Guatemala: First Review Under the Stand-By Arrangement and Requests for Modification of Performance Criterion and Consultation Clause: Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Guatemala
IMF Staff Country Reports, October 20, 2009
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- Guatemala: First Review Under the Stand-By Arrangement and Requests for Modification of Performance Criterion and Consultation Clause: Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Guatemala
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Bibliographic details
- Authors: Arrangement, Requests
- Published: October 20, 2009
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781451816686.002
Summary and Key Findings
- The paper discusses key findings of the First Review Under the Stand-By Arrangement for Guatemala.
- The fiscal deficit is increasing owing to a sharp decline in revenues, associated with the contraction in imports and domestic demand.
- The policy interest rate has been cut.
- All quantitative performance criteria through June have been met.
- Inflation has fallen below the consultation band set in the program, triggering a consultation with IMF staff.
- Fiscal policy needs to continue striking a balance between avoiding a procyclical stance and maintaining debt sustainability.
Fiscal Developments
- Fiscal deficit: increasing due to a sharp decline in revenues.
- Revenue decline associated with:
- Contraction in imports.
- Contraction in domestic demand.
- Policy implication:
- Fiscal policy must balance avoiding a procyclical stance and maintaining debt sustainability.
Monetary Policy and Inflation
- Policy interest rate: has been cut (no numerical rate provided in source).
- Inflation outcome:
- Inflation has fallen below the consultation band set in the program.
- This outcome triggered a consultation with IMF staff under the program’s consultation clause.
Program Implementation and Performance Criteria
- All quantitative performance criteria through June: met.
- Requests included:
- Modification of a performance criterion.
- Modification of the consultation clause (triggered by inflation outcome).
Policy Recommendations and Considerations
- Maintain a fiscal stance that:
- Avoids procyclical tightening that could deepen the economic contraction.
- Preserves debt sustainability over the medium term.
- Continue coordination between fiscal and monetary policy in light of:
- Weak revenue outturns.
- Lower inflation relative to the program’s consultation band.
- Reduced domestic demand and import activity.