One Quetzal Per Day Per Person in Exchange for Nothing: The Fiscal Ambush in Guatemala

The budget has grown 43% in three years, without roads, hospitals, or schools; with the carryover of unused balances, the real deficit could explode in 2026.

Taxes in Guatemala and the Current Tax Burden

You are the silent hero of this story. Because every day you have handed over almost one extra quetzal to the national budget, trusting that this effort would translate into roads, hospitals, or schools. But what this government has done is different: it has inflated the budget by 43% in barely three years —from Q115 billion in 2022 to Q148.526 billion in 2025, with projections of more than Q163 billion in 2026¹— without giving you anything in return.

In per capita terms, spending has risen from Q860 per person in 2022 to around Q1,200 in 2025, an increase of Q328 additional per person every year². That means your family of five has contributed nearly Q5,000 more during this time, the equivalent of a stove, a refrigerator, and a basic television set. And yet, none of that has translated into better public services.

At this pace, covering the deficit of 20,000 kilometers of roads would take nearly a century. The vehicle fleet grows by 7% annually, surpassing 5.3 million units,³ yet only 209 km of new roads are built each year. In healthcare, only one hospital has been completed, and it was started under the previous administration; another nine remain unfinished concrete shells, and only two more have been initiated.⁴ The hospital system has grown by 12.7% in infrastructure terms, which translates into a real increase in services of barely 2%, in a country whose population grows at 2.5% annually. In education, no significant new institutes or schools have been built; only old buildings have been renovated. In primary healthcare, 26 new health posts have been added, representing 2.7% of the existing network, equivalent to coverage for 200,000 additional people in a country of more than 17 million inhabitants.⁵

You pay, the State collects, goes into debt, but the projects never reach your community. It is an outrage. And the warning is clear: in good faith, it is incompetence; in bad faith, they are hidden expenditures that will be released in an election year. Execution data confirm it. In 2023, most departments barely reached 20% physical progress in their projects. In 2024, Izabal closed with 0% physical execution, Sololá with 3%, and most departments did not exceed 8%.⁶ By 2025, of the 8,300 projects scheduled, only 3,579 have been approved and less than 15% have effective execution.⁷ The money remains on paper, not in roads, hospitals, or schools.

The Public Investment Acceleration Law (6576) has introduced a decisive change: it allows unused funds to be carried over until 2027, an election year. On paper, it seeks to avoid losing resources. But in practice, it opens the door to a dangerous imbalance. If each year 3% of GDP in unspent funds accumulates and is concentrated into a single fiscal year, in 2027 the real deficit could skyrocket to 9% of GDP. That means the government would spend with a 75% gap relative to its annual revenues, a threshold that almost no country has exceeded without falling into crisis.⁸

International evidence is overwhelming. Kenya (2023), Sri Lanka (2022), Costa Rica (2020), Lebanon (2019), and Ghana (2014) fell into debt crises, reserve collapses, or IMF bailouts when their deficits reached these levels.⁹ Costa Rica escaped the deadlock by imposing a fiscal rule that limits the deficit to 3% of GDP and restricts current spending growth according to debt levels. Only some petro-states, such as Bahrain or Saudi Arabia, have resisted larger deficits thanks to extraordinary revenues.

Guatemala has not been immune either. For decades we had a strong quetzal, equal to the dollar, a symbol of solidity. But during the 1970s, 1980s, and 1990s we spent beyond what was possible: the financial system suffered liquidity problems, the currency depreciated from 1 to 2.5 under Ríos Montt and later to 7.5 under Vinicio Cerezo, while inflation exceeded 60% annually.¹⁰ The fiscal mismanagement of Jorge Serrano Elías reached the point where the government could not pay debt obligations, salaries, or constitutional transfers, leading to the self-coup and his flight to Panama in 1993.¹¹ Only the constitutional reform of that same year, which prohibited the Bank of Guatemala from directly financing the State, restored discipline and stability. That macroeconomic stability, celebrated as a hallmark of Guatemala, is very recent and fragile: it can be lost in a single presidential term.

Meanwhile, the government has decided to impose a 12% increase in the minimum wage. In MSMEs, which represent 98% of businesses and contribute 40% of GDP, salaries account for half of their costs. There, this increase equals 6% more in expenses, pushing 70% of them, with margins of barely 1% to 10%, to the edge of bankruptcy.¹² That would mean many more people without income and without jobs. Where is the social justice for the small entrepreneur who has risked everything to create his own future and that of his employees?

SMEs are also at risk: for them, the impact is between 3.6% and 6%, and 6 out of 10 could see their profits disappear during critical moments.¹³ Even one third of large companies with narrow margins would enter the danger zone. Altogether, more than half of the country’s companies will face serious difficulties. The consequence will be less investment, less replacement of equipment, zero innovation, and the paralysis of any expansion.

And here lies the most dangerous contradiction: while countries like Costa Rica have established rules to limit deficits, Guatemala is moving toward the perfect storm: a State that spends more than it earns, that accumulates deficits that could reach 9% of GDP, while simultaneously suffocating the productive sector with labor burdens that have been accumulating since the Giammattei administration.

In the history of Guatemala and the world, it has always been the ordinary citizen who bears the consequences of fiscal irresponsibility. Every time governments have spent beyond what was possible, families have suffered inflation, devaluation, and job losses. You know this: politicians never carry the sacrifice, you always do.

You are the hero of this story, not a spectator. Because you have memory, because you remember that the quetzal was once a strong currency equal to the dollar, and that strength was lost when governments spent what they did not have. Because you know that so-called macroeconomic stability is not an eternal gift, but a fragile achievement that can disappear in a single presidential term.

Today’s fiscal ambush is clear: more disguised taxes, more debt, more burden on entrepreneurs, and fewer services for you and your family. But the ending has not yet been written. It depends on you refusing to resign yourself, on demanding responsibility, on rejecting the populist formulas that have already destroyed economies here and around the world.

Remember this: in these three years, your family has already handed over the equivalent of a stove, a refrigerator, and a television… in exchange for nothing. If we do not raise our voices, tomorrow that cost will be much greater, and you, your children, and all of Guatemala will pay it. This government insists on repeating the losing formula of Giammattei: larger deficits, more populist minimum wages, and fewer results.

Notes

1. Ministry of Finance, Proposed Budget 2022–2026.
2. Per capita spending calculations based on INE data and budget execution.
3. SAT / MARN, Vehicle Fleet Statistics 2023–2024.
4. Ministry of Health, Hospital Infrastructure Report 2023–2025.
5. MSPAS, Crecer Sano Program, 2024.
6. SEGEPLAN, Physical Execution of Projects 2024.
7. SEGEPLAN, Execution Report 2025.
8. ICEFI, Analysis of the Public Investment Acceleration Law, 2025.
9. IMF, Fiscal Monitor and Historical Public Finance Database (2000–2025).
10. Bank of Guatemala, Historical Exchange Rate and Inflation Series (1978–1992).
11. Historical Press Archive, Jorge Serrano Elías Self-Coup (1993).
12. Chamber of Industry of Guatemala (CIG), Estimated Impact of the 2025 Minimum Wage Increase.
13. ICEFI, Report on the Effects of the Minimum Wage on SMEs, 2024.