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Guatemala - Investing for peace : a public investment review (English)

This report identifies priority areas of public spending needed to support sustained peace in Guatemala. It focuses on on-going government reforms aimed at modernizing the public sector, in particular, the Peace Investment Program (PIP), and is an outgrowth of a prior Country Economic Memorandum, report no. 15352. The report addresses the need to shift resources in line with sectoral priorities, while aptly using external resources, and effectively executing public investment. Fiscal reform requires: 1) reducing reserve requirements under the banking law, and, hence, lowering domestic interest; 2) improving financial management to avoid issuing short-term bonds to cover temporary cash flow shortages; 3) continuing to lengthen treasury bond maturity; and 4) approaching dollar bond issuance cautiously. Similarly, measures required to increase tax revenue include: 1) raising rates and eliminating exemptions, and creating a tax administration agency (the SAT); 2) modifying the tax code to strengthen the SAT; and 3) revising judicial norms to support tax enforcement. Fiscal discipline also requires: 1) controlling spending while prioritizing social and peace expenditures; 2) taxing public services to raise public savings; 3) disincorporating public enterprises and using the proceeds to reduce domestic debt; and 4) considering legislation to permanently limit the deficit. Guatemala has to address poverty and social inequality -especially in rural areas and among certain ethnic groups and women- by increasing the efficiency of social spending significantly. The PIP for education aims to: 1) expand coverage in rural areas through community-managed primary schools to include pre-school education, indigenous peoples, and groups directly affected by armed conflict; 2) strengthen and expand bilingual education, and teacher and school administration training; and 3) increase public investment in school construction and equipment. The PIP for health will: 1) expand coverage of basic service delivery; 2) build and expand health posts and health centers, 3) develop water and sanitation projects; 4) rehabilitate infrastructure and equipment, and develop the capacity of regional hospitals; and 5) support Mayan medicine.




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Guatemala - Investing for peace : a public investment review (English). World Development Sources, WDS 1997-2 Washington, D.C. : World Bank Group.