What is the use of being the most trusted country in Central America for financial markets if, internally, our economy beats weaker and weaker? The patient is called Guatemala, and today it is in the emergency room. Outside, investors applaud us; inside, the vital signs show exhaustion. The Monetary Board has just reduced the benchmark interest rate by 25 basis points, acknowledging that the blood of the economy is not circulating as it should.¹ Year-over-year inflation stands at only 1.17%, the lowest since the pandemic, and monthly inflation is negative (-0.06%).² That figure, which some celebrate as price stability, is actually the weak heartbeat of a patient on the verge of collapse: aggregate demand is fading because consumption is on the floor.
The Monthly Index of Economic Activity confirms the low fever: in March, agriculture barely grew by 0.3% compared to the previous year,³ even though that sector directly or indirectly sustains millions of families. Since April, the number of companies registered in the Mercantile Registry has fallen by around 10% compared to last year.⁴ The figure is more revealing than any graph: in a country of 18 million inhabitants, only about 11,000 new companies are registered each year. That means only 1 out of every 1,650 Guatemalans dares to open a business. Barely 0.06%. And this year we are 10% fewer.
Meanwhile, abroad we are seen as an example. Standard & Poor’s raised Guatemala’s sovereign rating to BB+ with a stable outlook, one step below investment grade.⁵ This has reduced our country risk spread to only 167 basis points, below Costa Rica (193) and far below El Salvador (413).⁶ International markets have spoken clearly: Guatemala is today the most trustworthy sovereign in Central America. The problem is that this confidence does not translate into investment, employment, or wages domestically.
The contradiction worsens when we look at the fiscal structure. It is said that debt, close to 30% of GDP, is low compared to the region. But with a tax burden of only 11.8% of GDP in 2024,⁷ the real picture reveals something else: a few sectors sustain almost all tax revenue. Commerce and industry contribute around 60% of revenues, agriculture barely 2%, and professional activities only 4%.⁸ And more than 90% of tax revenue comes from the department of Guatemala.⁹ We are a country where the capital sustains the fiscal apparatus, while most activities and territories contribute almost nothing. That asymmetry is a time bomb.
Even worse: the budget continues to punish investment. More than 65% of spending is allocated to operations, around 18% to debt servicing, and less than 20% to public investment.¹⁰ The result is the same as always: salaries, transfers, and clientelism, but without ports, highways, or reliable energy to sustain growth. What is the use of having billions in cash balances if the real economy is about to stop?
The CID Gallup survey conducted in September 2025 reflects what the numbers were already telling us: 79% of Guatemalans believe the country is headed in the wrong direction, and 44% say things are going from bad to worse.¹¹ More than half of citizens, 57%, identify the cost of living and unemployment as their main concern.¹² It is no coincidence: if only 0.06% of the population dares to undertake entrepreneurship each year, it is evident that the businesses and jobs needed to absorb the labor force are not being created. The result is palpable in household economies: 41% believe their situation is worse than a year ago, and 47% think that in a year they will be the same or worse.¹³ That is the true pulse of the national economy.
The contrast is brutal. Outside, applauded. Inside, out of breath. Among 18 million Guatemalans, only 0.06% dare to open a company each year, and fewer and fewer every time. That is the true measure of confidence: not Moody’s or Standard & Poor’s, but the citizen who decides to risk his capital, his time, and his life to create jobs. And that citizen is losing the pulse.
That is why one concrete and urgent measure is the elimination of the Solidarity Tax. The ISO was born as a temporary tax, but it has become a permanent punishment for those who sustain formal employment. It is charged on sales or assets, even when there are no profits. It strikes precisely commerce, electricity, finance, and manufacturing industry: the sectors that generate the most formal employment and concentrate tax collection. In 2024 it contributed more than Q6 billion to the treasury,¹⁴ but at the cost of slowing investment and suffocating businesses.
The contrast becomes even more evident when the figures are compared. The Solidarity Tax collects around Q6 billion per year,¹⁴ but today the State maintains nearly Q30 billion stored in cash at the Bank of Guatemala.¹⁶ That is, five times more than the ISO collects in one year. The conclusion is unavoidable: the ISO could be eliminated immediately without compromising public finances. Keeping it only prolongs a contradiction: the cash flow of small businesses and companies facing difficulties is punished, even though this tax was created as temporary and no longer has any reason to exist.
The elimination of the ISO would send an immediate message to national and foreign investors: Guatemala is not only trustworthy abroad, it also wants to be competitive domestically. It would free working capital for thousands of companies that today survive on narrow margins. And above all, it could restore the pulse to a patient already showing symptoms of cardiac arrest.
If we do not act, international confidence will remain an empty applause. The low EMBI will serve to boast in forums, but the real country will continue to see factories that never open, jobs that never arrive, and young people who migrate. In fact, almost half of young people between 18 and 24 say they would emigrate if they had the resources.¹⁵ The weak heartbeat of the Guatemalan economy will not be corrected with diagnoses, but with courageous decisions. The first of them is in our hands: eliminate the ISO and bet on those who still dare to undertake entrepreneurship.
Because in the end, true confidence is not measured in basis points or ratings. It is measured in how many Guatemalans decide to open a company, hire a worker, invest in a machine. And today, only 0.06% do so. If we do not change, that number will continue to fall. And the heart of Guatemala may stop beating.
Notes
- Monetary Board, Statement from the ordinary session of September 24, 2025.
- Ministry of Economy, Monthly Economic Report, September 2025.
- Bank of Guatemala, Monthly Index of Economic Activity (IMAE), March 2025.
- Mercantile Registry of Guatemala, Registered companies 2024–2025.
- Standard & Poor’s, Ratings Action Release on Guatemala, May 2025.
- Ministry of Economy, Weekly Economic Report, September 8, 2025, p. 25.
- Ministry of Public Finance, Fiscal Policy Report 2024, May 2025.
- Superintendency of Tax Administration (SAT), Tax collection by economic sector, 2025.
- SAT, Tax collection by department, 2025.
- Ministry of Finance, Proposed Budget 2026, September 2025.
- CID Gallup, Guatemala Public Opinion Study, September 2025, p. 6.
- CID Gallup, Guatemala Public Opinion Study, September 2025, p. 9.
- CID Gallup, Guatemala Public Opinion Study, September 2025, p. 13.
- SAT, Tax collection by tax type, 2024–2025.
- CID Gallup, Guatemala Public Opinion Study, September 2025, p. 18.
- Bank of Guatemala, Monetary Position – Net Public Sector, September 11, 2025.
