (IMF)

2007 Unemployment: 3.2% (CIA)

2006 Foreign Direct Investment

FDI (Inward): 0.4 billion USD (UNCTAD)

FDI (Outward): 0.01 billion USD (UNCTAD)

2006 Official Development Assistance

ODA (Received): 487 million USD (OECD)

ODA (Disbursed): N/A million USD (OECD)