Guatemala - Current economic position and prospects

RETURN TO RESTRICTED REPORTS DESK Report No. WH- 1 78b WITHIN ONE W(MrK This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. INTERNATIONAL BANK FOR R1ECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROSPECTS OF GUATEMALA May 6, 1968 Western Hemisphere Department  CUR-RENCY EQUIVALENTS 1 Quetzal 1 U. S. Dollar  TABLE OF CONTENTS Page No. BASIC DATA MVA P SUIMffiRY AND CONCLUSIONS i I. INTRODUCTION II. RECENT DEVELOPI-RITS 1966-1967 5 III. TIE 1968-1970 PROSPECTS 11 IV. CONCLUSIONS 17 STATISTICAL APPENDIX This report embodies the results of a mission by Eugenio F. Lari to Guatemala in October. 1967.  BASIC DATA Area: 42,o40 square miles Population: 407 million (mid-1967) Rate of growth 1964-1967: 3.2% Literacy rate 30e (estimate) Other significant factors: 55% of population is Indian and lives mostly outside the monetized sec- tor of tho oconomy. Tho rato of illite- racy in this sector is 90% Gross National Product, (at current prices): 1,379.1 million quetzales (1966) -Rate of growth per year9 1956-1962 (in real terms): 4.20$ 1963-1966 (in real terms): 4.0% Per capita, 1966, US$ 295 Gross Domestic Product, 1966 (at factor cost): 1417.8 of which in percent: Agriculture 29.1 If anufacturing 14.2 Commerce 27.5 Housing 7.9 Percent of GDP at market prices, 1966: Gross investments 12.3 of which Public 2.7 Gross savings 11.1 of which Public O07 Balance of payments current account deficit 1.2 Investment income payments (net) 1.9 Central Government tax revenues 8.1  BASIC DATA (Contd.) 196& :-ljnuL1 rate of change LIney and Credit AiL. Q. _ 1961-1966 total money supply (end of year) 140h4 54, 'I me and savings deposits (end of year) 97.4 20.95% Credit to private sector (end of year) 178.0 Rate of change in prices (cost of living) 3% (est.) 2.5 (est.) Public Sector Onerations 1966 Annual rate of change _7 G.:n_tFL, Gove-rMnC..nt) ;2 .1ill. Q, 1961-1966 Current revenues 121.3 5.3 Current expenditures 103.9 5.5 Surplus (after aczortization) 4.2 -9.4/0 Investment expenditures 32.1 7.0o x4:ternEil Public Debt, Long- cnd. wle(~r1-Term .,L1l. U&$ June 30, 1967 Total debt 109.2 Tota:L annual debt service 16 (est.) Debt service ratio 8.1% (est.) 1966 Annual rate of ch,?nge Balance of Payments ijill. Q. 1961-2966 Total e.xports of goods 231.6 12.2"' TotaL ii.ports of goods 201.8 8.3Z det :Lnvisibles _46.9 Current account balance -17.1 Net inflow of private capital 5.2 ilet inflow of public capital -0.1 Gross foreign exchange reserves 63.0 (or 3-1/2 montlhsI imports) Conxaodity concentration of exports (coffee and cotton) 62.5/O (86% in 1956, coffee and bananas) 2LED Operations end 1967 (US ?ai.11.): Committed Disbursed Repeaid 33.2 19.2 io.5  GUATEMALA 0 20 40 60 80 lOOKm j PE TEN oi ITk-, Paved roads L. Pet,n /fzo Q All weather roads +,0 >ERES ! s C Other roads 7 2 Roads under construction or pr-oposed / - ----| - - Railways I Volcanos Lakes I Gulf of .f=> RCIsinojd s ) JX . Honduras CJ / { O~~~~ ~ ~ ~~~~~~~~~~~Sebul Pto. Mendez ; S . -TB / 500- Eulolio \ n [4d~~~~~~~~~~~~~~~~~~~~~~~~~~e Galve\ . /. \ \ .<to ~~~~~Son iu1 t / ; J ColotenangStioouo X 7 o c ) 02 .|>< X 08 i (S~~~~~ALAMA * rU 9 '"'' SAN | X OICHE AC ^ A APA ; 0 .,~~~~~~~~~~~C Encuentros ) El Ranch IM L I_ ( / L il it o'r NA ti -'/ff1^ o SOLOLA MARC A965 HONDU10 0RAS PA~~~~~~~~~~~~~~~SUNL C/F/ _CE_ MACHme 195IBD10O1  SMIT MAY AND CONiCLUSIONS 1. Guatemala is a country of considerable potential whose rate of growth, however, has been disappointingly low. Sharp differences in cultural values, education, health and income among the Guatemalan population and an unstable political situation have been the main reasons for Guatemala's relatively poor development performance. 2. The countryks economy remains heavily dependent on a few ex- ports of primary products to the world market, coffee and cotton in particular, while the industrial sector caters only to the domestic market and to the markets of the other Central American countries. In recent years banana exports have declined, due to the process of relo- cation from the Pacific to the Atlantic plantations that was brought about by disease, transportation problems and adverse weather, but ex- ports of coffee (because of price recovery and exports above the quota fixed by the International Coffee Organization) and cotton (because of acreage increase) increased sharply until 1966 along with sugar, meat and other minor agricultural exports. The present outlook calls for some recovery in banana exports, but only a very modest increase in the other major agricultural exports. 3. In spite of the market size limitations, manufacturing has developed rapidly in the last five years, thanks to the formation of the Central American Common Miarket and to the availability of savings in the traditional export sector. Due to the generous fiscal exemptions of the industrial incentives law, however, many new industries have been established that increase by little the aggregate value added in the country. They have represented a heavy drain on the Government revenues and in some cases --because of raw materials, intermediate and capital goods import requirements-- have also had perverse effects on the balance of payments. The growth of the manufacturing sector is likely to slolw douin as overall growth in the other Central American countries is de- clining and traditional exports are expected to growJ only moderately. 4. Faced wJith a tremendous task of building and expanding the economic and social infrastructure, the Government has been unable in recent years to achieve a satisfactory level of capital expenditures --because of inadequate project preparation and administration, and of lack of savings. Public investments have failed to increase during the past decade and represent less than 3 percent of GDP. The Government has now a well designed investment program that wrouad result in about doubling in three years the present level of capital expenditures and providing a good portion of the infrastructure necessary to diversify the economy and break the present economic and cultural isolation of a large part of the population. While the expected increase in foreign loan disbursements wFill help financin- such a program, the crucial condition for its successful implementation remains the ability to talce in time the newv measures that l-sill be needed to ensure the availability of adequate public savings in the.next fe years.  5. Fiscal probleims have p2agued -,uatam;-.2 Lor years, but thiey have becomre more grave latelJ.y Ai sharp increase in currenit ex-penditures in 1966 and 1967 offset the gain in revenues obtained in 1963-65 with neu t.axes, and further revenue gj?owth is impaired by the inadequacy of the present tax system, based almost completely on indirect taxes and relying heavily on the external trade sector of the economy. 'ax revenues represented in 1967 only 8 percent of GDP, the loi.est tax burden in Central America. The Government had to recur to emergency tax measures in 1967. It has since met strong opposition in its attempt to initiate the lon- awaited tax reform to achieve a heavier and more equitable ta: burden and a tax structure more responsive to the growJth of the economy; and has thus had to extend the emnrgericy measures, and to cut its recurrent and capita'L expenditures to complete its 1963 financing pN.anr Still further measures will be needed if the investment expend- itures planned for 1969 and 1970 are to be realized. 6. A worsening balance of payments problem has underlined the urgent need of diversifying the economy and reducing its dependence on the fluctuations in the wzorld market for primary products. The current account deficit increased substantially in 1967 because of a drop in the value of coffee exports due both to a sharp reduction in volume and to lowJer prices in the world zmarket, and in cotton, because of a poor crop, and also because Of a s ,ib: tantial incr a3e in irportrs, in part s a specul- ative nature. Tnis n-ill require an acceleration and expansion of the present timid attempts at agricultural diversification. It wrill also require a reorientation outw.ards of the manufacturing soctor, and, to thi.s end9 a revision at a regional level of the present system of fiscal industrial incentives. 7. The Government intends to takce a series of credit and monetary measuros to restrict furthe:cr import groarth and thereby prevent further balance of payments deterioration0 Selective import surtaxes, accompanied by consumrtion or production taxes to avoid furtiher distortions in the productive structure of the economy, are also being considered. The Government also intends to reduce further the short- and medium-term indebtedness of the country, incurred in the early and mid-1960Ws, by making a larger use of the long-term external loans available to it. 8. Service of GuatemalaSs external public debt, which totalled about 8 percent of export earnings in 1967, should not rise significantly in the foreseeable future. If public savings are raised substantially -- as is urgently required-- Guatemala should be able to avoid any in- crease in short- and medium-term borrowings, i-while proiriding enoutgh funds to complemont new dovelopment loans for high priority projects. Develop- merit loans disbursements would acco-uLt for about 60 percent of public investment expenditures on the basis of the domestic financing effort that -fill bu nriuded fcr the next two to three years.  I. INTRODUCT TON A, The Land and the People 11. Guatemala is the northermost country of Central America, and the most populous, with 4.7 million inhabitants or about one-third of the total Central American population. Its physical and cultural environment is most varied, but the countryls economy is still largely agricultural* 1While coffee represents the dominant product (accounting for about 25 per- cent of total agricultural production, that in turn accounts for some 30 percent of GNP), the agricultural sector of Guatemala is more diversified than in the other Central American countries. Sharp eco:Logical differ- ences exist between the region of the high mountains and highlands, the unexplored tropical jungles and the flat coast lands. The population is widely split between Indians (about 55 percent of the total) and "ladinos"t, a good part of whom are of mixed blood. About two-thirds of the total population are illiterate and live at the margin of subsistence. Popu- lation growth is estimated at about 3.2 percent per year. Income distri- bution is very unequal, and income per capita averages about US$300. 12. The Ildians and the Ladinos of mixed bloods, or "mestizos", constitute the two poorest groups of the Guatemalan population. However, the Indians, while they have no political power and make very little use of modern facilities like banking and credit, present a fairly stable and orderly social structure. They maintain most of their century-old traditions, and are increasingly oxpandcn, their land propertiPs in the high- lands. According to the opinion of several agricultural experts, they also shov a remarkable capacity to adapt themselves to new techniques of cultivation and to new crops. The Mestizos, on the other hand, are still largely a migrant group: they work seasonally in large "fincas" or plantations during the harvest of the traditional crops, or crowd the urban areas where in the majority they feed the rapidly growing army of underemployed people. The rate of illiteracy in both groups is well above the average, reaching over 90 percent among the Indians. B. The 1956-1965 Period 13. From the mid-1950ts to 1962 the traditional exports (coffee, bananas and cotton),which constitute the backbone of the economy,stagnated, resulting in sluggish growth and creating conditions conducive to pol- itical instability: a series of Governments were put in power and conp trolled by the army, while rural and urban unrest became widespread. Political uncertainty and institutional inefficiency were additional fac- tors contributing to slow economic growth, and total investment declined and income per capita remained practically unchanged through 1962, while in the rest of Central America strong economic expansion was tak- ing place. In 1963, fearing the return to power of a liberal-leftist  -2- who had been President in the 1940Ls the array toppled the Government of Col. Idigoras Fuontes and put Col. Peralta Azurdia in power. The new Government that ruled ,he country for three years, hastened to reestablish a climate of confidence and to improve the fiscal and balance of payments situation. Helped by the e.xpanision of cotton exports, the recovery in coffee prices and the positive impact of the Central imerican Common .larket on manufacturing and services, the Government effort was success- ful in bringing about much faster growth in 1963-64. As political un- certainties reappeared inl.965 iwith the prospects of popular elections, the rate of growth subsided once again. 14. During the whole period 1956-65, the behaviour of the external aind fiscal sectors wias very important in determining Guatemala's economic progress. The external current account presented a negative balance, that however was generally offset by large net capital inflows, both official (U.S. grants) and private, so that international reserves re- mained at confortable levels --equivalent to about 4 months of imports on a gross basis. However, wrhen at t1he end of 1962 reserves came under heavy strain, mainly because of heavy repayments due on a budget support loan extended by U.S. banks, exchange controls were teimporarily introduced. 15. During the years of stagnation (1956-62), public finances also deteriorated markedly: from 1957 to 1963 Government current expenditures followed a sl.ow.ly rising trend, while current revenues and savizigs on current account declined and investment exnenditures were cut sha-rply. By fiscal 1962/63 public investment had failen to only 40 percent of the record level reached in 1956/57 (at the time of the construction of the Inter-Anerican and Atlantic Highrays) and about 2 percent of GNP. In particular, crucial sectors like education and power received a very inadequate share of the generally low0E public investment expenditures. Deficits, that had become a permanent feature of the government budget, were largely financed by grants from the U.S., by increases in floating debt (unpaid bills) and in 1962 and 1963, wihen U.S. grant assistance was sharply reduced, by Governrnent borrowing at short- and medium-term from U.S. banks. 16. This deterioration in the public finances wJas arrested when, after a personal income tax was introduced by the Idigoras Fuentes Government in December 1962, the Government that came in power in March 1963, took a series of revenue measures. It doubled the rates of the stamp tax, introduced new export taxes, and changed the gasoline tax. Even in 1965, however, tax revenues represented less than 8 percent of GMIP, still below their 1960 level (10 percent), and iiere wyell below the Central Aimqerican average of about 11 percent of GLIP and lecs than in any Central American country. The 1963-65 revenue increase, furthermore, was offset by a sharp rise in current expenditure, the bulk of w-hich wras in the "general administratioril category. As a result, public savings after amortization wrere sufficient to finance only 35 percent of invest- ment expenditures, compared with 50 percent in the mid-1950's, wThen investment wras at a much higher level. The Government was obliged  - 3 - to borrow substantiNlly .it home and fron commercial banks in the U.S3 at shwort-term. The increase in borroiing from tho Banco de Guatemala, howrever, 1as in part offset by the increase in Government doposits. 17. During the 1961-65 period, long-term external loans committed to Guatemala amounted to US$49 million or just over 50 percent of the average amount lent in the same period to the other four countries of Central America, which received an average US$95 million each. The rate of disbursement of such loans was also well below the area average: US$27 million were disbursed in Guatemala, against US$65 on average in the other four countries. Lack of projects and delays in project preparation and implementation were generally recognized as the main causesof the unsatisfactory public performance in the investment field. 18. The recovery in coffee prices, the sharp increase in exports of cotton (mostly to Japan) and of manufactures to the other Central American countries (as a result of the formation of the Central American Common Market), as well as increases in sugar and meat, resulted in a sharp in- crease in exports between 1962 and 1965. On the other hand, the acceler- ation in GNP growth, and especially theincreased levels of private in- vestments produced a spectacular import boom. The deficits on current account widened, reaching in 1965 a record level of US$50 million or 3 percent of MNP and 22 percent of export earnings, but large net capital inflows --mainly private, in the form of direct investment and especially cf suppliers' credit-- were available to finance them, so that the international reserve position did not worsen and actually showed a sig-, nificant improvement. 19. Throughout the period the Banco de Guatemala followed a cautious monetary policy and successfully maintained price and exchange stability. UJntil 1963, during the period in which the public sector demands were vTery modest, total credit increased at less than 5 percent per year and was oriented mainly toward the private (especially cotton) sector. Ioney supply and prices oscillated very narrowly. 20. In tlhk 1963-65 period, while net credit expansion to the public sector was nooligible, private savings and credit to the private sector increased sharply. Industry and services were the major beneficiaries of this credit -expansion: money supply increased by 6 percent per year, amd prices moved upwards --although little of the price increase is reflected in the price indexes, which are statistically very deficient. 21. Although service payments on external medium- and long-term plublic debt more than doubled between 1960 and 1965, they were in 1965 equivalent to only slightly more than 5 percent of total exports and were projected to fall to less than 3 percent by 1970.  - 4 - 22. It is against thiZ.s back,,round t' at uotih the last IBRD report on the Economic Position 2nd. Prospects of Guatemala (VF1l48_, dated April 29, 1965) and the IBRD ropoixt on the Economic Developmant and Prospects of' Cantral America (OiM-170a, dated June 5, 1967) concluded that: a. there wias a strong lilkelihood of a slow-down in the economic growth of the country, since the short and medium- term prospects in the twzo sectors mostly responsible for the recent economic advances, namely exports and private investments9 were deterioratingc Ekports appeared in trouble because of adverse prospects for traditional. exports (declining coffee and cotton prices and bananas production problems), and the expected tapering-off of growith and demand for Guatemalan -products in the other Central American countri.es. iienewJed political uncertainty and social unrest combined with the expected oxport stagnation to dampen private investment growth; b. it wfas urgernt to proceed to export diversification and to step up public investment expenditures, aimed in the short-term at counteracting the stagnation tendencies and in the long-term at changing the base of the economy; co in order to accomplish such a program. a climate of poli- tical stability had to be restored, public revenues and savings were to be increased substantially, and project preparation and iniplernentation ability improved, Specifically, the Government was to avoid further recourse to short- and medium-term borrowing to finance budgetary deficits and restrain in particular the inflow of private fcreign supplier credits, since heavy repayments might result in a reduction of foreign exchange reserves below prudent levels. A comprehensive fiscal reform was to be undertaken including a revision of income and pro- perty taxes and an increase in sales and excise tax rates; aiid in order to maintain import demand within the limits of available foreign exchange, a policy of credit restraint iwas to be followed; d. a fiscal performance along the lines just indicated wias the primary condition for considering Guatemala eligible for additional external assistance: if such were the case, some 55 percent of a moderately increased public investment program was expected to be financed from abroad.  II, RBCENT DMVEIOPiIENTS: 1966-67 A. Political and Social Situation 23. On July 1, 1966, after being elected by popular vote as the can- didate of the Partido Aevolucionario against the candidate supported by the military, the moderate left-of-center Julio Hendez i4ontenegro iwas inaugurated president and the country was returned to civilien rule. The newi Government came into pow-er under most difficult circumstances. In the montihs immediately proceding and following the transfer of power, public order had in fact become increasingly disturbed, with frequent kidnappings of prominent citizens and Government officials. These events created wJidespread uncertainty, and even the expectation that the military would intervene, first, to prevent and, then, to end the civilian regime. In fact the Government has remained in pow!er longer than many observers thought possible. 2h. The new Government undertook a serious effort to restore public order, particularly in the most isolated areas where small armed organized bands wJere active. Although this effort did not .ineet immediate success, organized guerrilla activity has been on the decrease, due to a better effort to control it on the part of the army and to the formation and actions of extreme-right anti-guerrilla gzoups. How-rever, the latter have reportedly had frequent recourse to terroristic activities and more and more constitute an additional disturbing factor in the political situation of the country. In Guatemala City public order is maintained through very ample and visible use of armed policemen but acts of violence still occur frequently. 25. The twro most important policy measures to which the Government -was coanitted were the agrarian and the fiscal reforxns. Because of the delicate political situation, neither one has gotten under way. The agrari&n reform wJas to be centered around: (a) the transformation of publicly-owined farms into cooperative farms, and (b) the reorganization of existing colonization projects and the development of new colonization projects (includini expropriation of inefficiently run farms) to absorb the landless poor. The agrarian transforration institute (flITA) was intended to be the main agency concerned with the agrarian reform. The agrarian reform has been interrupted after a token distribution of state- otned land. The fiscal reform was to be centered on a thorough revision of direct taxes and to be undertaken promptly, but --after a proposal made by the ilinister of Finance failed in the summer 1966 to get the necessary support from the Cabinet-- it remains "under study". Public investment has, as a result, fallen far short of targets and of urgent needs. However, the Government has taken several measures to encourage business activity. Fiscal and tariff exemptions have been granted  - 6 - liberally to "n%O" industries. In the fall of 1967 the export tax on coffee shipped to new markets was abolished. The Govermment also modified the most burdensome provision of two decree laws passed by the previous Government, giving special import-export privileges to the state-owned shipping and airline conpany and to the naticnal ports. These decree laws, rIhich transferred trade from traditionall.y private to official channels without reference to ability to handle imports effectively, had had the effect of creatina serious delays in and increasing costs of importing raw materials and sp2re parts. IJhen they were introduced, they shook business confidence considerably and caused the postponement of some investment plans. B. Economic Activity The Private Sector 26. Economic growth should be evaluated in the context of high population graowth, towTards which no explicit official attitudes have as yet been defined. Per capita GJP did not increase in 1966 and 1967, folloiing an increase of about half of one percentage point in 1965. This disappointing record is mainly the result of falling banana produc- tion, w-orsening terms of trade and increasing factor income paments abroad, a deceleration of growth in industry and services, declining or stagnating public investment, and (in 1967) poor coffee and cotton crops. 27. Exports increased over the two years at a slower rate than in the early 1960's, and even declined in 1967, because of a disappointing performance of the traditional commodities. Still high though de- clining wor:Ld prices, and slhipments well in excess of the quota allocated to Guatemala by the International Coffee Council resulted in record exports of coffee in 1966; in 1967, the further drop in wzorld prices and more rigorous measures adopted by the Council to enforce the Agreement resulted in the lowest level of coffee exports in the 1960's and in the accumulation of unsold stocks of coffee that at the end.of the 1966-67 e.xort year were estimated at 250 thousand 60 Ig-, bags. 28. Record exports w.ere also registered in 1966 by cotton. Production expanded in spite of lowier prices, thanks to increases in productivity and to abundant credit provided both by the domestic bank- ing system and by Japanese customers. In 1967 though, increased cost of production --due to large use of fertilizers and insecticides-- and unfavorable weather conditions, combined with the still low0 price level to create a criticzl financial situation for the cotton growers. Planted acreage was reduced and exports decreased by one-third. 29. Thanks to an increase in the quota and to the relatively high and stable prices in the United States market, sugar exports increased substantially; however, large production surpluses were reported in 1967, both in the form of uncut sugar cane in the fields and of unrefined sugar.  - 7 - 30., Banana exports increased, reversing the downwTard trend that had started in 1961, as a result of disease. bad ueather and the gradual abandonment of the plantations on the Pacific. It seems that the con- traction in banana production and ex.ports has been arrested and a recovery has begun as output of the plantations in the Atlantic regions is slowTly expanding. 31. Exports (mostly of manufactures) to the rest of the Central American Cotrion ilarket increased by over 40 percent in 1966, but the growth has considerably slac'kened in 1967, to around 15 percent, as a result of the sluggish growTth and of the balance of payments difficulties exper- ienced in the other CGCII countries. 32. The structure of exports continued to change, during 1966-67 in the sense of greater Liportance of exports to CACI countries and of newJ lines of exports. axports to the other Central iznierican countries accounted in 1967 for 22 percent of total exports and new- exports like meat and flowers, fruits and vegetables, seeds and seedlings (mostly to world marlkets) and tubes and tires (mostly to Central Jmnerican countries) showed a very rapid rate of graoth, more than quadrupling betwreen 1961 and 1967. However, traditional exports of coffee, cotton and bananas still accounted for some 60 percent of total exports (90 percent in 1956). 33. Ylanufacturing remains the most dynamic sector of the economy, and now accounts for over 15 percent of GIfP (less than 13 percent in 1960), and is geared to the domestic market and the markets of the other Central American countries, After an average grouth of over 7 percent per year in the period 1960-65, manufacturing growth was somewhat less than 6 percent in 1966 and is estimated to have been substantially lotuer in 1967. The eccnomic problems of the Central American countries and the diminished availability of savings (froan the export sector) are probably the main causes of this slower expansion. Private investments failed to increase in 1966 and, according to first estimates, fell by some 5 percent in l967e In manufacturing, soim of the industries clas- sified as "new1' in the last two years, were nerely old activities re-classified as new in order to enjoy the benefits of the incentives law. 34. Ln agriculture, large size latifundia and absenteeism, together wJith inadequate ta,: and credit policies, continue to present serious obstacles to diversification. HIolwever, a four-year program of coffee di.versification, started in November 1965 in collaboration with FAO, made some progress in 1966-67. The program has already identified a series of export crops tlat could be grown on marginal coffee areas: they include tea, oil palm, citrus fruit, avocados, mangos, rubber, vanilla, pepper, cardamon, quinine oil, nuts, and livestock and dairy products. Small pilot projects exist in citrus, oil palms and tea, and a milk cheese factory project for the domcstic and, possibly for the Central American market is technically completed and about ready for financing. 36. Significant investments have taken place or are likely in con- nectirn with several non-traditional cultivations. Substantial invest- ments have been reported in the Indian sector of agriculture, that now absorbs about 60 percent of all seeds, fertilizers and insecticides used in Guatemala and has shovn. remarkable gains in productivity. However, no  - 8 - reliable data exist on the amount of these projects. The four-year study of forestry in the Peten, started in 196h, is still in progress, but the inventory work has been completed and substantial possibilities for production and exports of hardwhood outside Central America have been already identified. 36. Foreign private investments decreased by some 25 percent in 1966 and are estimated tc have not changed significantly in 1967. A large nickel venture, that would start the exploitation of important nickel deposits in the lake Izabal area and that seemed finally about ready to start, after long negotiations and delays, is at present again delayed pending decisions on the requests of the foreign firm to be granted the status of new industry and thus enjoy tax exemptions, and to obtain assurances on foreign exchange availability for debt servicing and profit remittances. The nickel project wotld involve investment expend- itiures of US$130 million over three years, and permanent employment for some 1,200 people. A pilot plant to produce sulphur was recen'ly in- augurated and a small plant producing corn products is to be expanded soon. With the help of a loan of US$5 million from USAID, a private industrial development bank has been formed with the aim of financing small and raedium industrial ventures and facilitating the inflow of private foreign capital. Public Finances 37. Public revenues on current account remained virtually unchanged in 1966, and central Government revenues actually showed a fractional de- cline. The yield of import duties in particular declined, as the compo- sition of imports changed with a marked shift towards imports of ratw materials (on which generally no or lower tariffs apply) and towards imports froin the other countries of the Central American Common M4arket, which are duty exempted. Current expenditures of the central Government on the other hand increased by 8.5 percent in 1966; the increase was caused chiefly by "general administration" expenditures, while the share of funds devoted to productive sectors and to social development (agri- culture and industry, education, health) decreased. Net of amortization, public savings covered only 13 percent of a reduced investment expenditure, (compared wiith an average of 33 percent in 1961-65). Hard pressed for funds, the Government, after failing to agree on a package of fiscal reforms, had to resort in December 1966 to emergency tax measures that included small temporary increases in income, property and stamp taxes, newl temporary taxes on purchases of air tickets and first sale of cars, and a 10 percent tax on profit remittances. 38. The 1966 budget deficit was financed largely by borrowing from and drawing dowo on deposits in the Banco de Guatemala, and issuing 15-year bonds that the Banco de Guatemala in turn placed with commercial banks in the U.S., at 5 years. Net domestic credit expansion to the public sector increased by 57 percent. 39. During 1967 the Government became increasingly awiare of the need of obtaining larger public savings in order to provide counterpart  - 9 - in local funds to development loans from abroad, and thus finance without continued recourse to the banking system the higher level of public investmnents considered necessary to stimulate and broaden the base of the economy. Unable to reach agreement on a comprehensive fiscal reform, the improvement in public savings wias sought through: (a) restraining the growTth of expenditures by decreasing by 10 percent the expenditures for gen- eral administrative purposes --this decrease to more than offset tile ex- pected substantial increase in expenditures for social purposes, especial- ly for education, because of increases already stipulated for the Ministry of Education and, (b) increasing revenue by better administration of the existing taxes and introduction of new emergency tax measures. 40. Actual 1967 current revenues of the central Government are estimated to have increased by 3 percent, as a result of the emergency measures introduced at the end of 1966. However, current expenditures could not be successfully contained and increased by an estimated 6 percent, so that savings on current account decreased further. Yet of amortization payments, public savings were actually negative. The budget deficit had still to be financed by borrowJing from the Banco de Guatemala, although net domestic credit expansion to the public sector was limited to 5 percent. Large long- and medium-term borrowing abroad (some $24 million) took place in 1967. Short-term borrowing from the U.S. anounted to US$3 laillion, the maximum permitted under the -I' stand-by arrangement. 41. In late 1967 two emergency tax packages were discussed within the Government to complete the 1968 budget. One contemplated the sub- stitution of the emergency measures approved at the end of 1966 by a general sales tax of 5 percent and an excise on luxury articles of 20 percent. The second package consisted in maintaining the 1966 emergency measures, increasing the stamp tax by 1/2 percent and introducing an excise of 20 percent on luxury goods. Both packages wrere estimated to yield a net increase of Q12-15 million in 1968, equivalent to about 12-15 percent of the total 1967 tax revenues. In mid-October 1967, the Cabinet approved the second proposal. Subsequently, when the budget wsas presented to Con- gress, the general sales tax was proposed and approved instead. However, due to strong political and public opinion opposition, the sales tax was aorogated four days after its approval at the beginning of 1968, leaving the Government's 1968 finances still unbalanced. To cushion the fiscal effects of this action, the Goverment decided to maintain --until a general fiscal reform could be approved-- the 1966 emergency measures, and extended the 1-1/2 percent stamp tax to cover contracts and imports. But it also had to reduce the 1968 budget expenditures. It cut current expenditures by Q5.5 million and capital expenditures by some Q15 million or about 25 percent. MIoney and Credit 42. After increases of money supply and credit to the private sector of 10 and 8 percent, respectively, in 1966, there are indications that the corresponding 1967 increases have been more moderate. During :L961-1965 money supply and credit to the private sector had increased,  - 10 - respectively, by an average 4.5 and 10 percent per year. The cost of living is estimated to have increased at an accelerated rate, about 3 percent per year, in the last two years. 43. An element of uncertainty in the future monetary and credit po-icy has been introduced by recent changes in the monetary legislation. The provision contained in the Organic law of the Banco that linkced bond purchases to the amount of international reserves had made increasingly difficult purchases of Government bonds by the Banco de Guatemala. Thus in 1967, only during fer weeks (when international reserves were high enough, for seasonal reasons), was it possible to place Gcvernmenb bonds with the Banco de Guatemala. As a result at the end of Septemnber 1967, the Organic alaw of the Banco de Guatemala woas revised: the linkc between bond purchases and international reserves was severed and the discre- tionary powvers of the Council in matters of credit policy were consider- ably increased. The ilonotary Council wzas enlarged in such a manner as to deprive the traditionally and constitutionally independent Central Banlc of its control of the Council and give the public sector representatives the dominant voice in credit policy decisions. HowJever, it is the an- nounced intention of the President of the Council, who is also President of the Banco de Guatemala, not to depart from the past rather cautious credit policy for the more "liberal" approach that sonie politicians had publicly advocated as the reason for the changes in the Law. Public Investments 44,, The period of political transition in early 1966 resulted in a marked slowdowm in public investment expenditures and loan disbursements. VJhen the new Government took over in the middle of the year, it announced ambitious plans for increased capital expenditures, hastened to settle the sterling debt, and signed before the end of the year eight development loans totalling US$17.4 million with international agencies. In 1967, another six new loans for US$33.6 million were signed. This large long- term borrowing from abroad reflects the concern of the new Government about the inadequate use of foreign long-term financing of public invest- ment expenditures in the past, particularly in the 1961-65 period, and the excessive recourse to domestic borrowing from the Central Bank and short-term borrowing from abroad. However, while the Government succeeded in containing the 1966 decline in public investment to about 11 percent with respect to 1965, and in achieving a slight increase in 1967, investment levels have still remained far short of its original plans. 45. Transportation and power have continued to be the sectors where the Government and the international ayencies have concentrated their efforts. In 1967 a US$15 million loan iwas obtained froin IERD to finance a large increase in the country's hydroelectric capacity (the Ju un Xa-rinalA project). Large increases in agriculture, housing and health ep?enditures have taken place with the help of sizeable loans from the Inter-American Development Bank and USAIDe IDB has extended a loan of US$'6 million for a $10 million program of small- and medium-size irrigation projects: the irrigation program, already at an advanced stage of prepa-  tion, covers some 12,000 has. in the southeastern areas of Guaten.ala and is intended to expand production of s-taple foods like beans, corn and rice. Balance of Payments 46. The last two years saw a serious deterioration in Guatemala's external finances, due to the sluggish groAwth of traditional exports and to the combined effects on import demand of the policy of irncentives to industrialization, the credit expansion to the public sector and the ready availability of suppliers credits. 47. The 1966 current account deficit was not striking because the drop in investment expenditures and the slow overall growth caused a significant decrease in imports of raw materials and capital goods and an actual decline of total imports. In 1967, however, preliminary estimates indicate a sharp increase (by over 17 percent) in imports, apparently due in part to stock replenishments and the speculative increases in the expectation of import restrictions, and a correspondingly record deficit in the current account. Due to continuous capital inflows, and in spite of the large repayments of short-term foreign loans obtained in the previous years, gross international reserves have decreased only marginally and still accounted at the end of 1967 fo; over three-months' worth of imports. Net reserves, however, have decreased by almost 30 per- cent in the last two years. 48. The Government and the Banzo de Guatemala are showing concern for the balance of payments situation and especially for the growing trade deficit. A restrictive credit policy and import and payment controls are being advocated in some official quarters as against the permissive policy followed in the past. Restraint on suppliers credits, that have been financing substantial private imports from outside the CACM area, are also being advocated. III. THE 1968-70 PROSPECTS 49. Fiscal and balance of payments policics Tr'ill most likely continue to be the keys to Guatemalan economic performance in the next few years. Within the context of good policy, as outlined below, GNP is projected to increase in real terms by some 3.7 percent per year in 1968-70, or some 0.5 percent per year, per capita. Tuis estimate is somewhat lower than the one prepared by the Planning Board, that projects per capita GNP growth at an average 1.1 percent per year. It compares with an estimated average increase in GNP of 3 percent in 1965-67 and of 6 percent in 1962-6h. 50. Such growth should be accompanied by the beginning of major structural changes in the economy as public sector policies become focused increasingly on raising productivity in agriculture and re- orienting the industrial sector toward export markets and domestic inputs.  - 12 - There is awareness in the public sector that to this end it is urgent to take a series of measures, such as adapting credit and tax policies to favor agricultural diversification; developing industries using more domestically produced ravw materials and thereby raisin g domestic value added; bringing pilot agricultural diversification projects more rapidly to commercial scale wherever warranted; improving land tenure conditions to help develop a rural middle class, especially in new project areas; revising fiscal incentives for industry (Guatemala has yet to ratify the regional agreement on fiscal incentives and the protocol granting special privileges to Honduras); introducing effective crop selection, grading and quality controls; and preparing export marketing studies to guide the gradual substitution of new agricultural and industrial exports for traditional commodities. 51. Ilanufacturing is expected to continue expanding, althsough at a lower rate than in recent years, due to the limited growth in prospect for Central America. Significant exports to world markets are not in prospect in the short period under consideration. The average rate of growth per year during 1968-70 is estimated at 5 percent. In the absence of new political unrest, private foreign investment should recover gradually from their 1966-67 lows. 52. In the context of agricultural diversification and the develop- ment of mineral resources, an increasing number of agricultural and mining projects can be expected to be undertaken during the next three years. Private foreign capital and also funds from international agencies are likely to be attracted by this type of ventures. The nickel project will be probably started in 1969-70, and expansion of the sulphur project is also probable. Since coffee orices are expected to remain low and unsalable surpluses are likely to increase fractionally in 1968, and more substantially in 1969-1970, coffee growers may be induced to use marginal coffee land for new crops, so that diversification pr-ojects should be accelerated in the future. 53. Banana producers, after overcoming the initial difficulties encountered when they moved to the Atlantic region, are undertaking a limited expansion program. The only independent producer active at present (Empresas Taylor de Guatemala, that so far has exported through United Fruit Co.), is in the process of more than doubling its acreage, from 1,000 to 2,400 acres, while United Fruit Co., plans to expand from 8,000 to 10,000 acres. Further expansion by the United Fruit Co., is for the time being unlikely, because the Company is under obligation to the TJ.S. Justice Department to limit the predominant position in the world banana trade and to create by "spin-off" a newi independent, rival company capable of commercializing some 9 million stems. Public Finances 5I4 Government revenues are expected to increase in 1968 by some Q12 million, or 9 percent. Since the Government projects a very small increase in current expenditures, its saviings are expected to more than double in 1968 and leave something available for investment after debt  - 13 - amortization, 1 ith improvement in tax administration and no:mal revenue growth (in particular responding to larger e.xports and to marginally higher and probably more heavily taxed imports) revenues are expected to increase by 5 percent per year in 1969-70, and budget savings by some 30 percent over the two years. 55. The Government projection may be somewhat optimistic. The squeeze on current expenditures, projected to grow at 3 percent per year in 1968-70, against an average yearly increase of almost 7 percent in 1961-67, may prove difficult to attain, and a great deal of improvement in tax administration wzill be required to achieve the projected yield in- creases from existing taxes. IJlth these reservations, the Government estimates are that public savings net of amortization wrould avorage in 1968-70 Q10 million, about one-third higher than in 1961-67. Even this higher public savings, howiever, would cover only about 17 percont of the envisaged public investment expenditures. Additional fiscal measures will thus be needed to support the investment effort, now pleaned. 56. Further emergency measures of the kind talken recently wsould be undesirable since they wiould complicate tax administration further and aggravate the patently regressive character of the tax system. 11ev approaches to increasing revenues should thus be sought. Ideally, they- should comprise the much awaited comprehens,ve reform of the -tax system. This reform, wrhich would aim at achieving a higher degree of tax revenue responsiveness to income growth could result in a tax burden at least equal to the one borne by the otIher Central American countries (i.e., about one-third above the present Guatemalan tax buLrden) and in a larger use of direct taxation (income, property and inheritance taxes), wjith upped rates and assessments. HIow-ever, inability to move quickly in this direction should not be permitted to detract from the urgent need for additional public sector savings to' finance the 1969-70 investient program. Public Investments 57. The present plublic investment proGram calls for Government in- vestments to average ?52 million (or 458 million, if the whole public se2tor is taicen into consideration) during 1968-70. This level wzould be about 60 percent above th.e 1965-67 level and just about the record levels reached in 1956-58. The project by project analysis and the disbursement projections for the existing commitments and the additional long-term borrowing from abroad now being secured, indicate that the investment levels estimated by the Government could be achieved, although with some strain on the administrative and technical capacities of the public sector, namely,,only if the project preparation, implementation and administration are further improved. However, while in the past lack of adequate adminis- trative and technical capacities represented an important factor in limiting the level of public investments, lack of public savings consti- tutes at present the significant constraint. 58. 'lithin this public investment progrean, the share of transport and power uould continue to be dominant, but would drop from 50 percent in 1968 to about one-third in 1970. The transport sector includes port expansion, but its highest priority is the feeder roads and roads ir tlxt  - 14 - Northeast which form part of an overall 5-rear road expansion plan covering over 1,000 miles and costing an estimated US$85 million. In power, capacity would be triplcd. in four years. The largest percentage increases uill take place in agriculture, education and health --especially wvater supply. Practically all identified project would be in part firanced from ,broad, with long-term loans and grants expected to account for about 62 percent of the total investment program. 59. As far as the IBRD lending program is concerned, twJo loans are e:;- pected to be proposed in 1968. The first loan, of about US$7.5 million, would finance a third thermal pl^nt in the Guajalate scheme, intended to re- duce the period of power shortage before the Jurtn-LTarinal.f hydro project comes into operation, and then to complement the hydro project in providing powJer to a vast region of the country. A second loan, of about US$7aO million, would finance the construction of several secondary education facil- i.ties, the expansion of teacher training facilities and the expansion and reorganization of the agriLcultural schools: the project wlas prepared by the Guatemalan Covernment assisted by a UNESCO team sent to Guatemala under the IBRD/2JESC0 Agreement. Table 24 in the statistical Appendix surmmarizes GCuatemalats public finances and investments in the 1960-70 period, actual and projected. Balance of Payments 60. Export receipts are expected to increase by some 15 percent in 1968 and 4.5 percent per year in 1969-70 (see Table 20 in the Statistical Appendix). Assuming prices at about the present levels, coffee exports should be in 1968 some 20 percent above 1967 (but still below the record 1966 level), and then grat. at 4.5 percent in 1969 and 2.5 percent in 1970. These rates, which are on average rauch higher than the long-term coffee export rate cf growth, reflect: (a) the very low 1a967 base value; (b) the penalties im- posed by the International Coffee Organization on Guatemala (that will have some effect also on coffee exports for calendar 1968); (c) the increased quo- ta proposed for Guatemala for the next period of the International Coffee Agreement, and (d) the probability of some sales to new markets. 61. Strengthened prices and lQrger production and export availabilities should account for an increase of about 18 percent in 1968 over 1967 in cot- ton exports, In 1969-70, however, only fractional increases should take place, as most of the incremental production is likely to be absorbed by the domestic textiles industry. Over the next three years sugar exports should increase only marginally: they have been projected on the basic assumption of a 2 percent increase per year in the U.S. quota and of constant prices. 62. The Government has a very ambitious program of expansion for banana exports, based on opening to independent producers 25,000-acres in the Aitlantic region during 1968-70, with exports starting in 1969. Because this program presents major problems (drainage, irrigation, feeder roads, quality control, credit facilities) and would imply an unprecedented effort on the part of the public sector, the area involved is lilcely to be at most about half of the progra=med (or some 12,000 acres) and exports should not take place until 1970-71. Taking into account only the planned expansion of the private producers (United Fruit  - 15 - Co., and Empresas Taylor de Guatemala), as wiell as productivity increases due to more effective pest control and better drainage and irrigation, and some price weakening, exports of banana are projected to grow steadily during the 1968-70 period, recovering by 1970 to around the 1963 levels. 63. As the general level of economic activity in the other Central American countries is expected to decrease and balance of payments difficu'lties are expected to become more acute in the near future, exports to Central American countries are projected to increase at a diminishing rate: by 10 percent in 1966 and by 5 percent in 1969 and 1970. This is below current official Guatemalan estimates of 18 percent, 15 percent and 12 percent respectively. 6a. The residual export categories ("other commodities" and services), that have been accounting for some 25 percent of total export receipts, have been projected by extrapolation of past trends. Total export growth in the 1968-70 period w.ould then reach 25 percent and average 7.8 percent per year (15.2 percent in 1968, 4.6 in 1969, and 4.5 percent in 1970), against 79 percent (or an average 10.2 percent per year) in 1960-65, a period that wras characterized by increasing export prices and by the fast expansion of manufacturing exports to the CACM countries. 65. Imports for 1968, as the Government estimates, are not likely to increase much over 1967 because of the abnormally high level last year. But in view of the expected GNP rate of growth and hligh investment levels, total imports are projected to grow subsequently at some 8 percent per year. These rates compare with an average yearly rate of increase of 9.4 percent in 1960-65. 66. These projections, which are suxmarized in Table 18 in the statistical Appendix, are not encouraging. They point to continuing balance of payments deficits and pressure on international reserves if corrective policies are not pursued. The Government is aware of these precarious balance of payments prospects and intends to take actions to stimulate exports and capital inflows and contain imports along the lines outlined below, to prevent further deterioration in Guatemala's external finances. 67. On the export side, the Governrent hopes to increase Guatemala's share of the world market for its traditional exports (coffee, cotton, bananas) by entering nevr markets. Since these exports face stiff competition from the other Central American countries, that are also pursuing the same objectives, significant gain in this respect is doubt- ful. Ne-vi export lines provide more promising alternatives after 1970 if the tax, credit and investment policies intended to encourage agricultural and industrial diversification are pursued wTith vigor. The nickel project alone should originate exports of the order of US$30-35 million (US$l0-15 million on a net basis) per year. With good policies, exports and the balance of payments could improve sharply in the early 1970's.  - 16 - 68. On the import side, a series of credit and tax measures aimed at reducing imports of consumer goods and raw materials that can be supplied domestically is at present under consideration. The measures include tightening of deposit requirements and payment terms, suppliers' credit restrictions, and import surtaxes on luxury and durable consumer goods. The Government is aware that the latter should be accompanied by excises on domestically produced competitive goods or adequate sur- charges on imported inputs to avoid perverse effects on Guatemala's productive structure. Both kind of measures, however, are meeting opposition from established coinmercial and industrial interests. 69. As most of the import measures contemplated will have regional repercussions, they will also need to be discussed with the partners in the Common Market. In fact, the need for coordinated action at the Central American level explains in part the lack of any concrete action so far in this field by the Guatemalan Government. Coordinated action may be in early prospect, however, since concern about balance of payments disequilibrium is now widespread and increasing throughout Central America. All the countries are anxious that an effective balance of pay- ments policy be followed by each one of them, to avoid the appearance of chronic disequilibria and the eventual adoption of drastic controls that would hurt the other countries and endanger the very existence of the Central American Common Marlet. 70. The Government recognizes in principle that the net internal credit expansion to the public sector should be contained to or near zero, to avoid undesirable inflationary and balance of payments pressures with- out diverting credit from the private sector. The present fiscal program for 1968-70 still calls, however, for net domestic borrowing by the Central Government of about Q3 million in 1968 and Q4-5 million per year in 1969-70, confirming the need for a larger effort to increase public savings, particularly in 1969-70. 71. With the larger disbursements of long-term loans from abroad in prospect, and possibly some IMF assistance, Guatemala could balance its external accounts without sacrificing development expenditures. But the availability of this external development capital will depend in great measure on the adequacy of the fiscal and balance of payments effort referred to above. If the Government is not able to translate its present intentions into concrete tax measures and have them approved by Parliament in time to enforce them effectively starting in 1969, foreign assistance will most likely be less than wjhat Guatemala might otherwise expect, and the public investment and development effort would be correspondingly reduced. Money and Credit 72. Overall monetary and credit policy is expected to remain prudent, as already indicated. The fears that existed earlier in 1967 that credit to the coffee sector might expand greatly in order to finance unsold surpluses have somewhat receded. Although the coffee growers are still  - 17 - putting pressure on the Banco de Guatemala to receive much larger and more liberal financing than in the past, the coffee financing scheme most discussed at present does not contemplate financing of coffee over and above the amount of the export quota. According to this scheme, the only change would be to provide credit at a longer term than in the past in order to relieve the medium-sized coffee producers who find thermselves in a temporary financial squeeze due to a combination of low prices and low quantities exported. Producers would have to submit themselves to some kind of quantity and quality control to cualify for for these credits. Current estimates of the forthconing coffee production and exports indicate that the coffee problem should not prove unmanageable in 1968. Unless the Government yields to the coffee sec-tor pressures--which is generally not expected--coffee financing should remain at a level con- sistent with the Government policy of credit restraint and agricultural diversification. After 1L968, however, the problem of coffee financing might become more acute, as coffee surpluses are likely to increase. Table 9 in the statistical Appendix shows the likely increasing trend in production and unsold stocks. 73. The external debt service ratio, that reached 8 percent in 1967, will decline slightly in 1968-70. The additional long-term borrowing abroad now being envisaged will not have any significan-L effect on the debt servicing until the early 1970's, and even then the increase in the debt service ratio will be small. But this additional borrowing abroad for developmental purposes, required to support increasing public invest- ment, will as mentioned above require substantial measures to raise new complementary domestic savings beginniing in 1969, even if external finance is forthcoming on an average 60:40 cost-sharing basis. IV. CONCLUSIONS 74. Guatemala's economy has been characterized in the last few years by a deterioration in its external and public finances. The Government is aware of the problems and of their causes, namely: poor performance of traditional exports, high and rising import content of the productive system, excessive inflows of short-term capital, inadequate recourse to long-term borrowning, inadequate level of taxation, excessive number of taxes (some 200) and exemptions, bad tax administration, high current expenditures, failure to carry out the level and kind of public invest- ments that are needed to change the basis of Guatemala's economy. 75. These economic and financial problems have been compounded by a very difficult political and social situation. The country remains badly split socially and economically. liith no tradition of a repre- sentative, civilian Government, the present regime finds lukewarm support in the public opinion, especially since it has achieved little of its announced development plans. Uncertainty and fear of crisis unfortunately remain the dominating characteristics of today's political situation in Guatemala and impose severe constraints on Government decision-making.  - 18 - Ihe Governmentvs ability to take measuresi is also reduced because of its obligation (e.g., in matters related to :irport duties) to coordinate many economic measires iiith its CACII part:ners. 76. In this difficult context, the Government has been moving with caution toward its announced development goals. But one of the major consequences of this approach has been a loaer than hoped for level of puiblic sector savings and a correspondingly excessive reliance on external borrowring to finance public sector investments. The result- ing financing pattern is not a sustainable one. Additional fiscal measures will be needed to support the 1969-1970 investment program now envisaged.  LIST OF TABLES Table No. External Public Debt 1. External MIedium- and Long-term BPblic Debt Outstanding, Including Undisbursed as of June 30, 1967. 2e Estimated Contractual Service Payments on Ex:ternal M4edium- and Long-term Public Debt Outstanding, Including Undisbursed as of June 30, 1967. Population, _National Accounts, Production and Other Development Indicators 3. Population, 1950, 1964, 1967. 4. Gross National Product, 1955-1966. 5. Gross Domestic Product by Type of TLxpenditure, 1955-66. 6. Gross Domestic Product by Sector Origin, 1955-1967. 7. National Income, 1961-1966. 8. Private Income by Origin and Type of Expenditure, 1961-1966. 9. Coffee Statistics, 1963-1970. 10. Cotton Statistics, 1963-1970. 11. Banana Statistics, 1963-1970O 12, Suigar Statistics, 1963-1970. 13., Basic Crop Production, 1953-1966. 14. Indicators of Industrial Production, 1957-1966. 15. Value Added in the 1lTanufacturing Sector, 1961-1967. 16. Transportation and Power Statistics, 1955-1966. 17. Trends in Education, 196h-1966. Balance of Payments 18. Balance of Payments, 1960-1970. 19. Composition of Exports, 1955-1966. 20. Export Projection, 1967-1970. 21. Composition of Imports, 1956-1965. 22. Balance of Payments, 1962-1967. 23. International Reserves, 1961-1967. Public Finance and Investment 24. Public Finances, 1960-1970. 25. Central Government Current Revenues, 1954/55-1967. 26. Central Government Expenditures, 1954/55-1967. 27. Central Government Fiscal Operations, 1962/63-1967. 28. Public Investment 1960/61-1963/65 and 1965-1967. 29. Drawi-ng on Foreign Loans to the Public Sector, 1962-1967.  -2- Tl'bIe ;'o. ,O. Projected Disbursements on Foreign Loans to the Public Sector, 1967-1970. 31. Holders of Central Government Domestic Bonded Debt, 1961-1966. Banking- and Prices 32. Summary Accoumts of the Banking System, 1960-1966e 33. Credit to the Private Sector, 1958-1965. 34. Wholesale Price Index in Guatemala City, 1957-1966. 35. Terms of Trade, 195;5-1966.  Table ls GUATEMPLA - EXTERNAL MEDIUM- AIND WjNG-TERM g1 PUBLIC 3 DE_2 0UTSTAMflJsQ3 INCLUDING UNDISEURSED AS OF JUNE 30, 1967 Debt Repayable in Foreign Currency (In thousanids of U.S. dollar equivalents) Debtl Outst.aL-ding Itemhl b!et June_30 1967 Item N~~~~~~~et of Including, undisbir'sed undIsbursed TOTAL EXTERVAL PUBLIC DEBT 3. 102,159 Privately-Placed Debt 36.060 LO 647 Supplier6t credits 23 ,183 Other 2 33,877 38,46ls IBRD loan 6 21,373 IDB loans JLAL38 8,93 BCIE loa-i 214 W700 U.S. Government loans 13 287 33 .08 Export-Import Bank N7T l9, 2 AL) 6,749 11,,221 /i5 Debt -W,ith an original or extended maturity of one yeer or nore. E Ifenlcludes $2,810,C00 draxm and outstanding of lines of credit; excludes $3,828,000 not yet drawn. Source: IBRD, Statistical Services Division