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REPORTS DESK Report No. WH- 1 78b

WITHINONE W(MrK

This report was prepared for use within the Bank and its affiliated organizations.They do not accept responsibility for its accuracy or completeness. The report maynot be published nor may it be quoted as representing their views.

INTERNATIONAL BANK FOR R1ECONSTRUCTION AND DEVELOPMENT

INTERNATIONAL DEVELOPMENT ASSOCIATION

CURRENT ECONOMIC POSITION

AND PROSPECTS

OF

GUATEMALA

May 6, 1968

Western Hemisphere Department

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CUR-RENCY EQUIVALENTS

1 Quetzal 1 U. S. Dollar

TABLE OF CONTENTS

Page No.

BASIC DATA

MVA P

SUIMffiRY AND CONCLUSIONS i

I. INTRODUCTION

II. RECENT DEVELOPI-RITS 1966-1967 5

III. TIE 1968-1970 PROSPECTS 11

IV. CONCLUSIONS 17

STATISTICAL APPENDIX

This report embodies the results of a mission by Eugenio F. Larito Guatemala in October. 1967.

BASIC DATA

Area: 42,o40 square miles

Population: 407 million (mid-1967)Rate of growth 1964-1967: 3.2%Literacy rate 30e (estimate)Other significant factors: 55% of population is Indian and

lives mostly outside the monetized sec-tor of tho oconomy. Tho rato of illite-racy in this sector is 90%

Gross National Product, (at currentprices): 1,379.1 million quetzales (1966)

-Rate of growth per year91956-1962 (in real terms): 4.20$1963-1966 (in real terms): 4.0%

Per capita, 1966, US$ 295

Gross Domestic Product, 1966 (atfactor cost): 1417.8

of which in percent: Agriculture 29.1If anufacturing 14.2Commerce 27.5Housing 7.9

Percent of GDP at market prices, 1966:

Gross investments 12.3of which Public 2.7

Gross savings 11.1of which Public O07

Balance of payments currentaccount deficit 1.2

Investment income payments (net) 1.9Central Government tax revenues 8.1

BASIC DATA (Contd.)

196& :-ljnuL1 rate of changeLIney and Credit AiL. Q. _ 1961-1966

total money supply (end of year) 140h4 54,'I me and savings deposits (end of year) 97.4 20.95%Credit to private sector (end of year) 178.0Rate of change in prices (cost of living) 3% (est.) 2.5 (est.)

Public Sector Onerations 1966 Annual rate of change_7 G.:n_tFL, Gove-rMnC..nt) ;2 .1ill. Q, 1961-1966

Current revenues 121.3 5.3 Current expenditures 103.9 5.5Surplus (after aczortization) 4.2 -9.4/0Investment expenditures 32.1 7.0o

x4:ternEil Public Debt, Long- cnd.wle(~r1-Term .,L1l. U&$ June 30, 1967

Total debt 109.2Tota:L annual debt service 16 (est.)Debt service ratio 8.1% (est.)

1966 Annual rate of ch,?ngeBalance of Payments ijill. Q. 1961-2966

Total e.xports of goods 231.6 12.2"'TotaL ii.ports of goods 201.8 8.3Zdet :Lnvisibles _46.9Current account balance -17.1Net inflow of private capital 5.2ilet inflow of public capital -0.1

Gross foreign exchange reserves 63.0 (or 3-1/2montlhsI imports)

Conxaodity concentration ofexports (coffee and cotton) 62.5/O (86% in 1956, coffee and

bananas)

2LED Operations end 1967 (US ?ai.11.): Committed Disbursed Repeaid

33.2 19.2 io.5

GUATEMALA

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All weather roads +,0 >ERES ! s COther roads 7 2

Roads under construction

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Lakes I

Gulf of.f=> RCIsinojd s ) JX .Honduras

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SMIT MAY AND CONiCLUSIONS

1. Guatemala is a country of considerable potential whose rateof growth, however, has been disappointingly low. Sharp differences incultural values, education, health and income among the Guatemalanpopulation and an unstable political situation have been the mainreasons for Guatemala's relatively poor development performance.

2. The countryks economy remains heavily dependent on a few ex-ports of primary products to the world market, coffee and cotton inparticular, while the industrial sector caters only to the domesticmarket and to the markets of the other Central American countries. Inrecent years banana exports have declined, due to the process of relo-cation from the Pacific to the Atlantic plantations that was broughtabout by disease, transportation problems and adverse weather, but ex-ports of coffee (because of price recovery and exports above the quotafixed by the International Coffee Organization) and cotton (because ofacreage increase) increased sharply until 1966 along with sugar, meatand other minor agricultural exports. The present outlook calls forsome recovery in banana exports, but only a very modest increase inthe other major agricultural exports.

3. In spite of the market size limitations, manufacturing hasdeveloped rapidly in the last five years, thanks to the formation of theCentral American Common Miarket and to the availability of savings inthe traditional export sector. Due to the generous fiscal exemptions ofthe industrial incentives law, however, many new industries have beenestablished that increase by little the aggregate value added in thecountry. They have represented a heavy drain on the Government revenuesand in some cases -- because of raw materials, intermediate and capitalgoods import requirements-- have also had perverse effects on the balanceof payments. The growth of the manufacturing sector is likely to slolwdouin as overall growth in the other Central American countries is de-clining and traditional exports are expected to growJ only moderately.

4. Faced wJith a tremendous task of building and expanding theeconomic and social infrastructure, the Government has been unable inrecent years to achieve a satisfactory level of capital expenditures-- because of inadequate project preparation and administration, and oflack of savings. Public investments have failed to increase during thepast decade and represent less than 3 percent of GDP. The Governmenthas now a well designed investment program that wrouad result in aboutdoubling in three years the present level of capital expenditures andproviding a good portion of the infrastructure necessary to diversifythe economy and break the present economic and cultural isolation of alarge part of the population. While the expected increase in foreign loandisbursements wFill help financin- such a program, the crucial conditionfor its successful implementation remains the ability to talce in timethe newv measures that l-sill be needed to ensure the availability ofadequate public savings in the.next fe years.

5. Fiscal probleims have p2agued -,uatam;-.2 Lor years, but thiey havebecomre more grave latelJ.y Ai sharp increase in currenit ex-penditures in1966 and 1967 offset the gain in revenues obtained in 1963-65 with neut.axes, and further revenue gj?owth is impaired by the inadequacy of thepresent tax system, based almost completely on indirect taxes and relyingheavily on the external trade sector of the economy. 'ax revenuesrepresented in 1967 only 8 percent of GDP, the loi.est tax burden inCentral America. The Government had to recur to emergency tax measuresin 1967. It has since met strong opposition in its attempt to initiatethe lon- awaited tax reform to achieve a heavier and more equitableta: burden and a tax structure more responsive to the growJth of theeconomy; and has thus had to extend the emnrgericy measures, and to cutits recurrent and capita'L expenditures to complete its 1963 financingpN.anr Still further measures will be needed if the investment expend-itures planned for 1969 and 1970 are to be realized.

6. A worsening balance of payments problem has underlined theurgent need of diversifying the economy and reducing its dependence onthe fluctuations in the wzorld market for primary products. The currentaccount deficit increased substantially in 1967 because of a drop in thevalue of coffee exports due both to a sharp reduction in volume and tolowJer prices in the world zmarket, and in cotton, because of a poor crop,and also because Of a s ,ib: tantial incr a3e in irportrs, in part s a specul-ative nature. Tnis n-ill require an acceleration and expansion of thepresent timid attempts at agricultural diversification. It wrill alsorequire a reorientation outw.ards of the manufacturing soctor, and, tothi.s end9 a revision at a regional level of the present system of fiscalindustrial incentives.

7. The Government intends to takce a series of credit and monetarymeasuros to restrict furthe:cr import groarth and thereby prevent furtherbalance of payments deterioration0 Selective import surtaxes, accompaniedby consumrtion or production taxes to avoid furtiher distortions in theproductive structure of the economy, are also being considered. TheGovernment also intends to reduce further the short- and medium-termindebtedness of the country, incurred in the early and mid-1960Ws, bymaking a larger use of the long-term external loans available to it.

8. Service of GuatemalaSs external public debt, which totalledabout 8 percent of export earnings in 1967, should not rise significantlyin the foreseeable future. If public savings are raised substantially-- as is urgently required-- Guatemala should be able to avoid any in-crease in short- and medium-term borrowings, i-while proiriding enoutgh fundsto complemont new dovelopment loans for high priority projects. Develop-merit loans disbursements would acco-uLt for about 60 percent of publicinvestment expenditures on the basis of the domestic financing effortthat -fill bu nriuded fcr the next two to three years.

I. INTRODUCT TON

A, The Land and the People

11. Guatemala is the northermost country of Central America, and themost populous, with 4.7 million inhabitants or about one-third of the totalCentral American population. Its physical and cultural environment ismost varied, but the countryls economy is still largely agricultural*1While coffee represents the dominant product (accounting for about 25 per-cent of total agricultural production, that in turn accounts for some 30percent of GNP), the agricultural sector of Guatemala is more diversifiedthan in the other Central American countries. Sharp eco:Logical differ-ences exist between the region of the high mountains and highlands, theunexplored tropical jungles and the flat coast lands. The population iswidely split between Indians (about 55 percent of the total) and "ladinos"t,a good part of whom are of mixed blood. About two-thirds of the totalpopulation are illiterate and live at the margin of subsistence. Popu-lation growth is estimated at about 3.2 percent per year. Income distri-bution is very unequal, and income per capita averages about US$300.

12. The Ildians and the Ladinos of mixed bloods, or "mestizos",constitute the two poorest groups of the Guatemalan population. However,the Indians, while they have no political power and make very little useof modern facilities like banking and credit, present a fairly stable andorderly social structure. They maintain most of their century-oldtraditions, and are increasingly oxpandcn, their land propertiPs in the high-lands. According to the opinion of several agricultural experts, they also shova remarkable capacity to adapt themselves to new techniques of cultivationand to new crops. The Mestizos, on the other hand, are still largelya migrant group: they work seasonally in large "fincas" or plantationsduring the harvest of the traditional crops, or crowd the urban areaswhere in the majority they feed the rapidly growing army of underemployedpeople. The rate of illiteracy in both groups is well above the average,reaching over 90 percent among the Indians.

B. The 1956-1965 Period

13. From the mid-1950ts to 1962 the traditional exports (coffee,bananas and cotton),which constitute the backbone of the economy,stagnated,resulting in sluggish growth and creating conditions conducive to pol-itical instability: a series of Governments were put in power and conptrolled by the army, while rural and urban unrest became widespread.Political uncertainty and institutional inefficiency were additional fac-tors contributing to slow economic growth, and total investment declinedand income per capita remained practically unchanged through 1962,while in the rest of Central America strong economic expansion was tak-ing place. In 1963, fearing the return to power of a liberal-leftist

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who had been President in the 1940Ls the array toppled the Government ofCol. Idigoras Fuontes and put Col. Peralta Azurdia in power. The newGovernment that ruled ,he country for three years, hastened to reestablisha climate of confidence and to improve the fiscal and balance of paymentssituation. Helped by the e.xpanision of cotton exports, the recovery incoffee prices and the positive impact of the Central imerican Common.larket on manufacturing and services, the Government effort was success-ful in bringing about much faster growth in 1963-64. As political un-certainties reappeared inl.965 iwith the prospects of popular elections,the rate of growth subsided once again.

14. During the whole period 1956-65, the behaviour of the externalaind fiscal sectors wias very important in determining Guatemala's economicprogress. The external current account presented a negative balance,that however was generally offset by large net capital inflows, bothofficial (U.S. grants) and private, so that international reserves re-mained at confortable levels -- equivalent to about 4 months of imports ona gross basis. However, wrhen at t1he end of 1962 reserves came underheavy strain, mainly because of heavy repayments due on a budget supportloan extended by U.S. banks, exchange controls were teimporarilyintroduced.

15. During the years of stagnation (1956-62), public finances alsodeteriorated markedly: from 1957 to 1963 Government current expendituresfollowed a sl.ow.ly rising trend, while current revenues and savizigs oncurrent account declined and investment exnenditures were cut sha-rply.By fiscal 1962/63 public investment had failen to only 40 percent ofthe record level reached in 1956/57 (at the time of the construction ofthe Inter-Anerican and Atlantic Highrays) and about 2 percent of GNP.In particular, crucial sectors like education and power received a veryinadequate share of the generally low0E public investment expenditures.Deficits, that had become a permanent feature of the government budget,were largely financed by grants from the U.S., by increases in floatingdebt (unpaid bills) and in 1962 and 1963, wihen U.S. grant assistance wassharply reduced, by Governrnent borrowing at short- and medium-term fromU.S. banks.

16. This deterioration in the public finances wJas arrested when,after a personal income tax was introduced by the Idigoras FuentesGovernment in December 1962, the Government that came in power in March1963, took a series of revenue measures. It doubled the rates of thestamp tax, introduced new export taxes, and changed the gasoline tax.Even in 1965, however, tax revenues represented less than 8 percent ofGMIP, still below their 1960 level (10 percent), and iiere wyell below theCentral Aimqerican average of about 11 percent of GLIP and lecs than in anyCentral American country. The 1963-65 revenue increase, furthermore,was offset by a sharp rise in current expenditure, the bulk of w-hich wrasin the "general administratioril category. As a result, public savingsafter amortization wrere sufficient to finance only 35 percent of invest-ment expenditures, compared with 50 percent in the mid-1950's, wTheninvestment wras at a much higher level. The Government was obliged

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to borrow substantiNlly .it home and fron commercial banks in the U.S3at shwort-term. The increase in borroiing from tho Banco de Guatemala,howrever, 1as in part offset by the increase in Government doposits.

17. During the 1961-65 period, long-term external loans committedto Guatemala amounted to US$49 million or just over 50 percent of theaverage amount lent in the same period to the other four countries ofCentral America, which received an average US$95 million each. Therate of disbursement of such loans was also well below the area average:US$27 million were disbursed in Guatemala, against US$65 on average in theother four countries. Lack of projects and delays in project preparationand implementation were generally recognized as the main causesof theunsatisfactory public performance in the investment field.

18. The recovery in coffee prices, the sharp increase in exports ofcotton (mostly to Japan) and of manufactures to the other Central Americancountries (as a result of the formation of the Central American CommonMarket), as well as increases in sugar and meat, resulted in a sharp in-crease in exports between 1962 and 1965. On the other hand, the acceler-ation in GNP growth, and especially theincreased levels of private in-vestments produced a spectacular import boom. The deficits on currentaccount widened, reaching in 1965 a record level of US$50 million or 3percent of MNP and 22 percent of export earnings, but large net capitalinflows -- mainly private, in the form of direct investment and especiallycf suppliers' credit-- were available to finance them, so that theinternational reserve position did not worsen and actually showed a sig-,nificant improvement.

19. Throughout the period the Banco de Guatemala followed a cautiousmonetary policy and successfully maintained price and exchange stability.UJntil 1963, during the period in which the public sector demands werevTery modest, total credit increased at less than 5 percent per year andwas oriented mainly toward the private (especially cotton) sector.Ioney supply and prices oscillated very narrowly.

20. In tlhk 1963-65 period, while net credit expansion to the publicsector was nooligible, private savings and credit to the private sectorincreased sharply. Industry and services were the major beneficiaries ofthis credit -expansion: money supply increased by 6 percent per year,amd prices moved upwards -- although little of the price increase isreflected in the price indexes, which are statistically verydeficient.

21. Although service payments on external medium- and long-termplublic debt more than doubled between 1960 and 1965, they were in 1965equivalent to only slightly more than 5 percent of total exports and wereprojected to fall to less than 3 percent by 1970.

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22. It is against thiZ.s back,,round t' at uotih the last IBRD reporton the Economic Position 2nd. Prospects of Guatemala (VF1l48_, dated April29, 1965) and the IBRD ropoixt on the Economic Developmant and Prospectsof' Cantral America (OiM-170a, dated June 5, 1967) concluded that:

a. there wias a strong lilkelihood of a slow-down in theeconomic growth of the country, since the short and medium-term prospects in the twzo sectors mostly responsible forthe recent economic advances, namely exports and privateinvestments9 were deterioratingc Ekports appeared introuble because of adverse prospects for traditional.exports (declining coffee and cotton prices and bananasproduction problems), and the expected tapering-off ofgrowith and demand for Guatemalan -products in the otherCentral American countri.es. iienewJed political uncertaintyand social unrest combined with the expected oxportstagnation to dampen private investment growth;

b. it wfas urgernt to proceed to export diversificationand to step up public investment expenditures, aimed inthe short-term at counteracting the stagnation tendenciesand in the long-term at changing the base of the economy;

co in order to accomplish such a program. a climate of poli-tical stability had to be restored, public revenues andsavings were to be increased substantially, and projectpreparation and iniplernentation ability improved,Specifically, the Government was to avoid further recourseto short- and medium-term borrowing to finance budgetarydeficits and restrain in particular the inflow of privatefcreign supplier credits, since heavy repayments mightresult in a reduction of foreign exchange reservesbelow prudent levels. A comprehensive fiscal reform wasto be undertaken including a revision of income and pro-perty taxes and an increase in sales and excise tax rates;aiid in order to maintain import demand within the limitsof available foreign exchange, a policy of credit restraintiwas to be followed;

d. a fiscal performance along the lines just indicated wiasthe primary condition for considering Guatemala eligiblefor additional external assistance: if such were thecase, some 55 percent of a moderately increased publicinvestment program was expected to be financed fromabroad.

II, RBCENT DMVEIOPiIENTS: 1966-67

A. Political and Social Situation

23. On July 1, 1966, after being elected by popular vote as the can-didate of the Partido Aevolucionario against the candidate supported bythe military, the moderate left-of-center Julio Hendez i4ontenegro iwasinaugurated president and the country was returned to civilien rule.The newi Government came into pow-er under most difficult circumstances.In the montihs immediately proceding and following the transfer of power,public order had in fact become increasingly disturbed, with frequentkidnappings of prominent citizens and Government officials. These eventscreated wJidespread uncertainty, and even the expectation that themilitary would intervene, first, to prevent and, then, to end the civilianregime. In fact the Government has remained in pow!er longer than manyobservers thought possible.

2h. The new Government undertook a serious effort to restore publicorder, particularly in the most isolated areas where small armed organizedbands wJere active. Although this effort did not .ineet immediate success,organized guerrilla activity has been on the decrease, due to a bettereffort to control it on the part of the army and to the formation andactions of extreme-right anti-guerrilla gzoups. How-rever, the latter havereportedly had frequent recourse to terroristic activities and more andmore constitute an additional disturbing factor in the political situationof the country. In Guatemala City public order is maintained throughvery ample and visible use of armed policemen but acts of violence stilloccur frequently.

25. The twro most important policy measures to which the Government-was coanitted were the agrarian and the fiscal reforxns. Because of thedelicate political situation, neither one has gotten under way. Theagrari&n reform wJas to be centered around: (a) the transformation ofpublicly-owined farms into cooperative farms, and (b) the reorganizationof existing colonization projects and the development of new colonizationprojects (includini expropriation of inefficiently run farms) to absorbthe landless poor. The agrarian transforration institute (flITA) wasintended to be the main agency concerned with the agrarian reform. Theagrarian reform has been interrupted after a token distribution of state-otned land. The fiscal reform was to be centered on a thorough revisionof direct taxes and to be undertaken promptly, but -- after a proposalmade by the ilinister of Finance failed in the summer 1966 to get thenecessary support from the Cabinet-- it remains "under study". Publicinvestment has, as a result, fallen far short of targets and of urgentneeds. However, the Government has taken several measures to encouragebusiness activity. Fiscal and tariff exemptions have been granted

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liberally to "n%O" industries. In the fall of 1967 the export tax oncoffee shipped to new markets was abolished. The Govermment also modifiedthe most burdensome provision of two decree laws passed by the previousGovernment, giving special import-export privileges to the state-ownedshipping and airline conpany and to the naticnal ports. These decree laws,rIhich transferred trade from traditionall.y private to official channels

without reference to ability to handle imports effectively, had had theeffect of creatina serious delays in and increasing costs of importingraw materials and sp2re parts. IJhen they were introduced, they shookbusiness confidence considerably and caused the postponement of someinvestment plans.

B. Economic Activity

The Private Sector

26. Economic growth should be evaluated in the context of highpopulation graowth, towTards which no explicit official attitudes have asyet been defined. Per capita GJP did not increase in 1966 and 1967,folloiing an increase of about half of one percentage point in 1965.This disappointing record is mainly the result of falling banana produc-tion, w-orsening terms of trade and increasing factor income pamentsabroad, a deceleration of growth in industry and services, declining orstagnating public investment, and (in 1967) poor coffee and cotton crops.

27. Exports increased over the two years at a slower rate than inthe early 1960's, and even declined in 1967, because of a disappointingperformance of the traditional commodities. Still high though de-clining wor:Ld prices, and slhipments well in excess of the quota allocatedto Guatemala by the International Coffee Council resulted in recordexports of coffee in 1966; in 1967, the further drop in wzorld prices andmore rigorous measures adopted by the Council to enforce the Agreementresulted in the lowest level of coffee exports in the 1960's and in theaccumulation of unsold stocks of coffee that at the end.of the 1966-67e.xort year were estimated at 250 thousand 60 Ig-, bags.

28. Record exports w.ere also registered in 1966 by cotton.Production expanded in spite of lowier prices, thanks to increases inproductivity and to abundant credit provided both by the domestic bank-ing system and by Japanese customers. In 1967 though, increased costof production -- due to large use of fertilizers and insecticides-- andunfavorable weather conditions, combined with the still low0 pricelevel to create a criticzl financial situation for the cottongrowers. Planted acreage was reduced and exports decreased by one-third.

29. Thanks to an increase in the quota and to the relatively highand stable prices in the United States market, sugar exports increasedsubstantially; however, large production surpluses were reported in 1967,both in the form of uncut sugar cane in the fields and of unrefined sugar.

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30., Banana exports increased, reversing the downwTard trend thathad started in 1961, as a result of disease. bad ueather and the gradualabandonment of the plantations on the Pacific. It seems that the con-traction in banana production and ex.ports has been arrested and a recoveryhas begun as output of the plantations in the Atlantic regions is slowTlyexpanding.

31. Exports (mostly of manufactures) to the rest of the CentralAmerican Cotrion ilarket increased by over 40 percent in 1966, but the growthhas considerably slac'kened in 1967, to around 15 percent, as a result ofthe sluggish growTth and of the balance of payments difficulties exper-ienced in the other CGCII countries.

32. The structure of exports continued to change, during 1966-67in the sense of greater Liportance of exports to CACI countries and ofnewJ lines of exports. axports to the other Central iznierican countriesaccounted in 1967 for 22 percent of total exports and new- exports likemeat and flowers, fruits and vegetables, seeds and seedlings (mostly toworld marlkets) and tubes and tires (mostly to Central Jmnerican countries)showed a very rapid rate of graoth, more than quadrupling betwreen 1961and 1967. However, traditional exports of coffee, cotton and bananasstill accounted for some 60 percent of total exports (90 percent in 1956).

33. Ylanufacturing remains the most dynamic sector of the economy,and now accounts for over 15 percent of GIfP (less than 13 percent in1960), and is geared to the domestic market and the markets of the otherCentral American countries, After an average grouth of over 7 percentper year in the period 1960-65, manufacturing growth was somewhat lessthan 6 percent in 1966 and is estimated to have been substantiallylotuer in 1967. The eccnomic problems of the Central American countriesand the diminished availability of savings (froan the export sector) areprobably the main causes of this slower expansion. Private investmentsfailed to increase in 1966 and, according to first estimates, fell bysome 5 percent in l967e In manufacturing, soim of the industries clas-sified as "new1' in the last two years, were nerely old activitiesre-classified as new in order to enjoy the benefits of the incentives law.

34. Ln agriculture, large size latifundia and absenteeism, togetherwJith inadequate ta,: and credit policies, continue to present seriousobstacles to diversification. HIolwever, a four-year program of coffeedi.versification, started in November 1965 in collaboration with FAO, madesome progress in 1966-67. The program has already identified a series ofexport crops tlat could be grown on marginal coffee areas: they includetea, oil palm, citrus fruit, avocados, mangos, rubber, vanilla, pepper,cardamon, quinine oil, nuts, and livestock and dairy products. Small pilotprojects exist in citrus, oil palms and tea, and a milk cheese factoryproject for the domcstic and, possibly for the Central American market istechnically completed and about ready for financing.

36. Significant investments have taken place or are likely in con-nectirn with several non-traditional cultivations. Substantial invest-ments have been reported in the Indian sector of agriculture, that nowabsorbs about 60 percent of all seeds, fertilizers and insecticides usedin Guatemala and has shovn. remarkable gains in productivity. However, no

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reliable data exist on the amount of these projects. The four-yearstudy of forestry in the Peten, started in 196h, is still in progress,but the inventory work has been completed and substantial possibilitiesfor production and exports of hardwhood outside Central America have beenalready identified.

36. Foreign private investments decreased by some 25 percent in1966 and are estimated tc have not changed significantly in 1967. Alarge nickel venture, that would start the exploitation of importantnickel deposits in the lake Izabal area and that seemed finally aboutready to start, after long negotiations and delays, is at present againdelayed pending decisions on the requests of the foreign firm to begranted the status of new industry and thus enjoy tax exemptions, and toobtain assurances on foreign exchange availability for debt servicing andprofit remittances. The nickel project wotld involve investment expend-itiures of US$130 million over three years, and permanent employment forsome 1,200 people. A pilot plant to produce sulphur was recen'ly in-augurated and a small plant producing corn products is to be expandedsoon. With the help of a loan of US$5 million from USAID, a privateindustrial development bank has been formed with the aim of financingsmall and raedium industrial ventures and facilitating the inflow ofprivate foreign capital.

Public Finances

37. Public revenues on current account remained virtually unchangedin 1966, and central Government revenues actually showed a fractional de-cline. The yield of import duties in particular declined, as the compo-sition of imports changed with a marked shift towards imports of ratwmaterials (on which generally no or lower tariffs apply) and towardsimports froin the other countries of the Central American Common M4arket,which are duty exempted. Current expenditures of the central Governmenton the other hand increased by 8.5 percent in 1966; the increase wascaused chiefly by "general administration" expenditures, while the shareof funds devoted to productive sectors and to social development (agri-culture and industry, education, health) decreased. Net of amortization,public savings covered only 13 percent of a reduced investment expenditure,(compared wiith an average of 33 percent in 1961-65). Hard pressed forfunds, the Government, after failing to agree on a package of fiscalreforms, had to resort in December 1966 to emergency tax measures thatincluded small temporary increases in income, property and stamp taxes,newl temporary taxes on purchases of air tickets and first sale of cars,and a 10 percent tax on profit remittances.

38. The 1966 budget deficit was financed largely by borrowing fromand drawing dowo on deposits in the Banco de Guatemala, and issuing 15-yearbonds that the Banco de Guatemala in turn placed with commercial banksin the U.S., at 5 years. Net domestic credit expansion to the publicsector increased by 57 percent.

39. During 1967 the Government became increasingly awiare of theneed of obtaining larger public savings in order to provide counterpart

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in local funds to development loans from abroad, and thus finance withoutcontinued recourse to the banking system the higher level of publicinvestmnents considered necessary to stimulate and broaden the base of theeconomy. Unable to reach agreement on a comprehensive fiscal reform, theimprovement in public savings wias sought through: (a) restraining thegrowTth of expenditures by decreasing by 10 percent the expenditures for gen-eral administrative purposes -- this decrease to more than offset tile ex-pected substantial increase in expenditures for social purposes, especial-ly for education, because of increases already stipulated for the Ministryof Education and, (b) increasing revenue by better administration of theexisting taxes and introduction of new emergency tax measures.

40. Actual 1967 current revenues of the central Government areestimated to have increased by 3 percent, as a result of the emergencymeasures introduced at the end of 1966. However, current expenditurescould not be successfully contained and increased by an estimated 6 percent,so that savings on current account decreased further. Yet of amortizationpayments, public savings were actually negative. The budget deficit hadstill to be financed by borrowJing from the Banco de Guatemala, althoughnet domestic credit expansion to the public sector was limited to 5 percent.Large long- and medium-term borrowing abroad (some $24 million) tookplace in 1967. Short-term borrowing from the U.S. anounted to US$3 laillion,the maximum permitted under the -I' stand-by arrangement.

41. In late 1967 two emergency tax packages were discussed withinthe Government to complete the 1968 budget. One contemplated the sub-stitution of the emergency measures approved at the end of 1966 by a generalsales tax of 5 percent and an excise on luxury articles of 20 percent.The second package consisted in maintaining the 1966 emergency measures,increasing the stamp tax by 1/2 percent and introducing an excise of20 percent on luxury goods. Both packages wrere estimated to yield a netincrease of Q12-15 million in 1968, equivalent to about 12-15 percent ofthe total 1967 tax revenues. In mid-October 1967, the Cabinet approvedthe second proposal. Subsequently, when the budget wsas presented to Con-gress, the general sales tax was proposed and approved instead. However,due to strong political and public opinion opposition, the sales tax wasaorogated four days after its approval at the beginning of 1968, leavingthe Government's 1968 finances still unbalanced. To cushion the fiscaleffects of this action, the Goverment decided to maintain -- until ageneral fiscal reform could be approved-- the 1966 emergency measures,and extended the 1-1/2 percent stamp tax to cover contracts and imports.But it also had to reduce the 1968 budget expenditures. It cut currentexpenditures by Q5.5 million and capital expenditures by some Q15 millionor about 25 percent.

MIoney and Credit

42. After increases of money supply and credit to the privatesector of 10 and 8 percent, respectively, in 1966, there are indicationsthat the corresponding 1967 increases have been more moderate. During:L961-1965 money supply and credit to the private sector had increased,

- 10 -

respectively, by an average 4.5 and 10 percent per year. The cost ofliving is estimated to have increased at an accelerated rate, about3 percent per year, in the last two years.

43. An element of uncertainty in the future monetary and creditpo-icy has been introduced by recent changes in the monetary legislation.The provision contained in the Organic law of the Banco that linkced bondpurchases to the amount of international reserves had made increasinglydifficult purchases of Government bonds by the Banco de Guatemala. Thusin 1967, only during fer weeks (when international reserves were highenough, for seasonal reasons), was it possible to place Gcvernmenb bondswith the Banco de Guatemala. As a result at the end of Septemnber 1967,the Organic alaw of the Banco de Guatemala woas revised: the linkc betweenbond purchases and international reserves was severed and the discre-tionary powvers of the Council in matters of credit policy were consider-ably increased. The ilonotary Council wzas enlarged in such a manner as todeprive the traditionally and constitutionally independent Central Banlcof its control of the Council and give the public sector representativesthe dominant voice in credit policy decisions. HowJever, it is the an-nounced intention of the President of the Council, who is also Presidentof the Banco de Guatemala, not to depart from the past rather cautiouscredit policy for the more "liberal" approach that sonie politicians hadpublicly advocated as the reason for the changes in the Law.

Public Investments

44,, The period of political transition in early 1966 resulted in amarked slowdowm in public investment expenditures and loan disbursements.VJhen the new Government took over in the middle of the year, it announcedambitious plans for increased capital expenditures, hastened to settlethe sterling debt, and signed before the end of the year eight developmentloans totalling US$17.4 million with international agencies. In 1967,another six new loans for US$33.6 million were signed. This large long-term borrowing from abroad reflects the concern of the new Governmentabout the inadequate use of foreign long-term financing of public invest-ment expenditures in the past, particularly in the 1961-65 period, andthe excessive recourse to domestic borrowing from the Central Bank andshort-term borrowing from abroad. However, while the Government succeededin containing the 1966 decline in public investment to about 11 percentwith respect to 1965, and in achieving a slight increase in 1967,investment levels have still remained far short of its original plans.

45. Transportation and power have continued to be the sectors wherethe Government and the international ayencies have concentrated theirefforts. In 1967 a US$15 million loan iwas obtained froin IERD to financea large increase in the country's hydroelectric capacity (the Ju unXa-rinalA project). Large increases in agriculture, housing and healthep?enditures have taken place with the help of sizeable loans from theInter-American Development Bank and USAIDe IDB has extended a loan ofUS$'6 million for a $10 million program of small- and medium-size irrigationprojects: the irrigation program, already at an advanced stage of prepa-

tion, covers some 12,000 has. in the southeastern areas of Guaten.ala andis intended to expand production of s-taple foods like beans, corn andrice.

Balance of Payments

46. The last two years saw a serious deterioration in Guatemala'sexternal finances, due to the sluggish groAwth of traditional exportsand to the combined effects on import demand of the policy of irncentivesto industrialization, the credit expansion to the public sector and theready availability of suppliers credits.

47. The 1966 current account deficit was not striking because thedrop in investment expenditures and the slow overall growth caused asignificant decrease in imports of raw materials and capital goods andan actual decline of total imports. In 1967, however, preliminaryestimates indicate a sharp increase (by over 17 percent) in imports,apparently due in part to stock replenishments and the speculativeincreases in the expectation of import restrictions, and a correspondinglyrecord deficit in the current account. Due to continuous capital inflows,and in spite of the large repayments of short-term foreign loans obtainedin the previous years, gross international reserves have decreased onlymarginally and still accounted at the end of 1967 fo; over three-months'worth of imports. Net reserves, however, have decreased by almost 30 per-cent in the last two years.

48. The Government and the Banzo de Guatemala are showing concernfor the balance of payments situation and especially for the growing tradedeficit. A restrictive credit policy and import and payment controls arebeing advocated in some official quarters as against the permissive policyfollowed in the past. Restraint on suppliers credits, that have beenfinancing substantial private imports from outside the CACM area, are alsobeing advocated.

III. THE 1968-70 PROSPECTS

49. Fiscal and balance of payments policics Tr'ill most likely continueto be the keys to Guatemalan economic performance in the next few years.Within the context of good policy, as outlined below, GNP is projected toincrease in real terms by some 3.7 percent per year in 1968-70, or some0.5 percent per year, per capita. Tuis estimate is somewhat lower thanthe one prepared by the Planning Board, that projects per capita GNPgrowth at an average 1.1 percent per year. It compares with an estimatedaverage increase in GNP of 3 percent in 1965-67 and of 6 percent in 1962-6h.

50. Such growth should be accompanied by the beginning of majorstructural changes in the economy as public sector policies becomefocused increasingly on raising productivity in agriculture and re-orienting the industrial sector toward export markets and domestic inputs.

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There is awareness in the public sector that to this end it is urgentto take a series of measures, such as adapting credit and tax policiesto favor agricultural diversification; developing industries using moredomestically produced ravw materials and thereby raisin g domestic valueadded; bringing pilot agricultural diversification projects more rapidlyto commercial scale wherever warranted; improving land tenure conditionsto help develop a rural middle class, especially in new project areas;revising fiscal incentives for industry (Guatemala has yet to ratify theregional agreement on fiscal incentives and the protocol granting specialprivileges to Honduras); introducing effective crop selection, gradingand quality controls; and preparing export marketing studies to guide thegradual substitution of new agricultural and industrial exports fortraditional commodities.

51. Ilanufacturing is expected to continue expanding, althsough at alower rate than in recent years, due to the limited growth in prospectfor Central America. Significant exports to world markets are not inprospect in the short period under consideration. The average rate ofgrowth per year during 1968-70 is estimated at 5 percent. In the absenceof new political unrest, private foreign investment should recovergradually from their 1966-67 lows.

52. In the context of agricultural diversification and the develop-ment of mineral resources, an increasing number of agricultural and miningprojects can be expected to be undertaken during the next three years.Private foreign capital and also funds from international agencies arelikely to be attracted by this type of ventures. The nickel project willbe probably started in 1969-70, and expansion of the sulphur project isalso probable. Since coffee orices are expected to remain low andunsalable surpluses are likely to increase fractionally in 1968, and moresubstantially in 1969-1970, coffee growers may be induced to use marginalcoffee land for new crops, so that diversification pr-ojects should beaccelerated in the future.

53. Banana producers, after overcoming the initial difficultiesencountered when they moved to the Atlantic region, are undertaking alimited expansion program. The only independent producer active atpresent (Empresas Taylor de Guatemala, that so far has exported throughUnited Fruit Co.), is in the process of more than doubling its acreage,from 1,000 to 2,400 acres, while United Fruit Co., plans to expand from8,000 to 10,000 acres. Further expansion by the United Fruit Co., is forthe time being unlikely, because the Company is under obligation to theTJ.S. Justice Department to limit the predominant position in the worldbanana trade and to create by "spin-off" a newi independent, rival companycapable of commercializing some 9 million stems.

Public Finances

5I4 Government revenues are expected to increase in 1968 by someQ12 million, or 9 percent. Since the Government projects a very smallincrease in current expenditures, its saviings are expected to more thandouble in 1968 and leave something available for investment after debt

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amortization, 1 ith improvement in tax administration and no:mal revenuegrowth (in particular responding to larger e.xports and to marginallyhigher and probably more heavily taxed imports) revenues are expectedto increase by 5 percent per year in 1969-70, and budget savings by some30 percent over the two years.

55. The Government projection may be somewhat optimistic. Thesqueeze on current expenditures, projected to grow at 3 percent per yearin 1968-70, against an average yearly increase of almost 7 percent in1961-67, may prove difficult to attain, and a great deal of improvementin tax administration wzill be required to achieve the projected yield in-creases from existing taxes. IJlth these reservations, the Governmentestimates are that public savings net of amortization wrould avorage in1968-70 Q10 million, about one-third higher than in 1961-67. Even thishigher public savings, howiever, would cover only about 17 percont of theenvisaged public investment expenditures. Additional fiscal measureswill thus be needed to support the investment effort, now pleaned.

56. Further emergency measures of the kind talken recently wsouldbe undesirable since they wiould complicate tax administration furtherand aggravate the patently regressive character of the tax system. 11evapproaches to increasing revenues should thus be sought. Ideally, they-should comprise the much awaited comprehens,ve reform of the -tax system.This reform, wrhich would aim at achieving a higher degree of tax revenueresponsiveness to income growth could result in a tax burden at least equalto the one borne by the otIher Central American countries (i.e., aboutone-third above the present Guatemalan tax buLrden) and in a larger useof direct taxation (income, property and inheritance taxes), wjith uppedrates and assessments. HIow-ever, inability to move quickly in this directionshould not be permitted to detract from the urgent need for additionalpublic sector savings to' finance the 1969-70 investient program.

Public Investments

57. The present plublic investment proGram calls for Government in-vestments to average ?52 million (or 458 million, if the whole publicse2tor is taicen into consideration) during 1968-70. This level wzould beabout 60 percent above th.e 1965-67 level and just about the record levelsreached in 1956-58. The project by project analysis and the disbursementprojections for the existing commitments and the additional long-termborrowing from abroad now being secured, indicate that the investmentlevels estimated by the Government could be achieved, although with somestrain on the administrative and technical capacities of the public sector,namely,,only if the project preparation, implementation and administrationare further improved. However, while in the past lack of adequate adminis-trative and technical capacities represented an important factor inlimiting the level of public investments, lack of public savings consti-tutes at present the significant constraint.

58. 'lithin this public investment progrean, the share of transportand power uould continue to be dominant, but would drop from 50 percentin 1968 to about one-third in 1970. The transport sector includesport expansion, but its highest priority is the feeder roads and roads ir tlxt

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Northeast which form part of an overall 5-rear road expansion plan coveringover 1,000 miles and costing an estimated US$85 million. In power,capacity would be triplcd. in four years. The largest percentage increasesuill take place in agriculture, education and health -- especially wvatersupply. Practically all identified project would be in part firanced from,broad, with long-term loans and grants expected to account for about

62 percent of the total investment program.

59. As far as the IBRD lending program is concerned, twJo loans are e:;-pected to be proposed in 1968. The first loan, of about US$7.5 million,would finance a third thermal pl^nt in the Guajalate scheme, intended to re-duce the period of power shortage before the Jurtn-LTarinal.f hydro projectcomes into operation, and then to complement the hydro project in providingpowJer to a vast region of the country. A second loan, of about US$7aOmillion, would finance the construction of several secondary education facil-i.ties, the expansion of teacher training facilities and the expansion andreorganization of the agriLcultural schools: the project wlas prepared by theGuatemalan Covernment assisted by a UNESCO team sent to Guatemala under theIBRD/2JESC0 Agreement. Table 24 in the statistical Appendix surmmarizesGCuatemalats public finances and investments in the 1960-70 period, actualand projected.

Balance of Payments

60. Export receipts are expected to increase by some 15 percent in1968 and 4.5 percent per year in 1969-70 (see Table 20 in the StatisticalAppendix). Assuming prices at about the present levels, coffee exportsshould be in 1968 some 20 percent above 1967 (but still below the record 1966level), and then grat. at 4.5 percent in 1969 and 2.5 percent in 1970. Theserates, which are on average rauch higher than the long-term coffee export ratecf growth, reflect: (a) the very low 1a967 base value; (b) the penalties im-posed by the International Coffee Organization on Guatemala (that will havesome effect also on coffee exports for calendar 1968); (c) the increased quo-ta proposed for Guatemala for the next period of the International CoffeeAgreement, and (d) the probability of some sales to new markets.

61. Strengthened prices and lQrger production and export availabilitiesshould account for an increase of about 18 percent in 1968 over 1967 in cot-ton exports, In 1969-70, however, only fractional increases should takeplace, as most of the incremental production is likely to be absorbed by thedomestic textiles industry. Over the next three years sugar exports shouldincrease only marginally: they have been projected on the basic assumptionof a 2 percent increase per year in the U.S. quota and of constant prices.

62. The Government has a very ambitious program of expansion forbanana exports, based on opening to independent producers 25,000-acres inthe Aitlantic region during 1968-70, with exports starting in 1969. Becausethis program presents major problems (drainage, irrigation, feeder roads,quality control, credit facilities) and would imply an unprecedentedeffort on the part of the public sector, the area involved is lilcelyto be at most about half of the progra=med (or some 12,000 acres) andexports should not take place until 1970-71. Taking into accountonly the planned expansion of the private producers (United Fruit

- 15 -

Co., and Empresas Taylor de Guatemala), as wiell as productivity increasesdue to more effective pest control and better drainage and irrigation,and some price weakening, exports of banana are projected to growsteadily during the 1968-70 period, recovering by 1970 to around the 1963levels.

63. As the general level of economic activity in the other CentralAmerican countries is expected to decrease and balance of paymentsdifficu'lties are expected to become more acute in the near future, exportsto Central American countries are projected to increase at a diminishingrate: by 10 percent in 1966 and by 5 percent in 1969 and 1970. This isbelow current official Guatemalan estimates of 18 percent, 15 percent and12 percent respectively.

6a. The residual export categories ("other commodities" and services),that have been accounting for some 25 percent of total export receipts,have been projected by extrapolation of past trends. Total export growthin the 1968-70 period w.ould then reach 25 percent and average 7.8 percentper year (15.2 percent in 1968, 4.6 in 1969, and 4.5 percent in 1970),against 79 percent (or an average 10.2 percent per year) in 1960-65, aperiod that wras characterized by increasing export prices and by the fastexpansion of manufacturing exports to the CACM countries.

65. Imports for 1968, as the Government estimates, are not likelyto increase much over 1967 because of the abnormally high level last year.But in view of the expected GNP rate of growth and hligh investment levels,total imports are projected to grow subsequently at some 8 percent peryear. These rates compare with an average yearly rate of increase of9.4 percent in 1960-65.

66. These projections, which are suxmarized in Table 18 in thestatistical Appendix, are not encouraging. They point to continuingbalance of payments deficits and pressure on international reserves ifcorrective policies are not pursued. The Government is aware of theseprecarious balance of payments prospects and intends to take actions tostimulate exports and capital inflows and contain imports along the linesoutlined below, to prevent further deterioration in Guatemala's externalfinances.

67. On the export side, the Governrent hopes to increase Guatemala'sshare of the world market for its traditional exports (coffee, cotton,bananas) by entering nevr markets. Since these exports face stiffcompetition from the other Central American countries, that are alsopursuing the same objectives, significant gain in this respect is doubt-ful. Ne-vi export lines provide more promising alternatives after 1970 ifthe tax, credit and investment policies intended to encourage agriculturaland industrial diversification are pursued wTith vigor. The nickel projectalone should originate exports of the order of US$30-35 million (US$l0-15million on a net basis) per year. With good policies, exports and thebalance of payments could improve sharply in the early 1970's.

- 16 -

68. On the import side, a series of credit and tax measures aimedat reducing imports of consumer goods and raw materials that can besupplied domestically is at present under consideration. The measuresinclude tightening of deposit requirements and payment terms, suppliers'credit restrictions, and import surtaxes on luxury and durable consumergoods. The Government is aware that the latter should be accompanied byexcises on domestically produced competitive goods or adequate sur-charges on imported inputs to avoid perverse effects on Guatemala'sproductive structure. Both kind of measures, however, are meetingopposition from established coinmercial and industrial interests.

69. As most of the import measures contemplated will have regionalrepercussions, they will also need to be discussed with the partners inthe Common Market. In fact, the need for coordinated action at theCentral American level explains in part the lack of any concrete actionso far in this field by the Guatemalan Government. Coordinated actionmay be in early prospect, however, since concern about balance of paymentsdisequilibrium is now widespread and increasing throughout CentralAmerica. All the countries are anxious that an effective balance of pay-ments policy be followed by each one of them, to avoid the appearance ofchronic disequilibria and the eventual adoption of drastic controls thatwould hurt the other countries and endanger the very existence of theCentral American Common Marlet.

70. The Government recognizes in principle that the net internalcredit expansion to the public sector should be contained to or near zero,to avoid undesirable inflationary and balance of payments pressures with-out diverting credit from the private sector. The present fiscal programfor 1968-70 still calls, however, for net domestic borrowing by theCentral Government of about Q3 million in 1968 and Q4-5 million per yearin 1969-70, confirming the need for a larger effort to increase publicsavings, particularly in 1969-70.

71. With the larger disbursements of long-term loans from abroadin prospect, and possibly some IMF assistance, Guatemala could balance itsexternal accounts without sacrificing development expenditures. But theavailability of this external development capital will depend in greatmeasure on the adequacy of the fiscal and balance of payments effortreferred to above. If the Government is not able to translate its presentintentions into concrete tax measures and have them approved by Parliamentin time to enforce them effectively starting in 1969, foreign assistancewill most likely be less than wjhat Guatemala might otherwise expect, andthe public investment and development effort would be correspondinglyreduced.

Money and Credit

72. Overall monetary and credit policy is expected to remain prudent,as already indicated. The fears that existed earlier in 1967 that creditto the coffee sector might expand greatly in order to finance unsoldsurpluses have somewhat receded. Although the coffee growers are still

- 17 -

putting pressure on the Banco de Guatemala to receive much larger andmore liberal financing than in the past, the coffee financing scheme mostdiscussed at present does not contemplate financing of coffee over andabove the amount of the export quota. According to this scheme, the onlychange would be to provide credit at a longer term than in the past inorder to relieve the medium-sized coffee producers who find thermselves ina temporary financial squeeze due to a combination of low prices and lowquantities exported. Producers would have to submit themselves to somekind of quantity and quality control to cualify for for these credits.Current estimates of the forthconing coffee production and exportsindicate that the coffee problem should not prove unmanageable in 1968.Unless the Government yields to the coffee sec-tor pressures--which isgenerally not expected--coffee financing should remain at a level con-sistent with the Government policy of credit restraint and agriculturaldiversification. After 1L968, however, the problem of coffee financingmight become more acute, as coffee surpluses are likely to increase.Table 9 in the statistical Appendix shows the likely increasing trend inproduction and unsold stocks.

73. The external debt service ratio, that reached 8 percent in 1967,will decline slightly in 1968-70. The additional long-term borrowingabroad now being envisaged will not have any significan-L effect on thedebt servicing until the early 1970's, and even then the increase in thedebt service ratio will be small. But this additional borrowing abroadfor developmental purposes, required to support increasing public invest-ment, will as mentioned above require substantial measures to raise newcomplementary domestic savings beginniing in 1969, even if external financeis forthcoming on an average 60:40 cost-sharing basis.

IV. CONCLUSIONS

74. Guatemala's economy has been characterized in the last few yearsby a deterioration in its external and public finances. The Government isaware of the problems and of their causes, namely: poor performance oftraditional exports, high and rising import content of the productivesystem, excessive inflows of short-term capital, inadequate recourse tolong-term borrowning, inadequate level of taxation, excessive number oftaxes (some 200) and exemptions, bad tax administration, high currentexpenditures, failure to carry out the level and kind of public invest-ments that are needed to change the basis of Guatemala's economy.

75. These economic and financial problems have been compounded bya very difficult political and social situation. The country remainsbadly split socially and economically. liith no tradition of a repre-sentative, civilian Government, the present regime finds lukewarm supportin the public opinion, especially since it has achieved little of itsannounced development plans. Uncertainty and fear of crisis unfortunatelyremain the dominating characteristics of today's political situation inGuatemala and impose severe constraints on Government decision-making.

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Ihe Governmentvs ability to take measuresi is also reduced because of itsobligation (e.g., in matters related to :irport duties) to coordinatemany economic measires iiith its CACII part:ners.

76. In this difficult context, the Government has been movingwith caution toward its announced development goals. But one of themajor consequences of this approach has been a loaer than hoped forlevel of puiblic sector savings and a correspondingly excessive relianceon external borrowring to finance public sector investments. The result-ing financing pattern is not a sustainable one. Additional fiscalmeasures will be needed to support the 1969-1970 investment program nowenvisaged.

LIST OF TABLES

Table No.

External Public Debt

1. External MIedium- and Long-term BPblic Debt Outstanding, IncludingUndisbursed as of June 30, 1967.

2e Estimated Contractual Service Payments on Ex:ternal M4edium- andLong-term Public Debt Outstanding, Including Undisbursed as ofJune 30, 1967.

Population, _National Accounts, Production and Other DevelopmentIndicators

3. Population, 1950, 1964, 1967.4. Gross National Product, 1955-1966.5. Gross Domestic Product by Type of TLxpenditure, 1955-66.6. Gross Domestic Product by Sector Origin, 1955-1967.7. National Income, 1961-1966.8. Private Income by Origin and Type of Expenditure, 1961-1966.9. Coffee Statistics, 1963-1970.

10. Cotton Statistics, 1963-1970.11. Banana Statistics, 1963-1970O12, Suigar Statistics, 1963-1970.13., Basic Crop Production, 1953-1966.14. Indicators of Industrial Production, 1957-1966.15. Value Added in the 1lTanufacturing Sector, 1961-1967.16. Transportation and Power Statistics, 1955-1966.17. Trends in Education, 196h-1966.

Balance of Payments

18. Balance of Payments, 1960-1970.19. Composition of Exports, 1955-1966.20. Export Projection, 1967-1970.21. Composition of Imports, 1956-1965.22. Balance of Payments, 1962-1967.23. International Reserves, 1961-1967.

Public Finance and Investment

24. Public Finances, 1960-1970.25. Central Government Current Revenues, 1954/55-1967.26. Central Government Expenditures, 1954/55-1967.27. Central Government Fiscal Operations, 1962/63-1967.28. Public Investment 1960/61-1963/65 and 1965-1967.29. Drawi-ng on Foreign Loans to the Public Sector, 1962-1967.

-2-

Tl'bIe ;'o.

,O. Projected Disbursements on Foreign Loans to the Public Sector,1967-1970.

31. Holders of Central Government Domestic Bonded Debt, 1961-1966.

Banking- and Prices

32. Summary Accoumts of the Banking System, 1960-1966e33. Credit to the Private Sector, 1958-1965.34. Wholesale Price Index in Guatemala City, 1957-1966.35. Terms of Trade, 195;5-1966.

Table ls GUATEMPLA - EXTERNAL MEDIUM- AIND WjNG-TERM g1 PUBLIC 3 DE_2 0UTSTAMflJsQ3INCLUDING UNDISEURSED AS OF JUNE 30, 1967

Debt Repayable in Foreign Currency

(In thousanids of U.S. dollar equivalents)

Debtl Outst.aL-ding

Itemhl b!et June_30 1967Item N~~~~~~~et of Including,undisbir'sed undIsbursed

TOTAL EXTERVAL PUBLIC DEBT 3. 102,159

Privately-Placed Debt 36.060 LO 6 47Supplier6t credits 23 ,183Other 2 33,877 38,46ls

IBRD loan 6 21,373

IDB loans JLAL38 8,93

BCIE loa-i 214 W700

U.S. Government loans 13 287 33 .08Export-Import Bank N7T l9, 2AL) 6,749 11,,221

/i5 Debt -W,ith an original or extended maturity of one yeer or nore.E Ifenlcludes $2,810,C00 draxm and outstanding of lines of credit;

excludes $3,828,000 not yet drawn.

Source: IBRD, Statistical Services Division

¶2 2O I-ATl.111',A - KETII1.ATZD CO.1ITRACTIUAL S1R7CE FA PYIA3NTS ON EXWR ;.L, i -

L:. ; ? :1-" .. . XJ.IC D;,iBT OUTSTJ=D:[.J INCLJDTIG UISJ3Uj5ED AXS OFX JiE, 3-O, 1967 /1

I)cbt R.payablc in For'eign Currency

(In thousands of U.S. dollar equivalents)

Page 1

B; L;r f:TUTST.._._([.0-CI f .CF PEP IC0) PP'YOIFTS CUR1l\GC fEI4IIC_

I; .L U,: I N G A4GPT 1 -YEt.R UNCI $2.fZSEG ZITI CL INrTEPEST ICTrAL

CIIANOD TCrT,L

1-7 93 53L2 IC ,287 2,777 13,C C.__156 __ _1,23 1 I_I_ 1 ,C l , C C_ _ 1_ _ , I_i__19$9 BCy14IC 1C,3i,S ?,P36 13,222~T?c __ 69,754 _ 1C , 2 , 'I 6__ 13 , 3rC9i,71 52,9CE 6-,6512 ?,7 '11 C7 2 52,2936 7 16 C)P 2,566 9,734197! ';5,128 5, 05S 2,2%', 7,316

1',7440,CL-F4,PC& 1.,9E3 __] 6,7-'29 . 7 ,) 3 _ ., _ ., . . _ ..

15C, 7G __31,112 2,516 1, C 's,C451'97? 2E, 596 2,296 1,',2S 3,725I 978 _ ~ _ ?26 ,2% _ 1 ,945 1,324 3,2691,79 2, ,3 I 1, 75 1,21C 2,5, )

EC _ 22,62S 1,759 1,121 2,EC-C1s; 1 2C, ~66 1,685 1,C22 2, lC7

/I Includes service on all debt listed in Table 1 prepared October 27, 1967except the following amounts outstanding:

Total $15,627,000

Suppliers' credits 174,000Other Privately-placed debt 15 453,000

Lines of credit 2,810O000Revolving credit 10,000,000Bonds 2,64 33,o000

/2 Amount outstanding is as of June 30, 1967; payments are for the entire year

Source: IBRD, Statistical Services Division

Table 3: GUATEMALA: POPULATION 1J5o., 1964, 1967

Mid-year population

1550 2,8o5,157 (census data)1964 (April 18-26) 4,284h473 (census)1967 4,727,212 (estimate)

Average Annual Rates of Growth

195C-l 964 3.1%1964-1967 3,2%

Source: Direcci6n General de Estadistica, mission estimate.

i5 i >6 P7 198 o5o 1o 61 92 163 165 1 966X/ I19X,7_

a ^ --- n 1CeS ~~807 8 6933 967 1,029 1,033 1.,064 1,132 1.,249 1J,277 101i6 1,379

/--- e.- C6ee) 11.1 4.2 3.7 6.3 o.4 3'0 6.3 10.3 2.3 3.1 4.8

ar- c naloduct

(:n: --- ~uezls 828 908 947 967 1,00o5 I1,029 1,06o 1,102 1,194 I,262 1,308 1, 35 1 1,394

(-e ^ e-. vcge) ~2.7 9.7 4.3 2.1 3.9 2.4 3.0 4.0 8.3 5.7 3.6 3.3 3.2

ere-- Za Cr Os s';at:<-ai roduct

at ' c-9o Frices 251 267 271 272 27E 7 7 7 287 293 295 295 295

(>--rce.tage) 6.5 1.3 o.4 0.7 -0.7 0.0 0.7 4.7 2.1 0.X

1/ F' -elanary.

21 Estimate

zSource: Banco de Guate,mala - Departarnento de Estiir-ios Econ6omricoq (,Seccio-n deCuentas 'Nacionales), -mis-sion estimnates.

Table 5: GUATEMALA: GROSS DOMESTIC PRODUCT BY TYPE OF EKPENDIuirURE,1955-1966

(million quetzales at current prices)

1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966 1,/

Consumption 718.0 776.3 819.5 883.4 953.0 959.8 997.3 1,061.9 1,150.2 1,166.7 1,090.5 1,231.5

Private Sector 668.8 719.2 755.2 813.0 874.6 879.9 914.2 984.7 1,066.8 1,077.1 1,090.5 1,126.5Public Sector 49.2 57.1 64.3 70.4 78.4 79.9 83.1 77.2 83.4 89.6 104?.2 105.0

Investaent 79.9 134.4 150.1 136.3 111.6 102.1 108.9 106.5 125.0 159.4 167.3 172.2

Private Sectcr 48.4 86.2 89.4 86.4 75.0 75.5 77.1 79.2 103.0 125.3 125.8 134.2Public Sector 31.5 48.2 60.7 49.9 36.6 26.6 31.9 27.3 22.0 34.0 §a F 38.1

Chbare in Inventories 14.1 7.1 3.7 -1.1 - 3.2 1.4 -12.9 _6.1 8.3 7.2 8.2 1.3

Trade Balance 0.9 -16.6 -33.4 -42.6 -24.9 -19.8 -16.6 -18.7 -20.8 -38.9 -36.8 o.6

Exports of Goodsand Services 112.5 133.1 128.5 121.7 122.3 131.9 128.7 134.8 180.4 195.1 223.5 263.5ILports of Goodsand Services -111.6 -149.7 -161.9 -164.3 -147.2 -151.7 -145.3 -153.5 -201.2 -234.0 -260.3 -262.9

hross Domestic Product 812.9 901.3 940.1 976.1 1,036.5 10o43.6 1,076.8 1,143.6 1,261.8 1s294.4 1,333.5 1,405.6

Rate of Orowth(Percentage) 10.9 4.3 3.8 6.2 0.7 3.2 6.2 10.4 2.5 3.0 5.4

Net Factor Incoae PaynwntsAbroad _6.2 -5.4 -6.9 -8.7 -7.9 -10.4 -12.4 -11.9 -14.2 -17.4 -17.5 -26.5

(ross National Product 806.7 895.9 933.2 967.3 1,028.6 1,033.2 1,064.4 1,131.7 1,248.6 1,277.0 1,316.0 1,379.1Rate of (rovth (percentage) 11.1 4.2 3.7 6.3 0.4 3.0 6.3 10.3 2.3 3.1 4.8

g/ Prelixinary.

Source: Banco de Guatemala - Departarento de Estudios Econ6micos (Secci6n de Cuentas Nacionales), mission estimates.

Table 6: GUATEMALA: GROSS DOWMSTIC PRODUCT BY SECTOR ORIGTN, 1955-196 7(,nillion quetzales at 1958 prices)

1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1966!! 19672

A-riculture and Fishing 248.6 264.9 269.3 286.5 310.0 318.1 323.6 334.9 383.5 38h.8 389.4 )406.6 h02.9lining 1.9 2.4 2.6 2.2 1.8 1,9 2.4 1.5 1.5 1.6 1.6 1.8 1.8Manufacturing Industry 98.3 106.8 116.8 12h.0 129.8 135.5 143.3 151.1 165.9 176.4 190.8 203.6 220.8Construction 21.9 29.3 36.7 31.3 23.7 20.7 25.6 21.8 19.8 25.o 24.5 26.6 27.5Public Utilities 4.9 5.1 5.7 6.4 6.9 7.3 8.3 8.9 11.2 12.2 14.1 15.9 16.7Transport and Com-

muni2ations 39.9 42.3 48.8 49.4 49.9 50.3 55.3 67.5 59.3 66.7 73.8 75.5 81.3Co0merce 217.4 239.9 255.1 253.7 265.1 274.5 280.8 294.7 335.7 356.1 376.6 401.7 419.9Banking, Insurance,

Real Estate 10.8 14.3 13.1 16.0 16.8 18.7 20.8 25.0 28.9 32.4 32.7 33.4 33.0Housing 71.6 73.7 75.9 90.3 92.6 94.4 96.8 98.9 101.6 104.2 107.6 111.5 1114.9Public Admilnistration

and Defense 44.0 51.7 52.4 56.6 64.8 63.7 71.5 6o.5 61.2 63.1 65.1 64.3 70.0Other Private Services 49.9 52.3 56.2 59.8 63.0 64.1 66.o 68.3k 72.5 76.o 79.0 83.1 86.6

Gross Domestic Product(unadjusted) 809.1 882.7 932.5 976.1 1,024.2 1,049.2 1,09o43 1,133.0 1l,241.1 1,298.6 1,355.2 1,424.0 1,477.3

Terns o. TradeAdjustment 25.4 31.1 21.7 - -1o.5 -9.3 -21.1 -18.0 -31.7 -19.1 -30.3 -49.2 -56.8

Gross Dom.estic Product(adjusted) 834.5 913.8 954.2 976.1 1,013.7 1,039.9 1,073.1 1,114.9 1,209.4 1,279.5 1,324.9 1,374.9 1,1420.

Rate of Growth(percentage) 9 . 5 4.4 2.3 3.9 2.6 3.2 3.9 8.5 5.8 3.5 3.88 3.3

i/ Preli-minary.E Rstimate.

"Ource: Banco de Guatemala - Departarmeanto de Estudios Econ6micos (Secci6n de Cuentas Nacionales).

Table 7: GUATEMALA: NATIONAL INCOME, 1961-1966(million quetzales at current prices)

1961 1962 1963 1964 1965 1966

Gross national product 1,064h4 1,131.7 19248.6 1,277.0 1,316.0 1,379.1Indirect taxes 71.3 69.4 80.6 89.5 10h.1 lo4.6Depreciation 5o.4 5o.6 52.3 54.6 58.9 63.5

Net national income 942.7 1,011.7 1,115.8 1,132.9 1,153.0 1,210.9

Wages and salaries 443.3 h66.6 539.6 556.8 562.0 598.3Payments to IGSS J 5.9 5.0 6.1 6.8 7.5 7.8

449.2 471.6 545.7 563.6 569.5 606.1Earnings from business andproperty 481.1 528.6 557.8 561.0 568.2 595.6

Direct taxes on business 6.8 6.7 8.2 5.2 10.2 9.8Government income fromproperty 8.8 8.7 8.7 8.2 11.8 7.8

Interest payments byGovernment -2.5 -3.0 -3.6 -3.9 -4.8 -6.o

Other interest payments -0.9 -0.9 -1.0 -1.2 -1.9 -2.4

1/ Guatemalan Institute of Social Security.

Source: Banco Central de Guatmala.

Table 8: GUATEMALA: PRIVATE INCCME, BY ORIGIN AND TYPE OFEXPENDI TRE, 1961-1966

(million quetzales at current prices)

1961 1962 1963 1964 1965 1966

Private Incane 946.1 1,011.7 1,117.2 1,141.4 1,156.6 1,225.6

a) By Origin:

Wages and Salaries 449.2 471.6 545.7 563.6 569.5 606.1Earnings frcm

Property andBusiness 481.1 528.6 557.8 561.0 568.2 595.6

Interest Payments -0.9 -1.0 -1.0 -1,2 -1.9 -2.4Transfers from

Government 9.0 8.7 8.5 10.1 12.9 15.2Transfers from

Abroad 7.7 3.6 6.2 7.8 7.8 11.0

b) B of Expenditure:

Consumpticn 914.2 984.7 1,066.8 1,077.1 1,090.5 1,126.5Direct Taxes 16.5 15.5 12.2 16.4 15.1 18.6Other Payments to

Government 4.6 4.h h.5 4.9 8.3 10.1Transfers Abroad - 2.J 2.6 1.5 1.6 1.7Savings 10.7 4.7 31.1 41.5 41.0 68.8

Source: Banco Central de Guatemala.

TrIb1c 9 GUIAT' d11!\ C -U;,,4iS.Ir , 9<3 -19YO

itual s E~SLivIo l e l t al?s _Pro,_cti -ms 2/I~~~3lThT97~~~~~7i~~~ ____ s. T ~9_ _791o_

Acreage (th. has) 232 235 237 237 237 237 237 237

FPoduction VoluLme (th. 60Kg.bags) 1,937 1,740 2,024 1,990 l,685 1,850 2,000 2,200

Production Value (mill. US$equivalent) 74.6. 85.6 92.6 86.2 70.0 70 8 5 91 90

Exports Volume (th. 60 Kg.bags) 1,640 1,270 1,595 1,825 1,270 1i50o 1,570 i,6io

-of which soluble 25 17 13 41 26 30 35 45(expressed in greencoffee equivalent)

Exports Value (mill. US$) 77.1 71.1 91.7 100.1 64.8 78.0 8 L 6 83.7

Exports Unit Value (US$ per bag) 47.0 56.o 57.5 54.8 51.o 52.0 52.0 52.0

Exports quota (after adjust-ments; coffee export year) 1,331 1,511 1,257 1335 1,234 1,95 1,5o00 1,540(th. 60 Kg. bags)

Dorestic Conswmption(th. 60 Kg. bags) 230 230 230 230 230 240 250 260

Change in StoAksl/(th. 60 Kg.bags) +67 +21h0 +199 -65 +185 +110 +180 + 310

1/ At thoe end of the 1966-15'7 e>Iiport yc;;r the Jevel of stccks was estimated at soi0,. 250,000 bngsg/ Assuming only marginal effects on 1Froduction of the inter-planting that has taken place in

1965-66, because of the offsetting effects of the coffee retention scheme, diversification projectsand the likely decline in the use of fertilizers.

Source: Banco de Guatemala, Asociaci6n Nacional del Caf6 and mission estimates.

Table lo: GUATEKAT A: COT' ON STATISTICS, 1963-1970

m'cd ctLuals Estimate _rgections

l____ __ _964__ 77i9 -196179756 1-9-8 1969 1970

Requested Acreage (in th. has.)2! 71 80 99 103 93 89

Planted Acreage (in th. has)1! 66 81 89 93 imV 83 97 100

Production Volure (in th. qls.)]! 1,145 1,424 1,730 1,945 i,56o 1,700 1,850 1,900

Production Value(in mill. US$ equiv.) 28.3 33.3 37.0 44.9 34.0 44.o 46 .o 46.5

Exports Volume (in th. qls.) 1,021 1,217 1,535 2,010 1 .,,3o' 1,530 1,600 1,650

Exports Value (in mill. US$) 25.0 29.7 36.6 44.5 33.1 39.0 39.2 39.6

Exports Unit Value (US$ per ql.) 24.5 24.4 23.8 22.2 24.0 25.5 24.5 24.0

Exports f.o.b. price (basicmiddling - US$ per ql.) 25.50 25.75 26.25 26.25 26.25 28.75 27.00 26.50

Domestic Consumption(in th. qls.) 120.0 130.0 140.0 150.0 160.0 170.0 250.0 250.0

Changes in StockS/(in th. qs.) +4-.0 +77.0 +55.0 -115.0 20.0 - -

1/ Second year of the split crop year.

2/ NIovember rains reduced further by some 12% the area actually harvested.

3/ Stocks in mid-1967 -,ere estimated at virtually zero.

Source: Danco de Guatemala, Con.ejo Nacional do Al.go.on and mission esti-ates.

Table 11: GUATEMLA: BANANA STATISTICS, 1963-1970

Estimated Actuals Estmate ProJections1963 1964 1965 i976 1967 1968- 1969 -1970

Acreage (th. has.)1 114.0 100 5.5 7.0 6,5 8.0 9.0 10.0

Production Volume (th. stems) 7,005.0 6,s151 .8 3,435.4 5,461.1 4,900.0 6O,50.0 6,600.0 7,150.0

Production Value (mill.US$equiv.) 12.1 10.2 5.0 11.0 9.5 10.3 11.3 12.4

Exports Volume (th. stems)2/ 5,622.8 4,371.9 1,580.2 3,530.3 2,900.0 4,000.o 4,500.0 5,ooo.o

Exports Value (mill. us$) 11.5 9.4 4.1 10.1 8.6 9.4 10.4 11.5

Exports unit Value (US$ per stem)2/ 2.04 2.14 2.61 2.86 2.62 2.36 2.30 2.30

Domestic Consumption (th. stems)1.382.2 1,782.9 1,855.2 1,930.8 2,000.0 2,050.0 2,100.0 2,150.0

United Fruit Company:Production (th. stems) 2s730.0 3,600.0 3,600.0 3,600.0

United Fruit Company:Purchases (th. stems) 170.0 400.0 500.0 500.0

United Fruit Company:Total Exports (th. stems) 2,900.0 4,000.0 4,100.0 I4,l0O.

Independents (th. stems) 400.0 900.0

1/ Very rough estimate,2/ Because banana statistics provided to the mission were expressed in "stems" this table does not present

export estimate in "tons" or "boxes"./ llo allowance is made for the cost of the box.

Source: Banco de Guatemala, United Fruit Company, Empresas Taylor de Guatemala and mission estimates.

Table 12. GUATZi MALA: -SUGAR STATISTICS, -963-1970

Estimated Actuals Estimate Projections1_9763 -_ _96_ _1_9___- ]S__9_67_ 1968 969 1970

Production Volume ,(th. m, tons of cane) 1,980 2,052 2,090 2,150 1,8331 i,50o 1,5oo i,50o

Production Value(nill. US$, equiv.)?/ 18.6 19.8 17.5 18.4 17.0 11 .0 14.0 Ah.0

Exports Volume -(th. qls. of unrefinedsugar) 1,031.7 1,192.3 686.7 1,135.7 1,111.0 1,OllO.x 1,060.o 1,080.0

Exports Value(miii. Us$) 6.1 8.5 4.2 6.o 6.7 6.2 6.4 6.5

Exports Unit Value(us$ per ql.) 6.03 7.12 6.o8 5.26 6.oo 6.00 6.oo 6.oo

1/ Reportedly some 500 th. m. tons of cane were left uncut in the fields;furthermore, in fall 1967 there were about 565 th. quintals of unsold stocksof unrefined sugar.

g/ Includes sugari cane sugar cane juice, and unrefined sugar.

Scurce: Banco de Guatemnala, mission estimates.

Table 13: GUATEMIALA: BASIC CROP PRODUCTIO1N, 1958-1966_-(Vabeu-s in thousand quetvales at 1966 prices)

Pro-diiets t~~9~o6 I . 9 4 3 1 9 64 4

0. 0. V. 0. V. 0. V. 0. V. V. 0. V. 0. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~ V. 0.V.

Cotton (fiber) Qojotol, 3240 7399.5 344.5 a 225.4 - av.s a 508.2 430.4 55 329.6 777.4 57 494.0 5 2n.3a 29 470.4 1.6 S. 5 34 94 2 8.9.4 230.04.5 2. 560.8 38 946.6Co~~~~...,e (~~~~~~~~~~~dS) * ~~~~~ 49& 9 I 6D5.3 353.3 15 254 3.27. 2 424.0 75.2.5 2207.5 5I19.oa 3I55. Os O.i , 2. . 41 2664 73. 043. a 61.6

55.5 527.2 59.4 204. 0 -Is.0 69.2, 29.4 224.3 2n.4 2.3 42.0 44. 1.5 23. 28. 302.4 257 25.C.65.* 1254.2 0234.3 227.0 124a.0 295.2 I250.4 273.0 5 28.3 144.8 5 377. 6 M.,0 5 76.0 Sze. 21209.3 622.3 2 40.2 671.0 2 7.

foIl.. * 5915.6~~~~~~~~~~~~~~~~~~~M 4752.5 23. 9 72543.7 2WA 72077. 2572.2 79 0.5 227.7 724.3 262.2 047110.4 2428.9, 0455.6 2644.9 654504. 2650.3 2043.7

SO~~~~~~O76.54 * 54~~~~~~~~~~~~~i754.2 46M.I5 54049.4 490.4 212104.4 6944.3 20 044.8 6424.0 2 50015.2 9325.0 3 3252.0 5 on.2 2453504 51335.7 289.9 50294.3 331IV.2 I0a32.92.4 6 o.r95o6o.~~~~~~~652C0 OSiSongs1.. 47250 53200 4528.00 307O.8 2225.0 530.0 300.0 I5589.0 27. 59 222131. 23. 3 32,.. 3235.4 5i27.5 2069.0 354S.0 227.so.~~~s (.0,.rto..4) 992525~~~~~q..1. I sA.2 a 23.4 5021.0 723.9 I 229.5 717.8 2 32.3 4745.5 5 635.9 6 2S35. 5 35. 7743. 5 972. 4567.5 944.8 4920.5 I 02).7 3242.

Cw3,o 1 . 93. 0 3.3 394. 9.9 5 000 .8 2. 9.aS . 8.2 944.0 8.4 Im02. 7.9 948.0 3.0 94.foe,. * 05.2~~~~~~~~~~~~~~~~~~~~~4 259.4 55. 35.2 0.91 550. 55.4 ML. 0. '8. 2 7.4 525.0 . .2 92.5 3.4 942 . 9.

3-1.y X~~~~~~~* 32 53L5 2.4 3.0 2.0 12.3 5.9 s1.9 5.0 :5.2 2.1 52.5 24 I5.5 2.3. 5I.4 .450IL2. 7111.3 3.3 45 7.5 231. 1*681.7 25.0 I5 2-1 50.2 W.J 13.7 ML& 13.0 649. 28.6 90.9 5. 0.

24,.1 f14b0 * 25. * 5.-1 - - . . - - - _ . ; * ---Kr..f M60 I.4 31.4 2.2 46.3 06.0 527.5 12.0 115.0 07.4 73.4 8t0o 3.75.2 132.2 53.9 I 049.7 5.2 5 5.

I0380.2 I I044.2 644.4 55 7)".3 IM 7.0 052 . 5 1722.5 52 00.4 Ia57.0 13 244.7 2774.4. 4 2411.9 2425.3 57528.3 2304.2 5409M.0 2 430.7 757 -.

E1.. - W-228.9 727.0 5w07. 749.0 110.3 772. 553.5 796.4 557.3 WA1. 525. 5.6 55.4 807. I2. 53. 22.7 55.T.d1. ,,obo7 * 5.5 .9 55.4 3451.9 15.4 342.9 52.4 341.9 24.6 757.5 15.5 I90.7 68.2 I20 -4 5 33. 44. O 2.

U..ot. 2evo* 55. 54.7 50172.8 38.5 404.2 5577.5 256.2 423.2 3604 .8 987.4 A527.4 I 3W74 2325.0 2842 0 27M0.0 0254. 4 53.CI r..11. I.-s 25. 273.9 4 015.9 722.1 48223.4 77. 4 O 425.4 155.3 7941.4 3227. 2 .7 30.4 2 93.3 07.8 31550.4 074.3 365.4.4 43.L.024l0 0 44 5. 0.4 55.0 0.4 55.0 0.4 55.5 0.4 55.5 0.4 55.8 .5. 53.6 6.2 23.5 0. 5.

94o~~~~~~~~~~~t.o 52 0~~~~~~~~~~~~.4 94.4 9.2 92.4 .4 94.4 9.7 97.4 9.0 98.4 10.4 054.4 567 57. 550 204 2. 523.4Co2 * 5M293. 1544.7 It 252.3 150373.0 55445. 3 442.6 It54025 V7 267.2 52550.9 3794.9 i 5523.2 a463.4 24589.9t SI 390.6 2594. 255224 I'53.7 15243.29.89025t.. * 296.0 I 17V.J 79.9 5 722.0 .:2.3 5 43.7 3041 5827.6 343.5 2150.5 320.2 5 62.2 14. 2255.2 450.0 2W 45. 5033. 7.

T.b. 32~~~~~~~ 1.6 m.. 34.9v 3.8 68. 511. 43.5 5252.4 68 369.3 88.3 5I402.5 50477 7 32I . 53.3 2253.24615:9 2553.4 448.7 2522.2 44.5-1 27"6.4 115 355 389 20. 6. 454 284.6 470. 542 32448M.L3 .

vft.tAl- ~ ~ ~ ~ * 221".0 1 52415.3 2294.0. 14m. 23 7.2 2472 1 4.4 359082 5214 14 23495 556.3 2615.9 2744.2 275.2 5422360 283210 247547 2. 577.

it ~ ~ ~ ~ ~ ~ 470. - 1530. 52 273. 5307.4s . 4o9. 7i 5797.5. 8 233.5. 521.0...,.Wo t,. .r4 -U-~~12 355 5 420.4 &468.5 1441.7 047. O 53.3 7no.s 503.9 72. O 4O. 0. n2 455 I739 52. 5. 3. 2. 6

f-,.. o *os..- A 4202.9 53 447.4 3421.4 I 5529.4 7 233.6 39 745.2 42M.0 27995.5 4 550I.# 55 760.8 5 2.$ O4 mi2.2 4 271.9 52.6 26.2 41 2294 3,1,3 It

SS.b-Wt.1 - M83 53.4 - 84. 0 . 204.0 .0?" - 253SO. I M gn.V U,24 9MI. 273 820.9 - 077 333.8 . ~ 7,4.

05.h.. A4gi-I5t-4 P_-~ 9550.2 - W8532.7 to2507.2 to xL2 'II5 525.5 - 5 497.0 - 3451'.0 135 547. . 2,793

T.'-.I A9111e.2-1 15d,so 92 332.8 n213537 M 51344. - 15o 00.3 2 7%1_2 - - 45.7 Wu 555.9 . 291 20.4 . ~ 75

5.57-.ok -.d d0577 100-.t. - 745.8 - 73 351.3 - 79 227.9 04 055.2. 3 a854.9 8 009. WA 64. S" 9 396.3

Pi-So O 3985.7 -t2289. 3468.9 - 3.7 - 407.7 On.$ .0 ..-. 4942.5 - 41105.3 . 1152

Tocol ~~~~~~~o1O 9ro4,.e01o. -~~~~~~~~~~~~~2D 0.2 2207. 2 2742. - 15568.7 ZSW 213.2 3068482.5 s 352. & 342 709.0 . 06.1,

"P't. V? SMODX ~~~- 25~0 - 2925. 25370 1573.4- 223. 2344.5 55. 12. c..

.1 Estimuated at 5% of total agriculitural production.

Source: Banco de Guatemala . Departamento dc Estudios Econ6micos (Secci6nde Cuenotas Nacionales), mission estimates.

Table Th: GUATEMALA: lNDICATORS OF INDUSTRIAL PRCDUCTION, 1957-1966

1957 1958 1959. 1960 1961 1962 1963 1964 1965 1966

Flour (thousand metric tons) 27.5 32.1 37.0 48.8 52.5 52.4 58.9 58.o 60.1 65.7Beer (million liters) 15.5 18.7 20.2 16.6 16.1 15.4 17.9 20.3 22.6 22.4Cigarettes (million packs) 85.4 86.2 87.6 94.5 92.7 95.6 99.0 104.8 115.1 120.4Cement ('000 metric tons) / 129 174 163 167 182 171 224 265 330 332Sugar ('000 short tons) 66.0 69.5 68.5 80.7 91.5 120.7 142.8 lkS.5 137.4 nea;

Production Indices (1946 100)

Non-durable goods: 149 161 173 174 184 186 210 248 236 252

Food 163 159 179 172 198 185 213 193 204 217Beverages 137 139 141 138 136 131 136 135 141 153Tobacco 151 152 155 167 164 168 176 185 203 209Chemicals 200 239 321 383 423 467 664 673 611 638Textiles 99 115 102 108 124 131 152 155 182 183Clothing 144 226 219 215 191 168 183 228 280 294Electric Power 262 302 385 374 427 484 553 615 736 836

Duwable goods 218 256 242 221 237 208 252 315 388 355

Lumber 157 Vk4 140 106 115 84 84 128 136 136Non-metallic minerals 285 380 355 348 372 345 437 522 666 598

Value added in manufacturingJ/(million auetzales in 1958prices) 116.8 124.0 129.8 135.5 143.3 151.1 165.9 176.4 190.8 201.8

2/ Staff estimate based on constant price data for value of production, assuming a price of $1 per 42.5 kg. bag./ Estimate.

Source: Direcci6n General de Estadistica, Banco de Guatemala and mission estimates.

Table 1: uUATEMALA: VALIJE ADDED IN THE 14ANUFACTURfl'G SECTMOR, 196:9-19967(In millions of cruetzales at 1958 prices)

1961 1962 1963 19614 1965 1966 19671/

Food processing 42.0 44.8 49.3 49.3 51.4 55.1 60.9Footwear and clothing 20.2 21.3 22.3 24.2 24.6 24.8 23.0Sawmill and furniture production 7.9 8.3 8.4 9.2 9.6 10.0 10.4Textiles 15.0 17.0 20.2 21.9 24.5 25.8 27.8Chemicals 5.1 5.8 6.0 5.2 6.9 7.1 7.4Metal productsZ/ 1.9 2.6 3.8 4,5 6.3 7.4 7.7

Beverages 23.8 22.5 23.8 24.9 26.4 27.1 27.9Nonmetallic minerals 6.4 6.2 .7.1 9.3 10.2 10.7 11.0Publishing and printing 2.4 2.6 2.7 3.0 3.6 3.8 3.9Tobaeec 11.1 11.4 11.9 12.5 13.7 14.4 16.4Other industries 7.5 8.6 10.4 11.4 13.6 15.6 16.8

Tcital 143.3 151.1 165.9 176.4 190.8 201.8 213.2

Source: Banco de Guatemala.

1/ Preliminary.i/ E:xcept machlinery and transportation equipment.

Table 16s GUATEMALA: TRASPOIRTATION AND POIWER STATISTICS, 1955-1966

1955 1956 1957 1958 1959 1960 1961 1962 1963 1964 1965 1

Tran:sportationMotor Vehicle

(thousands)&/Car s 10.9 15.2 15.7 19.9 21.2 23.5 25.7 28.0 28.0 29.6 32.2 32.iTrucks 5.3 5.5 5.7 5.9 6.7 7.1 7.6 8.1 10.9 12.3 12.4 13.'Others 6.1 7.2 8.0 8.5 9.5 10.4 11.2 12.0 5.2 7.7 5.5 15.3

Total. 22.3 27.9 29.4 34.3 37.4 41.0 44.5 48.1 44.1 49.6 5o.1 61.,

Railroad TrafficPassengers ('000) 2000 1771 1648 1766 1757 1601 1647Freight ('000 metrictons) 981 1002 999 899 794 924 803 729 779 748 644 695

Port Traffic (000'smetric tons)

Export and InportTotal 913 911 933 935 1007 1138 1i41 1121 1370 1537 1589 1272

Electric Power?/Installed capacity (14) 42 5o 56 57 70 72 84 87 88 103 116 129

Consumption (mill. KWH) 152 158 177 200 224 248 269 301 336 367 426 486

Industry 48 5o 56 63 70 78 84 94 105 115 133 152Residential 68 71 79 89 100 111 120 135 150 164 191 217Commercial 21 22 24 27 31 34 37 41 46 5o 58 67Public Sector 16 16 18 21 23 26 28 31 35 38 44 5o

j Excludes vehicles owned by Armed Forces, and motorcycles.?! Includes private plants, which in 1966accounted for about 20C% of total electric power generation.j Preliminary.

Source: Instituto Nacional de Electrificaci6n (INDE), Banco de Guatemala, Direcci6n General de Estadistica, Dire: i5n deTransito, mission estimates.

T Lb/o (GUATLi4AUL: TitUiDS DI EDUCATION, 1 ',GI-ti>

(Public Schools only)

1964 i),) I

Primary Echllcat,ion

(a) DZay-tirne

Schlools 2,939 2,9N'/ 7¾L';

Tuachrcrs 7,981 8,29$fi.

Iupils enrolled 310,472 327,6o6 3,I,-,1

(b) Night-school

Schools 118 119

Teachers 393 )1092

Pupils enrolled 14,55o 15,881 66,SLi(,

Basic Secondary Educationi/

Schools 21 20

Teachers 1,009 1,002

Pupils enrolled 15,131 16,t088 1 7 629

Secondary Lduication

Schools 35 36 In

Teachers 664 CS45 3142

Pupils enrolled 7,034 7,527

Technical and Vocational Education

Schools 2 2

Tn1wCh1wil~ 29 I7('

I'ulllr *in >Js.u (i&;0 hid )v,,

1/ Three years of post-pri-mary general education.

2/ Including some schools that provide secondary education beyond the throe basic yuar .

3/ Excluding some schools that provide secondary education beyond the three basl(; yfwars.

Source: Hinisterio de Educaci6n Phblica.

Table 18: GUATEMALA: BALANCE OF PAYMENTS,1960-1970

(million US dollars)

Actuals Estimate 7___3/1960 1961 1962 1963 1964 1965 1966 16 Y1 196 1970

Exports of Goods (f.o.b.) 116.2 11h.4 118.5 15h.1 165.2 187.8 231.6 197.4 227.6 235.1 2h5.2Imports of Goods (f.o.b.) -12h.8 -120.6 -122,9 -156.0 -185.7 -210.6 -201.8 -237.0 -237.0 -256.o -276.5Services and Transfers, net -17.4 -10.1 -19.8 -28.1 -29.5 -25.9 -46.9 -40.1 -44. -h6.7 -49-°

Balance on Current Account -26.0 -16.3 -2h.2 -30.6 -5o.o -48.7 -17.1 -79.7 -5h.o _6Y.6 -0.3

Public!/Capital, net 11.7 13.6 -2.7 17.8 2.9 10.2 -0.1 25.7 21.0 20.0 25.oPrivate Capital, net 21.0 12.3 16.6 27.2 4.5 42.5 5.2 45.3 30.0 35.0 40.0

Balance on Capital Account 32.7 25.9 13.9 45.0 47.4 52.7 5.1 63.8 43.8 55.0 65.o

Decrease in Reserves/ -2.8 -5.8 13.0 -12.6 -0.3 1.8 7.5 6.1 3.0 12.6 1

Errors and Omissions -3.9 -3.8 -3.2 -1.7 2.6 -5.8 4.5 9.8

1/ Includes the Banking sector.2/ The minus sign indicates increase in reserves.J Not taking into account any possible stand-by arrangement with the LFT. nor the adoption of corrective

measures by the Government.

Source: Central Bank, Ministry of Finance, IMF estimates and mission estimates.

Table 19' GUATEHALA; COMPOSITION OF EXPOFMTS 1955-66(Value s in million U.S. dollrrs)

1955 1956 1957 1958 1959 1960 1961 1i962 1963 19614 1965 1966

Coffee (green only) 75.5 91.9 82.3 77.5 74.2 714.6 67.1 67.1 77.1 71.1 91.7 100.1Volume (000 quintals) 1Y286 1,358 1,3144 1553 1,804 1,737 1,718 1,791 24T36 1,653 2,071 2,370Unit Value (U.S. j perlb.) 58.8 67.7 61.2 50.o 141.2 142.9 39.1 37,5 35.6 2.14 3.6 141.6

Bzantes ih5 l5.i 14b5 13.1 14.6 17.3 13.9 9.5 11.5 9.4 14.3. 10.1Volume (milJ,ion stems) 5.5 5.2 5.3 14.7 5,5 7.3 6.3 14.1 5.6 14.14 1.7 3.5Ulnit Value!/ (U.s.$ perstern) 2.6 2.9 2.8 2.8 2.7 2.4 2.2 2.3 2.t) 2.1 2.6 2.9

Cotton 145 5.0 1h.? 5.h 4.1 5.8 10.2 i5.2 25.0 29.7 34.4 44.5Volume (000 quintals) 110 171 337 217 226 251 393 587 1,021 1,217 1,535 2,010Unit Value (U.S./ per lb) 31.7 29.0 265 2zh.5 18.0 22.8 25.6 25.5 214.2 214.1 23.5 21.8

2Dned meat - - - - 0.2 o.8 3.8 h.4 3.7 14.6 5.3suaer 2 - - 0.1 0.1 0.9 3.0 6.1 8.5 14.2 6.0%lscentialoflaS 1.1 3.3 3.2 1.0 0.7 0.8 1.7 2.9 3.2 2.6 2.2 1.7Shrimu and other sea-food - - - - 0.1 0.), o.5 1.3 1.1 1.0 0.? 0.8Cli cle 1.14 1.0 1.1 0.9 x.5 1.9 2.3 i1 1.1 1.6 1.3 o.4>;.nber o.8 0.6 o.14 0.14 0.9 0.9 1.1 1.0 1.7 1.14 1.2?lo.ivrs, ?ruits and

Vegetables, Seeds and0, e cn- i n gs n.a. n.a. n,. n.a. n.a. n.a., 2.6 2.7 3.9 5.9 6.7 9.0

> r;syt215 Tubes n.a. n.a. n.c. n.c. n.r. n.e. o.8 o.4 0.8 1.2 1.9 ).16.8 p.4 10.7 9.1611Ž, -A& 92.7 -10.1' 18.9 2a3.8 34.2 -,48j,

TOTAL _ 6 t,b __,1 3 j 917.1 107.4 126.2 lmr1w351-> T16- { I 723fl

1/ Since the valne of bannnn exports is an estilmte, the ni,t wiine jiS shown only to ind:icPte the general trend,not ncthlpl 'vices.

j/ T>-On 2rrS.SS oil rnd citronella oil.-/ InC12zdezS, _non- others, SoT1Yhble corffee honey, cfcro, cottonseed, tin eoncentlrrtes, .beveregcs, plynvood, paper-

bags, annd Vnrious other rnnnafnctiWed prodVots.

Soxnrce¶ Dj.recci6n Generrl cle Estnd¶stic., and Banco de Guatemaala

Table 20: EXPORT PROJECTION, 1967-1970(million U.S. dollars)

Estimate1967 1968 1969 1970

Corrunoditie s 197E4 227.6 236.7 247.3Coffee 6X7.0 6 3. Cotton 33.1 39.0 39.2 39.6Bananas 8.6 9.lh 10.4 11.5Sugar 6.7 6.2 6.) 6.5Meat 5.6 5.9 6.4 7.0Others 20.0 21.6 23.3 25.2Exports to Central America 58.5. 64.4 67.6 71.5

Services 29.8 33.6 35.3 37.1

TOTAL 227.2 261.2 270.); 2882.3

Source: Banco de Guatemala, individual cormodity associationsand cooperatives, and mission estimates.

Tc-ble 211 GUATEMALA: COMPOSITION 0P IMPORTS, 1956 - 19(65

(million U. S.,dollars, c.i.f. valucs)

IsrIc class, vication - 1956 1957 1958 1959 19"O 1961 1962 1963 1964 1965

rc :dstr.ffs 14.7 15.3 16.5 15.4 1!-.0 13.8 15.1 19.5 20.2 14.0Bev-'ragcs and Tobacco 1.6 1.5 1.9 1.6 1.3 1.1 1.2 1.0 1.2 2.0?a-, materia}s 1.2 1.6 1.6 1.1 1.7 1.9 2.3 3.1 3.9 35.35els and -ubricants 10,2 10rA 11.2 12.3 13.9 13.4 12.8 13.5 15.4 15.9Fats and non-mineral oil0 1.0 1.1 1.6 1.2 1.6 2.0 1.6 2.0 2.3 3.8C'emicals 15.0 17.3 17.5 18.0 20.2 20.9 21.8 29.3 32.h 18.7'.;wLfactures, according to rawr material 34.3 h0.7 38.0 32.8 37.7 34.2 34.7 44 .5 52.2 65.5.c -inery and vehicles 38.4 36.0 36.0 34.0 34.3 35.4 36.9 )L5.7 58.7 h3.6Various manufactures 20.5 22.9 24.h 17.6 11.2 10.8 9.5 12.5 15.8 30.5Othzr2/ 1.0 0.6 1dt 1.2 - - - - -

Total 137.9 147.6 150.1 1314.0 137.9 133.6 136.0 171.2 202.1 229.3-

/ T,RD ztaCfr approximations of SITC classification based on Guatemalan import classification used. up to 1959.J Disciz-pancy in T-RD staff estimate of SITC categories.

Voarce: Direcci6n General de Estadistica y Censos, Comercio Exterior,- Banco de Guatemala, SIECA, and IBRD staff estimates.

-sbl* 22, GJATMIALA: BALANCE OF PAYMTS, 1962-1967

(In *.llore of U.S. dollars)

196e i963-- - 19614 1 9~ 65 196 19671/

A. Goods, services, and transfer peymsztRKports f.o.b. 119.0 154.1 165.2 187.8 231 .C 19y.4Import f.o.b. 122 9 -156.0 -165.7 2;0o.6 -20o1.& - °

Trade balance -3.9 -1.9 -20.5 -22.8 29.8 -39.6

Freight and insurance -12.3 -15.1 -17.3 -13.0 -19.2 -20.9Inveatment incone (net) -11.9 .14.2 -17T.4 -17. 5 -26.2Travel (net) -2.14 -7.1 -7.5 -10.6 -18., -14.8Other servicec (net) -0.2 2.7 6.0 13.8 T77 2.2

Balance of services -26.8 -33.7 -36.2 -3`'3 -56.2 -49.

Private transfero (not) -1.3 2.5 5.7 5.3 7.8 .Official transfers (net) 8.3 2.4 1.8 1 1 1 -

Balance of transfera (nat) 7.0 4.9 7.0 6.4 9.3 Y.6

2tol -23.7 -30.7 -49.T -48.T -17.1 -79.7

B. Capital accountPrivate *ector

Long-term borrowingLoans received 4.2 8.7 11.9 10.1 12 7 11.5Amortization -2.3 -17 -1 9 -2;.4 -2 - .5Net borroving 1.9 7.0 1'J.0 .7 9.U 9.0

Direct investment capital 9.3 8.5 11.7 15.3 15.0 15..Suppliers' credit and other privatesector capital (not) 4 22.8 1 -19.6 21.0

Nh. ~~~~~~~~~~~~~~~~~~~~~-5 5.2 -Subtatel -15S 27 2 45 4 % Publirc sector,

Long-term borrowlng (Central GC _nW t)Loans received o.6 4-3 3" 3 ° 2.7 9.6Amortization -1.3 -1.14 -2.> -5._ 4 -3.1 -1.4Net borrowing -0.7 2.9 1.2 -2. -0.4 .2

Central Gavernment boodsPlaccments abroad 1.8 15.1 5.0 13.0 6.5 15.2Amot.ization -2.8 _ _5.0 - 7.9 _::r,o.' -orroing =0. 0. .l b.0 -u.g 9

Loans to rest of public sector (net) -- -- 0.2 5.1 o.6 5.4Government of Costa rdca bonds - -1.0 -- -- -- --

Subtotal -17 *='O 1.5 8;7 -0.7 1 9. 5Danking sector

Net utilization of medium- and long-termloans by the Bank of Guatemala 1.9 2.9 1.8 3.0 -0.3 0.6Net utilization of medium- and long-term

loans by other banka -- -- -- 0.2 1.0 0.5Subscriptions to internatioaorganizations (net) -2.9 -0.2 -0.3 -1.8 -0.2 -1.5

Increase In the capltal of freigndeponit money banks -- -- -- 0.2 0.2

Blnks' bonds -- t. -0.1 -O.1 -O.] o -6Subtotal ; 371 4 1 5 O.r -3 .'Ž

Total 134 14.0 147.I1 52.7 5.1 63.A

C. Not errors and amissiams -3.2 -1.7 2.6 4.5 9.8

Total (A+B+C) -13.0 12.6 0.3 -1.8 -7.5 -6.1

D. Reserve movementsBank of GubteisalaAssets (increase-) 5.0 -12.4 2.8 _12.0 T.1 -4.5Net L position 5-0 -1.1 -3.9 3.8 5.4 10.0liabilities 0.9 0.3 0.2 5 7 -6.2 1.5

A.ft-otal 10._-9 _-13.2 -_:0.9 -2.5 _673 7 0Otk:r banks

Aar.ete (incTc." -) n.4 0.3 -1.1 1.1 0.3 -o.8L' bilitiea 1- 7 ) 7 _3 2 0.9 -° l

foubtcntl _2.I -o.6 .o _4.i- I., o.

¶.^ota1 13.0 -12.6 -0.3 1.8 7.5 6.1

Sourcer. Bo&eo dn auatemala; PG stafr eatimstea1 And mission estimates.

/ 1967 eationte bern-i on central bank figures of Januar- 5, 1968.

Table 23: GUATEMALA: INTERNATIONAL RESERVES OF GUATEMALA, 1961-67(In million.of U.S. dollars)

End of Period .1961 196 2 1963 1964 1965 1966 1967

Banco de GuatemalaGold and foreignexchange i/ 51.2 46.2 58.6 55.8 67.8 60.7 65.2

Net IMF position 3.8 -1.2 -0.1 3.8 - -5.4 -iS.4 2YReserve liabilities?/ -1.4 -2.3 -2.6 -2.8 -8.5 -2.3 ' 3,.8

Net reserves 53.6 42.7 55.9 56.8 59.3 53.0 46.0

Other banksForeign assets 3.2 2.8 2.5 3.6 2.5 2.2 3.0Reserve liabilities -6.5 -8.2 -8.5 -10.2 -13.4 -14.3 -lL52

Net reserves -3.3 -5.4 -6.o -6.6 -10.9 -12.1 -11.2

Banking systemnet reserves 50.3 37.3 49.9 50.2 48.4 40.9 34.8

2/ Includes dollar deposits with the Central American Clearing Houseand any credit balances on operations.

g/ Includes any debit balance on Clearing House operations.31 The IMF agreed in 1967, on a US$13.4 million stand-by arrangement.

Guatemala has drawn US$10 million, of which 6.5 million heve been reclassifiedas compensatory f insAncing.

Source: International Monetary Fund and Banco de Guatemala.

Table 21 GtIUATMAA: PUBLIC FINANCHS, 1960-1970(mji1-;nn Quetzales)

1Estimated Actuals Estimate _

1960 1961 1962 1963 1964 1 96 1196 1967 1968 19 1970

Total Current Revenues 108.8 107.5 105.1 L14.6 127.3 150.2 151.3 155.8 163 o 177.3 186.7Central Government 89.0 i 92.9 104 .0 121.3 124.3 132.9 113.1 150.3Autonomous Agencies 19.8 21.5 20.0 21.7 23.3 28.4 30.0 31.5 33.1 34.7 36.4

Total Current Expenditure -90.3 -94.1 -89.2 -95.0 -103.2 118,8 -128.2 -1 42..5 -1145.4 -151.0 -157.6Central Government 7T -75.1 1 -73.3 7B9 -85.1 - 97,3 -103.9 -116i 7 -113 ol -122.0 -12 Autonomous Agencies1/ -114.9 -16.0 -15.9 -16.5 -18.1 -21.5 -214.3 -25.8 -27.3 -29.0 -30.7

Total Savings on Current Acc. 18.5 13.14 15.9 19.6 24.1 22Lk 23.1 1 26.8 29.1Central Goverrment 13. 7. 9 -1T T T. T 1B 2.7 17 3 1.4 7.7.23.LAutonomous Agencies 14.9 5.5 4.1 5.2 5.2 6.9 5.7 5.7 5.8 5.7 5.7Amortization g/ -6.1 -6.3 -9.0 -8.9 -12.1 -12.6 -13.2 -17.0 -15.0 -16.5 -18.0Savings, net of Amort. 12.L4 7.1 6.9 10.7 12.0 -3.7 i.6 10.3 11.1

Total Investment -9 -3 -27 -22.2 -7.4i -38 . 3 _ -_

Central Government -21. 2 -26.-22 .3 -177.7 -2W7 3 .2 -32.1 -32 .3 -7l . -5 -60.Autonomous Agencies -5.2 -5.7 -5.1 -4.5 -5.3 -5.3 -6.o -6.o -6.o -6.o -6.o

Deficit (-) or Surplus (+) -14.2 -24.8 -18.4 -13.3 -22.0 -23.0 -28.2 -42.& -4a -50-3 -55

Financing 13.22 i81 -0

Foreign Grants andDevelopnent Loans 14.7 20.5 10.7 13.7 10.3 9.8 5.2 14.2 30.0 142.0 41.o

Other Borrowing 3/ andIncrease in FloatingDebt 12.0 5.i 11.1 6.9 9.1 23.7 22.7 23.5 12.0 13.0 14.0

Utilization of Deposits(- = increment) anddiscrepancy -12.6 -o.8 -1.7 -7.3 2.6 -10.5 0.3 L.3 -2.0 -4.7 0.3

1/ Includes municipalities, University of San Carlos and the Gtiatemalan Institute of Social Security.2/ Central Government only: autonomous agencies would add around Q. 1 million equivalent per year.3/ In recent years most of the Governmnt bonds have been ilaced, generally through the Banco de Guatemala,

with US commercial banks at medium-term: in 1966 and 1967 the amounts so placed were each year about Q. 15rnillion (plus, in 1967, Q. 3.5 millimi placed by the ?micipality of Ouatemala City; The float-, debt Lncreased

in 1,967 by Q.1.4 million, after a decrease of Q.2.8 million in 1966.

_Zuurce: :'-in stry of Finance, central Bank and missi on estimates.

Table 25: GUATEMALA: CENTRAL GOVERNMENT CURRENT REVENUES 1954-55/1967

(million quetzales at current prices)

54/55 55/56 56/57 57/58 58/59 59/60 60/61 61/62 62/63 63/64 JuI.-Dec. 1965 1966 19671964 6/

Business Profits Tax I/ 501 5.7 6,3 7.0 7.1. 6.4 6.3 7.6 7.7 8.6 4.7 13,5 12.4 14.0Property Tax 0,9 0.9 0.9 1.1 12 1,3 1.4 1.6 1.8 2.4 1.2 2.6 3.0 3.9Inhleritances andDonations Tax 0.1 0.3 0.3 0.2 0,2 0e2 0e3 0.2 0.3 0.3 0.1 0e3 0.3 0.2Import Duties 21.4 23.7 27e6 29.5 31.3 28.2 28.1 26,5 25.4 27,3 14.1 30,8 27.5 26.1Export Taxes

(mnostly coffee) 14,8 14.0 15,4 11,7 10,5 9,7 8.3 8.9 6.2 6.4 1.8 8,5 8,5 5.Liquor and Tobaco Taxes 12.7 12.9 14,4 15,5 15,9 16,1 15,9 15.0 15,4 16,6 8,5 16,9 16.9 16.6Stamp Tax 4,0 4,9 5.6 6.0 5e7 5.5 5,6 5.8 6.5 12,4 6.9 15,6 16.9 22.3Other Indirect Taxes 5/ 2e4 2.9 3.5 4.3 3,8 4,0 4,6 3.5 3,8 7,4 5e0 13,0 15.5 157

Non-Tax Revenues 2/ 5e5 900 108 7.6 5,9 7.0 6.8 6.9 6,9 7,2 5,5 7.9 7.1 8.5Earmarked Taxes 3f 4,9 4.7 6,6 8,7 8,2 9e0 9e3 9.0 8.6 9,5 4.1 9,7 12.3 11.5Other 4/ 7,3 0,6 0 0 0.1 0.9 0.7 2,2 0,3 0,2 1,3 2.7 0.8 Q.3

Total Current Revenues 79.1 79.6 91.4 9J36 89.9 88.3 87.3 87.2 82,8 98.3 53.2 121,5 121.2 124.3

I/ Starting 1963/64, includes income tax established in July 1963T/ Includes sales of public services, employee contributions to pension funds.3/ Various excise taxes earmarked for debt amortization_T/ Includes sales of public proporties.5/ Begirnnin_ in 1963/64!, includes ta_z on petroleum, previously collected as an mport dutv.6/ A special transitional budgetary period.

Source: Banco de Guatemala, Boletin Estad)stico, unrevi;sed series.

Table 26: GUATEMALA: CENTRAL GOVERNMENT EXPENDITURES* 1954/55 -1967(Million quetzales at current prices)

54/55 55/56 56/57 57/.58 58/59 59/60 60/61 61/62 62/63 63/64 Jul-Dec. 1965 1966 Jan-Jun.1964 1967

Current Expenditures 1/ 49.8 55e7 63.2 64,2 69.7 76.9 72.0 74.1 73.1 74.4 43.1 103.2 109.6 56,2

Administration 24.9 27.2 30.2 29.8 36.5 38.7 36,1 385 33o6 30.4 19.7 49.7 50.2 25.5Education, Health andOther Social 15,9 17.3 21,3 21.3 19.5 24.5 22,2 21.5 24.6 26,5 14.3 31,4 33.2 17.5Defence 7,4 8,6 8,9 9.7 9,9 9.6 9,2 9,1 904 110 5,7 14.3 14.7 8s4Pensions 1,2 1.8 1.4 1,6 1,8 1.9 2.1 2.3 2,4 2,6 1.4 3.0 5.6 1.8Interest on the PublicDebt 004 0.8 1.3 1.7 2.0 2,1 2,3 2,7 3.1 3,8 2.0 4,8 5.9 30o

Investment Expenditures 1/29,4 44,5 50J7 49,4 37.7 24,5 25,9 35,4 20,6 32,2 20,4 29,7 26,4 128

Equipment 1l1 1.1 1.1 11 2,4 0,3 0,2 0Q6 - 0,8 1.7 - - _Studies and Supervision 1,4 2,8 2,1 3,2 4,4 2,9 0,6 0Q5 0,6 - - - - -Roads (incl. some maintenance) 12.8 27,4 35.7 30.9 14,7 7.5 4.9 11.9 9.3 1 2,5 5.3 7X2 5,3 302Other Public Works 9,5 10Q8 8.0 9,5 9,6 7,7 9,0 8,9 4,2 8,3 5.0 11,5 12,2 4,8Other 2/ 4,6 2.5 3,8 4,8 6,7 6,0 11,2 13,5 6,4 10,5 8,3 11.0 8.9 4,8Total 79.2 100.2 113,9 113,6 107,4 1Q1o4 97,9 109,5 93,7 106,7 132.9 136.0 69,0

* Excluding debt amortization, These data represent obligations incurred, not cash payments actually made,1/ The division between Current and Investment expenditures is not rigorous,Y/ Includes "capital transfers" to autonomous agencies, Part of these should be considered as current expenditures,

Source: Banco de Guatemala, Boletrn Estadistico, unrevised series.

Table 27: GUATEMALA: CENTRAL GOVERNMENT FISCAL OPERATIOiS, 1962/63-1967(nillion quetzales at current prices)

1962/63 1963/64 July-Dec.I 1965 1966 1967_1964-

Current Revenues 82.8 98.3 53.2 121.8 121.3 124.3

Expenditures2/ 93.7 106.5 63.5 132.9 136.0 1)49.0

Current 73.1 74.4 43.1 97.3 103.9 116.7Capital / 20.6 32.2 20.4 35.6 32.1 32.3

Deficit -10.9 -8.2 -14.9 -11.1 -14.7 -2!4.7

Financed byForeign grants 2.6 2.5 0.4 0.6 1.2 1.8Net foreign borrowing 6.7 - 3.9 14.6 12.7 17.3

Gross borrowing 10.6 4.7 6.2 19.2 19.1 27.4Amortization -3.9 -4.7 -2.3 -4.6 -6.4 -4o.1

Net Internal borrowingl3.9 24.0 24.] 5.7 1.0 -1.9

Gross borrowing 26.2 30.4 27.3 13.7 7.7 5.oAkortization -12.3 -6.4 -3.2 -8.0 -6.7 -6.9

Decrease in deposits(-increase) and discre-

pancy -12.3 -18.3 -13.5 -9.8 - 75

A special transitional budgetary period.B/ Preliminary.j Excluding public debt amortization, including financial investment..

Source: Banco de Guatemala, Ministry of Finance and mission estimates.

Table 28s GUATEMALA: PUBLIC INVESTMENT, 196%0/61-1963/64 Aim 1965-1967(million quetzales at current prices, Central

Government only)

(a) 1960/61-1963/64

Jul.-Dec.Fiscal years 1960/61 1961/62 1962/63 1963/64 1964

Roads 5.6 7.8 h.6 7.2Ports and Airports 2.0 1.3 0.8 1.2Telecommunications 0.1 - 0.9 1.4Electric Power 0.5 0.2 2.6 4.2Agriculture 4.7 7.4 4.2 6.7Health and Welfare2A 7.1 5.9 2.0 3.1Housing 3.1 2.9 2.0 3.1Education 6.5 7.5 2.5 3.9Public Works (Other 1.3 1.8 1.0 1.4

TOTAL 30.9 34.4 20.6 32.2 20.4

(b) 1965-1967

Calendar years 1965 1966 19672/

Roads 12.r Public Works 11.5 12.2Agriculture 2.3 1.9ELectric Power 4.3 3.6Social 3.1 0.7Financial o,6 0.9Other 1.9 1.8

TOTAL 36.2 32-.1 3,2.3

1/ Includes water supply and sewerage.2/ A special transitional budgetary period.,/ Preliminary.i'>urce: Consejo de Planificacift and Contaduria General de la Naci6n

Ministry of Finance and mission estimates.

Table 29: GIUATEMALA: DRAWING ON FOREIGN DEVELOPMENT LOANS TO THE PUJBLIC SECTCR, 1962-67(million U.S. dollars)

Undiss-Original 1962 1963 196l. 1965 1966 1967 bursedAmount end 1967

Transp,ortt. ion

AID (roads) 8 21/ .5 2.3 1.6 1.5 0.5 0.5 1.3Eximbank (roads and com.) 12:81/ o.5 1.9 1.6 2.4 1.1 2.0 3.4Eximbank (port,) 4.6 1.9 2.7Eximbank (roads and agric.) h.2 )4.2IDB (roads) 9.0 9.0

Power an(d Telecovriunications

IDB 3.2 0.2 1.2 0.7 3.2 -Supplier (Siemens telephones) 0.9IBRDt 15.0 1.0 14.0

'_cial and Other

AID (fea-ibility studies) 2.0 - - 2.0.AID (customs service modernization) 0.7 - 0.7ATD (malaria eradication) 1.6 - 0.5 1.1AID (property tal- development) 2.2 2.2IDB (irrigation) 6.o 6.omDB ('easihilit,. stiudies) n02 0.2 -IDB (,w-tfer suppl-y and sewerav) 7.81/ 0.1. 1.1 1.6 0.8 o.4 l,.o.DB (h(,I-;in.,) . .3 - - 0.2 - o.6 2.3 2.3

Credi-t to Privrate Sector 2

5ximbank (agric. and irnustry) 5.o 0.6 0.1 - cancelledAID (rubber) 5.0 0.8 0.2 0.2 o.6 0.3 0.6 2.5AID (industrial development) 5 0 5.0IDB (ind. and agric.) 11.0' 0.4 1.2 O.b o.6 o.5 1.7 5.6IDB (small farmers) 2.5 - - 0.3 1.2 0.2 o.6 0.2

To TI 111.3 2.8 q.8 5.5 10.0 b.9 14.7 66.2

1/ Several loans.2/ Channelled through the Bank of Guatemala or specialized institutions.3/ Pcxrludes CABE'ls loans.

Sourc (: Banco de Guatemala and statements of individual agencies.

Table 30: GUJATEMALA: PROJECTED DISBIJRSEMENTS ON FOREIGN LOANSI/TOTHE PUBLIC SECTOR, 1967-1970

(million TJ.S. dollars)

7ndj;s- New Undi s-bursed Commit- Disbursements bursedend '67 ments 19f(7- 1969 197n end '70

T t c - ^';-TAI 2'):. 11.0 11.3 10.7 11.6 11.1

AIL:D l'o1)/A1.3 .7 .li } > i (r a > d cn( cf nr^ IJ3 L . ,o~0drnLak (r.~i 00(nd crum. ). 3 L.6 0. 9*T' :imb-Lnk (n)rt.) 2 .7 1.i 1.2Frnimbank (roads arrd aCri c. equip.) ).2 1.0 3.2 -

-I])lAB l,'nadis) 9.0 0.9 3.0 )!.0 1.1IB3LtD (!h,-i rhiways) 11.0 2 1 8.0 10.,BM It3 l3/ * r 3.0 ol. -

P-*uoer and Cornrnur i. rationsTO-TAiL 1T.n __.5 8.6 10.0 5.3 5.7

TJIR.t (hivro ) P7 T 77 2.0 1.1113tD (thermal) 7,5 3.6 3 .3 0.6 -TB11D (tel enom.) 7.0 1.0 2. 3.5

TOTAL 13.0 7.p 19.3 23.6 18.6A ID (feasiblitv studies) ". -. 1.2AID ( "tSt'XF serv. rmndern.) 0.7 0.l 0.3AI ED) (i-]rr1a rad .) 1.1 3.0 o.6 n.

A LB (r,ral credit1) 1.0 2.0I. r;, ( -r'1i os ar:C: , 1.0) n.8 2nPT'r) (F>r mar, c'w½. ) ci.O 1.0 2.0 -. 0AID (property tax) 2.? o.8 (.6 n.6

:~ (nui iwal. faci5.tiies) 2.0 1.0 1.0Tll (hospital modernization) . O.9 ji (water '-r' nd ses1eraeie) '.0 1.8 1.8 0.) -

11(,- ilo. ) .° *3 10.0 2.0 3. 7:!'D (,1-11 -,Ff rF' 4 ! i ).)1 !) ,.5 r 1 r

I j- !l] -ls,l-,- ) .3 1.8100 (!!.s'nnF 6 ').0 o.6 .5 2.9 -IO,T (agric. credit, 6.0 1.5 2.5 2.0IDf3 (cn. cA a,a tin f 0.5 1.0TD1 (Ynruinve- tjer,!e studies) 1.9 0.8 0. -

iHBO (educat A-n) L/ 7.0 0.6 2.9 29- 6; 4) i. i to Frivat- Sector-TO T 1,.7 2.0 8.0 .8 2.6A (riuibi-er) 0.3 7 7. l, -AID (rubber) 2.0 1.0 1.0 -AID (inFdcii;s.rin1 development) 2/ 5.0 o.8 0.8 0.8 2.6

JTB (industrial and agric. credit)- .6 2.7 2.2 0.7 -IDB (a,!ri: . cred-it : small fo?rrme s) 0.2 0.2

.. 0.kXiD TOALrr, 75.2 8o.5 31.8 8il8.8 I48.): 38.0

1,/ ,n ;'i,.i "u e o" loans from U.S. banks to the private sector (through the Banco de )Iratema].a)-1, fnr 'h,e 2-ntral qcvernment budget.

7,' P,' ,,f ted 'iF>ur e 7enis a,re vrerv rrnu-h eFtimateF.;, '-,9 ,l th ?C; r-'h ~he Banco rne ruatemala or sgecialir7ed inctitutions.

(: .n -1 ~ ~-" j .r an ' ;-,e ,5, cc .,*,'- ;5rn astc ''l "C - 1te C .5' :.

.'able 31: GUATEMALA: HOLDERS OF CENTRAL GOVERNMENT DOMESTIC BONDED

DEBT 1961 - 1966(million quetzal.es at current prices)

Debt outstanding atenrd of year 1961 1962 1963 1964 1965 1966

bId. by:

3anco de Guatemala 30.2 25.8 37.3 39.8 49.6 53.1Institutional Funds0 1/ 5.6 11o8 11.3 7.7 9,8 13.6State Agencies 2/ 1.5 0.9 1,4 4.8 4.6 7.6Private Sector 4.5 5,4 7,3 11,8 12.6 15.3

insurance companies 0.9 1.1 1.3 1.7 2.1 2.4Publ ic 3.6 4.3 6,0 10,2 10.5 12.9

Total outstanding 41.9 43.9 57.3 64.1 76.6 86.6

1/ "Institutional Funds" are government deposits in the Bcnco de Guatemala held for debt amortization. The funds are invested in government bonds.

2/ Includes the 3 state-owned banks, the Soctal Security Institute, and various autonomous agen-cies,

Source: Banco de Guatemala

Table 32?: GUATEMALA ; SUMMARY ACCOUNTS OF THE BANKING SYSTEM 1960-1966(million quetzales at current prices)

End of Period 1960 1961 1962 1963 1964 1965 1966

International Assets (net) _47e6 42.6 3 ( 3 40.6 38,0 4204 _4 0e13ank of Guatemala 50.7 48,3 41.9 48,9 48.3 53.4 53.3Other Banks - 3.1 - 5,6 - 116 - 8,6 - 10.3 - 11.0 - 13.3

Domestic Assets 159.4 172.0 186,01 217,8 255,9 278,2 301.4Credit to Public Sector 30,5 37.5 32.3 44.6 55.2 61.1 69.3From Bank of Guatemala ( 26.6) (33.2) (28.8) (41.0) '(44.8) (55.2) (56.6)C(redit to Private Sector 104.2 108,8 112.6 129.5 148,6 165.5- 178.0From DepositMoneyBanks (79.9) (87.1) (95.5) (108.5) (127.9) (132,6) (145.7)From State Development Banks (24.3) (21.7) (17,1) (21,0) (20,7) (32.9) (32.3)lJnclassified Assets 24 .8 27.8 41.2 43 .8 51.5 51.6 54.1]:nterbank Float - 0, 1 0, 1 - 0.6 - -

T O T A L 207,0 216,6 216.4 258,4 293,9 320.6 341.4

Domestic Liabilities to PrivateSector 152,0 156 2 163.4 188,0 215,6 234.8 254.3

Currency in Circulation 61.5 62.2 62,9 67.0 71.7 70.5 80.8Monetary Deposits 41.0 40.9 44,4 52,0 54.5 56.8 59,6Quasi-monetary Deposits . 31.2 35.6 41.3 51,0 70,6 86.1 97,4Deposits in Foreign Exchange 0 1 0,1 0. 1 0.1 0.1 0.1 0. 1Bonds 8.8 7.9 4.4 6,7 7.2 6.8 6.3Capital 9.3 9.5 10,1 11.2 11,5 14.5 10.1

OtherLiabilities 55,0 60,4 60,0 70,4 78,3 85.8 87,1Public Sector Deposits 18c0 25.1 12.9 28.9 33.5 38,8 34,0Official Capital 25.8 22.8 25.9 24,8 27,9 28.5 26.1IJnclassified Liabilities 10.4 12.5 14.1 16.6 16.9 18.5 27. 0Interbank Float 0.7 - - 0.1 - - -

Source: Banco de Guatemala.

Table 33- GUAT ALLA: CRLEDIT TO THE PRIVATi, SECTO 1958-1965(million quetzales at current prices; loans outstanding at

end of year)

1958 1959 1960 1961 1962 1963 1964 1965

Cotton 6.8 6.o 6.3 9.5 14.0 18.4 19.5 12.8Coffee 13.4 10.5 11.9 22.1 15.2 14.0 17.8 13.6Cattle lo.4 11.7 12.8 1o.5 11.6 15.0 16.8 20.2Other agriculture 7.7 8.1 7.9 10.3 9.7 10.5 12.0 14.2

Total agriculture 38.3 36.3 38.9 52.4 50,5 57.9 66.1 60.8

Coinmerce 17.5 1i4.9 16.5 17.3 16.0 17.5 17.1 21.3Industry and mining 8.8 10.2 10.7 12.8 12.8 16.5 22.8 18.5Construction 7.3 8.5 9.5 8.2 8.4 8.9 11.0 14.3Various 23.6 25.3 28.6 18.1 22.6 26.2. 27.2 42.7

Total 95.5 95.2 104.2 108.8 110.3 127.0 Jit.2 1i7.6

1/ Includes credit from the deposit money banks and the state development banks only.

Source: Banco de Guatemala.

Table 3: GUIATA : w-HOLESALE PRICE inDEX IN GUA.TE2iALA CITY, ].9"7-1966(195o =0oo)

1957 1958 1959 1960 1961 1962 1963 196L 1965 1966

Domestic products 105 106 107 105 104 105 1o5 108 106 106

Food and drink 107 110 111 108 106 109 107 113 111 109TextQiles 101 98 98 99 101. 99 99 95 93 93Construction and materials 103 104 104 102 104 104 104 105 107 109

Imported products 110 109 107 109 112 114 114 117 112 i5

Food and beverages 114 114 116 121 131 135 136 11i0 133 138Fuels 102 100 89 84 81 81 79 77 77 77

Wholesale price index, total l05.2 106.3 107.1 105.7 104.5 106.1 lo5.6 108.3 107.1 106.7

Source: Banco de Guatemala, Boletin Estadistico.

Table 3_: GUATE&4AL: TE5.'C OF TRADE, 1955-1966(1958 = 10J)

Export prices Coffee BE: nas Import Prices Terms of Trade

1955 122 118 112 92 1331956 138 134 13? 94 1471957 126 123 99 100 1261958 100 100 100 100 1001959 84 83 94 98 861960 86 86 S1 99 871961 82 78 73 103 801962 83 75 131 105 791963 78 72 82 105 741964 89 86 90 107 831965 9121 89 '0 103 88-1966 87j/ 84 90 106 821/

v/ Rough estimate.

Source: EF, International Financial Statistics and IRD staff estimates.