The World Bank In Guatemala

Guatemala is the largest economy in Central America in terms of population (estimated at 17.6 million in 2023) and economic activity (with a GDP of $104.4 billion in 2023). The country has experienced stable growth, averaging 3.2% between 2014 and 2023, above  the Latin American and Caribbean average, supported by prudent fiscal and monetary management. Growth is projected to reach 4% in 2024. 

However, this economic growth has not translated into a significant reduction in poverty. In 2023, it was estimated that 55% of the population lived in poverty, and the informal economy represented 49% of GDP, with 71.1% of the employed population working in the informal sector.

Structural factors limiting access to basic services and productive job opportunities, along with frequent natural hazards and disasters, are key contributors to Guatemala's high poverty levels. These factors have also led to significant emigration, with remittances accounting for 19% of GDP in 2023. 

Guatemala's Human Capital Index score of 0.46 (2020) is far below the Latin American and Caribbean average. Human capital indicators are particularly low among indigenous and Afro-descendant populations. The country's child malnutrition rate is among the ten highest in the world, with stunting rates in some of the poorest municipalities reaching nearly 90%. 

Extreme weather events and other disasters have also reversed human capital gains, damaged infrastructure, reduced agricultural output, and intensified food insecurity. Hurricanes Eta and Iota in 2020 caused infrastructure-related losses equivalent to 0.56% of GDP and agricultural losses of about 0.20% of GDP.

Despite these challenges, Guatemala has significant potential for growth and prosperity. The country is rich in natural resources, is one of the world's megadiverse countries, and has a rich cultural heritage. Its proximity to the United States offers opportunities for tourism and nearshoring.

President Bernardo Arévalo took office in January 2024, focusing on social and economic investment, anti-corruption efforts, and improving public sector efficiency. His administration is committed to strengthening accountability, improving the business climate, and advancing reforms to address gaps in human development, infrastructure, and economic inclusion.

Last Updated: Oct 08, 2024

The World Bank Group's Country Partnership Framework (CPF) for Guatemala for 2024-2027 supports the country's efforts to strengthen human capital, increase resilience to disasters and climate change, and improve employment opportunities, focusing on institutional strengthening and promoting inclusion.

This strategy aims to generate impacts through investments and technical support in three key areas for the country's development. First, it seeks to enhance human capital by improving nutrition and child development, expanding social protection networks, and increasing access to basic services such as health, water, sanitation, and social protection. Second, it aims to strengthen resilience to disasters and climate change by enhancing risk management, natural capital, and the necessary infrastructure to face climate shocks, as well as improving forest management. Finally, it will work on creating better job opportunities by optimizing public spending, which will increase investment and promote employment in both rural and urban areas.

Additionally, this Framework encompasses two fundamental cross-cutting themes. The first involves strengthening institutional capacity by improving the availability, integrity, and transparency of data. The second is promoting inclusion by addressing barriers affecting women and indigenous groups and promoting their economic empowerment.

The strategy includes investments of up to $2.5 billion over four years. The World Bank supports the country through several financing instruments, technical assistance, and advisory services to address development challenges. This support is coordinated with other international partners and complemented by analytical work aimed at strengthening institutional capacity and improving service delivery, leveraging the World Bank's global experience.

Currently, the World Bank's active portfolio in Guatemala amounts to $407 million and includes three projects: a budget support of $250 million pending disbursement, the "Crecer Sano" program with $100 million financing since 2019 focused on health and child nutrition, and an Emission Reduction Payment Agreement (ERPA) backed by a $52.5 million grant aimed at addressing the drivers of deforestation and forest degradation.

Moreover, this portfolio is complemented by technical assistance and analytical products in tax administration, sustainable industries, and decarbonization. A pilot project funded with $4.5 million under the Dedicated Grant Mechanism aims to increase the capacity and benefits of indigenous peoples and local communities in sustainable forest and natural resource management.

The World Bank is also preparing new projects focused on rural roads, strengthening disaster risk management capacity, and providing access to immediate financial resources in case of health emergencies or disasters.

Last Updated: Oct 23, 2024

Technical support provided by the World Bank and UNICEF to the Ministry of Social Development, for designing a comprehensive information management system and strengthening its social protection systems, allowed the Government of Guatemala to rapidly expand its cash transfers program in 2020 and create the “Bono Familia” to support families during the COVID-19 pandemic. The “Bono Familia” platform enabled beneficiary families (around 2 million) to be identified through a simplified verification process, minimizing personal contact, and the delivery of 1,000 quetzales (US$ 134) per family through “simplified bank accounts”. Money could be received in bank branches or ATMs or used to pay for goods in stores, allowing the expansion of digital payments for thousands of families who lacked access to bank accounts.

Facing one of the highest secondary school dropout rates in the Latin America and Caribbean region, Guatemala had several challenges in accurately identifying students at risk of dropping out and implementing more effectively targeted interventions. The World Bank’s technical assistance from 2018 to 2020 helped strengthen the capacity of Guatemala’s Ministry of Education to collect, manage, analyze, and use high-quality statistical information and pilot the use of an early warning system to identify at-risk students. The pilot, which was implemented in 3,000 schools and prevented approximately 850 children from dropping out, will be scaled up nationwide and will include a guide for teachers on low-cost interventions to prevent dropouts.

The Project to Support a Rural Economic Development Program improved the competitiveness of rural value chains and strengthened the institutional capacity of public entities through the adoption of a land management model. Results of this project, which closed in 2014, include support for more than 200 partnerships with a high participation from indigenous groups; an increase of US$ 16.4 million in these associations’ total sales; rehabilitation and construction of bridges to benefit 160,000 people, and support for the development of 324 municipal development plans.

The Maternal-Infant Health and Nutrition Project helped to provide access to basic health and nutrition services for over one million people through the building or renovation of 35 health centers for maternal and child care, training of more than 5,000 health workers and support to the Comprehensive Community Care program for Children and Women (AINM-C) in 142 jurisdictions, among other activities. The maternal mortality rate declined by more than 50 percent between 2006 and 2012 in the intervention areas, while the percentage of pregnant women who received prenatal care increased from 54 % in 2006 to 89 % in 2012.

Through the Project to Strengthen the Resilience of the Maya and Rural Residents Facing Food Insecurity and Climate Change in Guatemala’s Dry Corridor, the World Bank helped the population cope with climate change through ecologically-sensitive, lower-cost production systems, which increased productivity levels and contributed to food security. The project closed in 2016 and benefitted 1,600 families living in the departments of Baja Verapaz, El Progreso and Jalapa.

The Second Land Administration Project helped improve land tenure security for close to one million people (51 % of which are women) and resolve land conflicts. More than 1,600 indigenous families received titles and four communities benefited from communal land certification, a historic precedent set by the Project, which closed in 2015. The cadastral information generated is now being used by 22 municipalities for multiple purposes, including territorial planning activities.

Last Updated: Oct 23, 2024