Chapter

GUATEMALA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2004
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(Position as of December 31, 2003)
Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: January 27, 1947.
Exchange Arrangement
CurrencyThe currency of Guatemala is the Guatemalan quetzal.
Exchange rate structureUnitary.
Classification
Independently floatingThe exchange rate is determined in the foreign exchange market in which the Bank of Guatemala (BOG) purchases foreign exchange on behalf of the public sector and to service its own external debt and intervenes occasionally to moderate undue fluctuations. All foreign exchange transactions of the public sector must take place through the BOG at a reference rate that is equivalent to the weighted average of the buying and selling rates in the foreign exchange market during the day before the previous business day. On the basis of additional information on the implementation of monetary policy by the BOG, the exchange regime of Guatemala has been reclassified, effective January 1, 2003, to the category independently floating from the category managed floating with no preannounced path for the exchange rate.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketThe Bolsa de Valores Nacional, S.A. is responsible for the operation and administration of the forward exchange market.
Arrangements for Payments and Receipts
Prescription of currency requirementsIn practice, most transactions in foreign exchange are denominated in dollars, in accordance with special payments agreements.
For capital transactionsThe issue of securities denominated in foreign exchange by banks and other financial institutions requires prior approval by the Monetary Board.
Transactions in capital and money market instrumentsYes.
Payments arrangements
Bilateral payments arrangements
OperativeThe Panama-Guatemala Clearing and Credit Reciprocal Agreement is operative.
InoperativeThe Clearing and Credit Reciprocal Agreement between Guatemala and Costa Rica, El Salvador, and Honduras functioned until 1995, and the Mexico-Guatemala Clearing and Credit Reciprocal Agreement functioned until 2002.
Regional arrangementsGuatemala is a member of the CACM.
Clearing agreementsYes.
Administration of controlThe Monetary Board (which includes the BOG and the MOF) approves annually Guatemala’s exchange policies. The BOG administers the exchange regime and may buy and sell foreign exchange to implement these policies.
International security restrictionsNo.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)No.
Controls on exports and imports of banknotesNo.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadYes.
Accounts in domestic currency held abroadNo.
Accounts in domestic currency convertible into foreign currencyNo.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresImports of most goods are unrestricted and require neither registration nor a license. However, imports of some agricultural commodities and animal products are subject to non-tariff restrictions.
Negative listThe list includes goods considered dangerous to society, such as weapons, certain chemicals, and drugs. Weapons may be imported only with the approval of the appropriate department.
Open general licensesYes.
Import taxes and/or tariffsGuatemala applies the CET for processed goods from CACM countries, which ranges from zero to 15%, with virtually all other intra-CACM trade exempt from tariffs. The maximum tariff rates on raw materials and intermediate and capital goods not produced in Central America are 5% and 10%, respectively, while the tariff rate on raw materials and intermediate and capital goods produced in Central America is zero.



Some processed products, such as coffee, sugar, oil, wheat, and alcohol, which are traded with CACM countries, are subject to tariffs ranging from zero to 40%. Guatemala’s tariff structure continues to exempt certain processed products from the maximum CET rate of 15%. The tariff rates for most footwear and textiles are 21% and 14%, respectively, and those for tires range from 5% to 15%. In addition, certain agricultural products enjoy safeguard provisions and are subject to tariff rate quotas under WTO rules, which also allow tariffs well above the maximum rate for imports in excess of their quota. Sugar is subject to a quota of 100,000 metric tons a year, with tariffs of zero within quota and 20% in excess of quota. Other examples are apples (12% and 25%); wheat flour (zero and 10%) yellow corn (5% and 35%), and rice (zero and 23.7%). These quotas are adjusted yearly, following discussions between the private sector and the government.



A trade agreement exists between El Salvador, Guatemala, Honduras, and Mexico giving certain tariff benefits to the participants. There is also a trade agreement with the Dominican Republic.



Effective January 16, 2003, the tariff rates for 52 products were temporarily increased up to 40% in some cases in order to offset the short-term loss of revenue due to changes in other taxes.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsNo.
Export licenses
With quotasExports of sugar, apparel, and textiles to the United States are subject to quotas.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instrumentsNo.
Controls on derivatives and other instrumentsNo.
Controls on credit operationsNo.
Controls on direct investment
Inward direct investmentForeign direct investment in the petroleum sector is regulated by special legislation.
Controls on liquidation of direct investmentNo.
Controls on real estate transactionsNo.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Purchase of locally issued securities denominated in foreign exchangeThe purchase of privately issued securities requires prior approval from the Monetary Board.
Investment regulations
Abroad by banksYes.
In banks by nonresidentsYes.
Open foreign exchange position limitsBanks are required to maintain positions as instructed by the monetary authorities.
Provisions specific to institutional investors
Currency-matching regulations on assets/liabilities compositionThe difference between total assets and total liabilities (including future payments and contingencies in foreign currency) may not exceed 60% of paid-up capital and reserves. If the difference is negative, it may not exceed 20% of paid-up capital and reserves.
Other controls imposed by securities lawsn.a.
Changes During 2003
Exchange arrangementJanuary 1. On the basis of additional information on the implementation of monetary policy by the BOG, the exchange regime of Guatemala was reclassified to the category independently floating from the category managed floating with no preannounced path for the exchange rate.
Imports and import paymentsJanuary 16. As a temporary measure to offset revenue loss due to other tax charges, the tariff rates for 52 goods were increased up to 40% in some cases.

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