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Economic and Social Development – 1998

Favorable macroeconomic performance in Guatemala facilitated the government’s compliance with the Agreement on Social and Economic Aspects and the Agrarian Situation in 1998. Spending on basic social services increased and the economic and social infrastructure was generally improved, both of which contributed to increases in public investment and job creation. There was a deadlock between planning agencies over the municipal training program, but it was resolved, and municipal development councils built up their capacities. The Ministry of Agriculture began the process of policy reform and transitioning state institutions for agricultural and rural development. The Guatemalan Housing Fund (FOGUAVI) failed to meet its commitment to award at least half of its subsidies to the rural population, and spending on housing was generally below budget. FOGUAVI was also unnecessarily slow in responding to the issue of urban squatter settlements. The Ministry of Health worked on implementing the Integrated Health Care System (SIAS), but geographic coverage had a long way to go and inadequate vaccination coverage failed to contain outbreaks of preventable diseases. The Program of Access to Medicines (PROAM) was operating in compliance with the Agreements. Tax revenue grew, but not enough to meet the target of 10.4% of GDP for the year due to reductions in property taxes and tariffs. The Ministry of Finance revised projections for raising tax revenue to the stipulated 12% of GDP and convinced the Follow-up Commission to allow the target date to be pushed back from 2000 to 2002.¹

The Ministry of Labor and Social Security adopted official policies in keeping with the Agreements, and the Labor Code was amended according to the draft submitted in 1997. While additional improvements were made in labor dispute settlement process, workers’ rights to unionize were still impeded, the Ministry of Labor was still overly centralized, legislation had yet to be introduced for vocational and technical training programs, and resources were lacking to properly initiate the School for Labor Mediation and Conciliation.²

In mid-1998 the Follow-up Commission gave priority to fiscal and rural problems. Hurricane Mitch ravaged much of Central America in October 1998, shifting the focus of many of the development efforts to disaster relief and reconstruction.³

1. “United Nations Verification Mission in Guatemala: Report of the Secretary-General,” United Nations General Assembly (A/53/421), September 28, 1998.
2. Ibid.
3. “United Nations Verification Mission in Guatemala: Report of the Secretary-General,” United Nations General Assembly (A/54/526), November 11, 1999.