Economic and Social Development – 1997
1997
The Ministry of Finance submitted a report on fiscal policy commitments on 10 April 1997. Included in the report were plans for a number of tax reforms designed to meet the stipulations in the Agreement on Social and Economic Aspects and the Agrarian Situation, especially to increase tax revenue to 12% of gross domestic product by the year 2000. On 16 April, the Government submitted plans for over 120 million US dollars in public investment for rural development, which surpassed the amount required by the Agreements.1
The Follow-up Commission accepted the Government’s request to delay the process of amending the Urban and Rural Development Council Act. A lack of funding and coordination problems led to delays in initiating the national municipal training program. At 9% of GDP, the tax burden fulfilled and surpassed the level set by the Agreements for 1997 (8.6%), but the rate of public spending was much lower than projected. Some efforts were made to improve tax administration and enforcement, which was to be the main catalyst for increases in tax revenue stipulated in the Agreements. The Government also made strides toward the agricultural and rural development reforms specified by the Agreements, especially with resource allocations and land dispute resolution mechanisms. It also introduced legislation to establish the Land Trust Fund, and Congress approved the bill to change the name of the National Agricultural Development Bank (BANDESA) to the Rural Development Bank (BANRURAL) and restructure it according to the Agreements.2
Some institutional reforms were made in the health care sector, but officials did not fully internalize the reforms, spending fell short of budgeted amounts, and there was little evidence of improvement in public health in 1997.3
The Government gathered resources for the Guatemalan Housing Fund from tax revenues and a loan from the Inter-American Development Bank, which it planned to begin distributing in 1998. The Ministry of Labor and Social Welfare completed draft amendments to the Labor Code, but it did not include all the collective bargaining rights for agricultural workers stipulated by the Agreements.4