Guatemala - The economy

Cno -I la3 /is, Lot- t~~~~~~~~~~~~~~~~~~~~~~~~~~~~~--o- Q--_ RETURN TO RESTRICTED REPORTS DESK Report No. WH-123b I WITHI-N (9t rn! WITHINFILE COPY ONE WEEK 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 The report may not be published nor may it be quoted as representing their views.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 RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION THE ECONOMY OF GUATEMALA December 27, 1962 Department of Operations Western Hemisphere  CURRENCY EQUIVALENTS U. S. $1. 00 = I Quetzal  TABLE CF CONTENTS PAGE NO. BASIC DATA SU1fAMRY AND CONCLUSIONS i I THE SETTING 1 II GRaOJTH AND STRUCTURE OF THE ECONOMY 2 III INTERNAL FINAN'CES AND PUBLIC INVESTENT 12 IV EXTERNAL FINANCES AND TRADE 20 V ECONOIIC PROSPECTS AND CREDIWORTHIESS 22 VI STATISTICAL APPENDIX: TABLES 1 - 21  BASIC DATA Area: 109,000 square kilometers Population 1961: 3.9 million Rate of growth: 3% a year Gross National Product 1961: U.S.$ 679 million Per Capita G.N.P. 1961: U.S.$ 175 Origin of Gross Domestic Product 1961: Percent of G.D.P. Agriculture 32 Manufacturing and Mining 20 Commerce and Transportation 16 Other 32 100 Government Finances 1961-62: million quetzales Current Revenues 87.4 Current Expenditures 71.6 Investment Expenditures 31.3 Balance -15.5 Balance of Payments 1961: u.S.$ million Exports (f.o.b.) 114.4 Imports (f.o.b.) -120.6 Other current items -22.4 Current balance -28.6 U.S. Grants 12.3 Capital inflows 1-4.1 Errors and omissions -3.3 Deficit -5.5 Composition of Exports by Value: Coffee Bananas Cotton (percent) 1950 67 24 - 1961 59 12 9 Foreign Exchange Reserves (net): December, 1961 U.S.$ 38.8 million Ratio to 1961 imports 32% External Public Debt, December 31, 1961: Total outstanding $68.8 million Disbursed $37.6 million Additions Jan. 1 - June 30, 1962 $13.8 million  GUATEMALA 0 20 40 60 80 lOOKm i I I I i I I - j I Paved roads Pgfldn urd All weather roads I SFLORES Other roads 4p Roads under construction o 11 or proposed i Railways I] Volcanos '2 j Lakes 'I bOSebol *'I 'e w \~~ -; -aM ge t f- - It _ /~~~~~~~~~~~~~~~ OECEMBER '962 IBRC-1090R2 f ~ xS A LM Cooen 7 9erocru as i-o Art 2~ ~~~~~~~~~~~~- EL LAMDA PA~~~M CJ DSOC DECeMBER~~~~~~OLL 1962 IBOtOO  - 1 - SUMkARY AND CONCLUSIONS 1. During the decade of the 1950's, GuatemalaTs GNP at constant prices grew at an average annual rate of around 4.5% and a per capita rate of 1.5%. Much of the growth was concentrated in the two years from 1954 to 1956 when GNP increased by a spectacular 27%. This short-lived boom was based on k.gh coffee prices and heavy capital inflows in the form of private investments, loans and U.S. grants. When these factors lost their momentum, growth slackened, and came to a halt in 1961. 2. The drop in coffee prices started before the decline in U.S. grants, but when they coincided in 1958, there was a steep decline in exchange reserves that led the Government to take restrictive monetary and tariff measures in 1959-60 to protect its exchange position. Wfhile these measures have been fairly effective, the continuing decline in coffee prices and the termination of U.S. grant aid pose a fiscal and balance of payments problem for the immediate future. 3. The Bank of Guatemala has followed responsible monetary poli- cies which have been based on the credit needs of the public and private sectors, and the capacity of the country's foreign exchange position to withstan<i monetary expansion. These policies have neither impeded econo- mic grc/r: nor have they allowed the balance of payments to get out of hand. hiuwever, in recent months, the cessation of U.S. budget support, together w th the large Government floating debt and the growing credit needs of the private sector hiave brought strong pressure on the monetary authorities for the expansion of credit. But in view of the countryts weak foreign exchange position, the Bank of Guatemala has been obliged to set a ceiling on the total volume of credit at its mid-1962 level. In addition, the Government introduced, against the advice of the IT7, a system of multiple exchange rates to curtail non-essential imports and capital flight. 4. Public saving, which averaged a little less than 5% of GNP during 1956-58, fell to a little over 2% in 1960 and was probably even lower in 1961. This sharp downturn was due to the continuing rise in current expenditures while tax receipts were shrinking. At the same time, the abrupt decline in U.S. grants and other external capital in- flows produced a deep cut in public investment outlays. With exchange holdings severely depleted, the Government has virtually exhausted its possibilities for additional borrowing from private suppliers and the Central Bank. 5. The fiscal squeeze in which the Government currently finds it- self can be attributed in large part to its accommodation to political pressures for expanding current expenditures. At best, this accommodation makes a disproportionately small, indirect contribution to economic growth by helping to preserve political tranquillity. At worst, it jeopardizes monetary stability, drains resources from public investment, and fosters  - ii - public cynicism which makes it more difficult to secure popular acceptance of needed fiscal reforms. However, even without imposing any new taxes or raising existing ones, the Government could substantially improve its fis- cal position within a year or two by keeping total current expenditures at their 1961-62 level, and increasing iax receipts by Q5-6 million a year through better collection and stricter enforcement of the tax laws. As the economy expands and the tax structure is modified, this might be raised to $10 million a year within a few years, without appreciably diminishing pri- vate savings that would otherwise flow into productive investment. 6. Durin-g the past six years, about 60% of total public investment expenditures have gone into roads. Though it is still too early to judge the merits of the heavy emphasis on road-building, the generally light traffic on the new highways suggests that the agricultural and other in- vestments necessary to produce the full economic benefits of the large highway investments have not yet been made. Indeed, public investment in Guatemala is all too often viewed primarily as a source of employment and income, rather than a means of expanding the productive capacity of the economy. As in many underdeveloped countries, the planning and execution of public projectshave been deficient. 7. W"?ith a reasonable degree of political tranquillity, Guatemala should achieve an annual growth rate of about 4% over the next few years. Growth prospects depend heavily on what happens to exports which consist almost entirely of agricultural products. On the basis of current trends and expectations, exports should increase from $114 million in 1961 to at least $138 million in 1966, or about 4% a year. Much of this expansion is expected to come from the continued growth of cotton exports which rose from :P4 million in 1959 to $10 million in 1961 and should reach about $20 million in 1963, and level off at $25 million. The smaller items, such as meat products, sugar, rubber products, and fruits and vegetables are ex- pected to produce the rest of the increase. 8. In the industrial sector, there are still considerable possi- bilities for import substitution in textiles, processed foods, chemicals, and other products. While the role of the Central American Common Market in stimulating industrial production has been exaggerated by some of its supporters, the wider market should give added impetus to Guatemala's in- uustrial growth. But the main stimulus to manufacturing over the next few years can be expected to come from import substitution and the growth of the internal market. 9. The balance of payments adjustment to the termination of U.S. grant aid will create some difficulties until project loan assistance (which will require the formulation of suitable projects) replaces grant aid. But this adjustment need not impose a serious brake on economic growth. Exchange receipts from exports, private capital inflows, and the use of undisbursed foreign loans should be adequate to finance a level of imports that does not fall more than $5-6 million below the $134 million (c.i.f.) level of 1961, and should enable the economy to at least maintain per capita income during the transition period.  - iii - 10. A growth in per capita income may call for a large puglic invest- ment program, which would require substantial external financing, although reliable estimates of capital requirements have not yet been prepared0 In the past, external resources have financed a substantial share of public investment, but the proportion could be reduced in the future. Public savings could be raised by $10 million a year within a few years through improved administration of the tax laws and modifications in the tax structure, without appreciably diminishing private savings that would otherwise flow into productive investment. llo Service on existing external debt amounts to about 8% of pro- Jected export earnings during 1962-64 and declines to about 4% in 1966, On the basis of her economic prospects and relatively low prospective debt- service ratio, Guatemala should be able to service a modest amount of additional debt on conventional terms for high priority projects providing short-term obligations are kept within manageable proportions.  I. THE SETTING The Land lo MIountains divide Guatemala into four main regions: the high- lands, the Pacific plain, the Atlantic area, and the Peten. The high- lands, which are formed by two mountain ranges, contain most of the countryls population and economic activity. The principal food crops - corn and beans - are grown here, and most of the coffee is grown on the southern highland slopes. Nearly all the major urban centers and most of the country's industrial activities are located in the highlands. 2. The Pacific coastal plain which averages less than 50 kilo- meters in width and is about 300 kilometers long, produces cotton, sugar cane, rice, bananas, and other tropical crops. Cattle-raising is also important in this region. 3. The Atlantic area which includes a short Caribbean coast- line and a wide interior plain produces bananas and some coffee. Puerto Barrios, the country's main port, is the largest city in the area. The Peten which is the northern-most province, occupies about a third of the country's area, but contains only about 20,000 people. It produces chicle and some tropical woods, but has large unexploited forest resources which are generally inaccessible. The Peten is regarded as Guatemala's new frontier and the Government is carrying out a modest program for its development. The People 4. Guatemala's population has been growing at an estimated 3% a year and totalled about 3.9 million in 1961. An unusually large pro- portion of the population is economically inactive, with children under 15 years of age comprising over 43% of the total population. Because of the age composition of the population, the labor force has been grow- ing by only 2.1% a year. 5. The most striking and significant characteristic of Guatemala's pop-ulation is its sharp ethnic division. The pure Indians, who made up 54% of the total population in 1950, are economically, culturally, and linguistically isolated from the rest of the population which is mainly Ladino, i.e. of mixed Spanish and Indian origin. The vast majority of these Indians do not participate in the money economy to any significant extent and have remained almost immune to outside influences. 6. The Indian economy, which has probably been stagnating for decades, consists almost entirely of subsistence agriculture and has a standard of living well below that of the rest of the economy. Accord- ing to the official statistics, Guatemala's per capita GNP was $175 in 1961. But it is probably less than $100 for the Indian population and perhaps something like $250 for the rest of the population. This ethnic and economic division makes per capita and other national indicators  - 2 - more misleading in Guatemala than in most countries. To cite one illus- tration: illiteracy was estimated at 71% in 1950. But for the Indian population it was close to 100%, and probably only about 40% for the rest. 7. The Indian population contributes very little to the rest of the economy either through production or the payment of taxes. Nor does it absorb an appreciable amount of public resources. Thus, the Indians are neither a source of economic growth nor a drag on the economy, though they are a drag on national per capita estimates and other aggregative economic measurements. If account is taken of the division of the Guate- malan economy into a stagnant subsistence segment and a more dynamic com- mercial segment, the performance of the latter in terms of growth, savings, and investment has been somewhat better than the aggregate data indicate. Even as the economy grows, the Indian sector is unlikely to make an ap- preciable contribution to saving and investment for some years to come. Indeed, it will probably absorb an increasing amount of resources from the rest of the economy via the public sector. II. GROWTH AND STRUCTURE CF THE ECONOMY General Trends 8. During the decade of the 1950ts, Guatemalats GNP at constant prices grew at an average annual rate of around 4.5% and a per capita rate of 1O5%a MAuch of the growth was concentrated in the two years from 1954 to 1956 when GNP increased by a spectacular 27% and accounted for 45% of the growth during the entire period 1950-61. Between 1950 and 1954, the total growth in GNP at constant prices was less than 2%, and in the five years since 1956 it has averaged around 4% a year. 9. The short-lived boom of 1954-56, which was stimulated mainly by a high rate of capital formation and a rapid growth in coffee exports, slackened in 1957. Since then, per capita GNP t constant prices has shown a modest rise, but gross national incom per capita has declined slightly, mainly because of lower coffee prices. 1/ Real gross national income is GNP at constant prices adjusted for changes in the import value of exports, i.e. terms of trade. For the period 1950-1961 as a whole, the difference between the growth in GNP at constant and current prices is quite small, the implicit price rise amounting to only 5.5%. However, the differences in recent years have been greater due mainly to declining export prices.  - 3- 10. The growth pattern of the Guatemalan economy during the 1950's has reflected mainly external influences - coffee prices and foreign ca- pital inflows - rather than internal forces. The economy prospered when coffee prices were high and capital inflows heavy. When these factors lost their momentum, growth slackened. However, in the last few years, Guatemala has been gradually adjusting to the decline in coffee prices and has begun to develop some internal strengths: the expansion of cotton and beef production, and the growing manufacture of import substitutes. As these and other developments take hold, they should provide a more solid base for self-sustaining growth. Investment and Savings 11. From 1950 to 1955, gross investment averaged 9.2% of GNP; in 1956, it rose to 15.1% and remained at approximately that level until 1958 when it began a steady decline to 11% in 1961. During 1956-58, when gross investment reached peak levels, public investment comprised a little over half the total, with nearly all of it going into roads and social welfare projects. The decline in total investment between 1958 and 1961 was almost entirely due to the sharp cutback in public outlays which fell from 46% to 33% of the total. 12. Private investment has risen somewhat since 1957, but less than half of it appears to have made a direct contribution to the expansion of agricultural and industrial output. More than 40% of it has gone into resi- dential and commercial constructLon; and much of the private foreign invest- ment has not led to higher output because about half of it has consisted of outlays on unsuccessful oil exploration by foreign companies, and another 10% has gone into trade and commerce. PRIVATE FOREIGN INVESTMENT IN GUATEMALA BY SECTORS, 1957-61 (million quetzales) 1957 1958 1959 1960 1961 TOTAL 15.2 15.5 16.2 18.4 10.3 Agriculture 2.2 1.5 - .1 .4 Industry 3.7 3.3 4.2 10.3 3.4 Commerce 1.6 2.4 l,2 11 2.3 Mining 7.8 8.4 10.8 7.0 4.2 Source: Bank of Guatemala.  13. The most striking feature of investment financing in recent years has been the extraordinarily large proportion that has been financed by foreign capital, both public and private (including the drawing down of foreign exchange reserves). This prcncrtion rose fromn lTss than a tenth in 1955 to over a fifth in 1956 and nearly a half in 1958. Since then, it has fallen to 40' in 1961. GROSS INVESTMENT AND SAVINGS AS A PERCENTAGE OF GNP, 1950-61 Gross Total Gross Year Invest- Domestic Public Private External ment Savings Savings Savings Capital 1950 9.6 10.6 - _ - 1.0 1951 9.9 10.3 o.4 1952 7.3 11.1 = - - 3.8 1953 9.1 10.1 h.9 5.2 _ 1.0 1054 9.1 8.6 4.8 3.8 0.5 1955 10.7 9.7 4j4 5.3 1.0 1956 15.1 11.9 4.6 7.3 3.2 1957 15,2 8.8 h.8 40o 6.4 1958 15.2 709 4.7 3.2 7.3 1959 12.9 7.7 2.7 5,0 5.2 1960 12,2 7.8 2.3 5.5 h44 1961 11.0 6.6 - _ 4.4 Source: Bank of Guatemala and IBRD Staff estimates. 14. A corollary cf the heavy inflow of foreign capital was the sur- prisingly low level of domestic savings, which amounted to 11.9% of GNP in 1956 and steadily declined to 6.6% in 1961. Public savings which averaged 4.7% of GNP during 1956-58 fell to only 2.3% in 1960. To attain an invest- ment level of 15% of GNP with domestic savings rates of the last three years, more than half the investment would have to be financed from external sources. The Major Economic Sectors 15. The principal changes in the composition of Guatemala's output in recent years have been a decline in the share of agriculture from 37% of gross domestic product in 1956 to 32% in 1961, and a growth in the share of industry and mining from 16% to 20,%; the share of services increased slightly from 43% to 44%.  16. Between 1956 and 1961, the contribution of agriculture to the GDP fell from Q235 million to Q221 million, and the contribution of in- dustry and mining rose steadily from Q102 million to Q139 million. The decline in the value of output originating in the agricultural sector was due entirely to the more than 40% decline in coffee prices, which diminished export receipts by Q22 million. This compares with a decrease of Q14 million in agriculture's contribution to the GDP and suggests that the rest of the agricultural sector registered a modest increase during this period. Thus, while industry has grown more rapidly than agricul- ture in recent years, agri.iultural output has expasnied oonsiderably. 17. During the period of Guatemala's most rapid economic growth from 1953 to 1957 when the GDP rose by 38%, the contributions of the agricultural and industrial sectors which together accounted for 55% of GDP in 1953 contributed only 29% of the increase. Services accounted for about 60% of the expansion and public construction (mainly roads), for most of the rest. While some of the rapid growth in services was in transport and communications and electric power, the bulk of it was in other private and public services which make less direct contributions to the production of goods. Economic growth in underdeveloped countries, that is based on an expansion in the output of services rather than goods is unlikely to be self-sustaining without continuous large injections of external assistance. However, the trend in Guatemala since 1957 has been more encouraging in this regard, as agriculture and industry accounted for most of the moderate expansion in total output. Agriculture 18. Agriculture is the largest sector in the economy, though its relative importance seems to have diminished during the past decade, having grown less than the rest of the economy. 19, As in nearly all underdeveloped countries, piroductivity in agriculture is lower than in other economic sectors, and thus absorbs a larger proportion of the labor force than it contributes to total output. In 1950, 70% of the labor force was employed in agriculture and produced only 41% of the gross domestic product. Productivity per worker in agri- culture may even have fallen since 1950 in view of the rapid population growth in the rural areas, the relatively light migration to the urban centers, and the generally primitive methods of cultivation. 20. The overall performamne of the agricultural sector in recent years has been quite encouraging as evidenced by the expansion in the output of food staples and the growing trend towards diversification through the growth of cotton output and to a lesser extent beef, dairy products, and fruits and vegetables. Corn is the staple in the Guate- malan diet, and occupies over half the arable land in the country. Other important food crops are beans and rice, which are generally grown on small  - 6 - subsistence farms, and sugar which is generally produced on large planta- tions. Though wheat consumption has been growing rapidly, only a small quantity of soft wheat is grown in Guatemala. Climatic conditions are unsuitable for growing hard wheat and virtually all of it is imported. 21. Corn production, which has been plagued by a lack of storage facilities and sharply fluctuating prices, increased by over 50% between 1955-56 and 1961-62 after a steady decline during the preceding five years. The downward trend in these earlier years can be attributed to the anti- landlord policies of the Arbenz Administration (1950-54) that induced landlords to provide less land to their workers for growing corn, and dis- couraged large commercial growers from planting corn; and the high coffee prices that encouraged plantation owners to plant coffee as a substitute for corn grown by their workers. The Government that succeeded the Arbenz administration was faced with a food shortage and tried to stimulate corn output by setting minimum prices and expanding storage capacity. However, despite a steady increase in production, the 1960-61 crop fell short of domestic needs and 12,000 tons of yellow corn were imported from the U.S. in exchange for 5,000 tons of sugar. 22. Much of the growth in sugar production from 57,000 to 110,000 tons during the past six years has been stimulated by rising consumption and an expectation that Guatemala would receive a quota in the U.S. market. The production of panela, a hard brown sugar which is consumed in the rural areas because it is relatively cheap, has been falling though it still amounts to about 35,000 tons a year. In 1961, Guatemala received an allo- cation of 17,000 tons in the U.S. market, but was able to export only 7,500 tons. Under the new U.S. sugar legislation, Guatemala has been allotted an annual quota of 20,000 tons. 23. A continuous increase in the output of food crops in the Indian sector will be difficult because the barriers to increasing productivity are formidable, The unused lands where such crops could be growm at rea- sonable costs are located mainly in the tropical lowlands and are likely to be cultivated by commercial farmers, if at all, because the Indians who live in the cool highlands where land is becoming scarce are extremely re- luctant to move to these areas. Thus, efforts to expand the production of food crops to meet the growing needs of the Indian population will pro- bably have to rely more on improving yields than on bringing new land under cultivation. The problem may be alleviated somewhat as Indians are induced to leave the highlands and are assimilated into the rest of the economy. 24. Coffee is Guatemala's most important cash crop and has accounted for the bulk of export earnings and about 40% of agricultural output in recent years. Coffee also occupies a key monetary and fiscal role in the economy, since the financing of the annual crop absorbs a substantial por- tion of private bank credit, and taxes on coffee exports comprise a sig- nificant share of total tax receipts.  - 7 - 25. There are approximately 12,000 holdings that produce coffee on a commercial scale, and an estimated 1,740 of these account for nearly 80% of the total output. These holdings include some 75 national farms now owned and operated by the Guatemalan Government that were seized from German nationals during World War II. These farms include some of the largest plantations and account for about 10% of the countryts coffee pro- duction. They formerly produced 15 to 20% of total output. The national farms have sustained heavy financial losses in recent years and the Govern- ment is planning to dispose of them through sales to private purchasers and as part of an agrarian resettlement program. 26. Most of the coffee is groam on the Pacific slopes in the southern and southwestern part of the country at elevations of about 3,000 feet. Some coffee is also grown on the lowlands, but its quality is inferior and it brings a considerably lower price. With stable or declining prices, these holdings are expected to go out of production during the next few years. 27. Coffee production increased by 63% between 1956-57 and 1960-612, despite a price decline of 40%. This growth in output is the result of plantings during the years when prices were higher and demonstrates the responsiveness of coffee producers to price incentives. During the last few years, the international quota together with exports of soluble coffee and internal comsumption have absorbed nearly all of the countryts produc- tion. Thus, Guatemala has been fortunate in not having to accumulate large stocks that have plagued other coffee-producing countries. The relative balance be&een supply and demand is not the result of any Government con- trcl or regulation of production. It is probably due to a combination of factors: the fairly liberal quota; the concentration of the bulk of the output in a relatively small number of plantations; a vigorous coffee as- socfLation that advises producers on production and market conditions; and the opportunities for raising other crops and livestock on coffee lands. 28M Until very recently, bananas were Guatemalats second largest ex.prt, but have now been surpassed by cotton. Banana exports reached a peak of 14.9 million stems in 1947, but have fallen sharply since then as a result of disease, wind damage, and other difficulties. Standard Fruit, vjhich has been shipping about 1.5 million stems a year, has recently with- dravm from Guatemala because of blowdowns and labor problems. United Fruit expects to stabilize exports at around 6 million stems a year. / According to the estimates of the U.S. Department of Agriculture and U.N. Coffee Conference, production rose by only 20%. The estimate of the Government of Guatemala for 1960-61 is 500,000 quintals above the USDA and U.N. estimates. This difference may be due to a confusion between crop years and calendar years in the official Guatemalan estimates.  - 8 - 29. The most encouraging economic development in Guatemala in re- cent years has been the rapid expansion in the production of cotton for export. In the two years from 1959-60 to 1961642, production increased from 322,000 to 675,000 quintals /. Much of this increase in production has taken place on lands formerly held by the banana companies. 30. Though cotton production was initially stimulated by a price support program and government credit to private growers, the opportunity to make large and fairly quick profits has been the main stimulus in recent years. While general inferences about the Guatemalan economy on the basis of the cotton boom would be unwarranted, it does show that Guatemalats commonly-cited ailments - political instability, lack of entrepreneurial spirit, and inadequate credit facilities - can be overcome. One aspect of the cotton boom that may have important implications for Guatemalats future economic development is that much of it is in the hands of younger people, and this may give rise to a new class of vigorous and venturesome entrepreneurs. 31. At current prices cotton production should continue to expand, though at a somewhat diminishing rate because of the limited supply of suitable land. The cultivation of cotton appears to be more efficient and more technologically advanced than any other crop. Tractors are used for virtually all of the planting and present yields are reported to be considerably higher than in other Latin American producing countries and one of the highest in the world. With the assistance of FAO experts and the two cotton producerst associations, substantial progress has been made in the successful growing of longer staple cotton which would bring a higher price than the present variety. It would also satisfy the internal demand for this type of fibre which is now being imported in the form cf yarn and fabrics. 32, Other products which have made significant contributions to Guatemalats export earnings in the past are cocoa, chicle, and essential oils. The production of these items is unlikely to gruw significantly in the years ahead because of adverse market conditions. However, the pro- duction of rubber, which amounted to 500 tons in 1961, may reach substan- tial proportions by the late 1960's. 33. The cattle population has been growing slowly in recent years, though the production of beef has been expanding at a fairly rapid rate through cattle imports from Honduras and Nicaragua that have grown to about 30,000 head per year. Guatemala has become virtually self-sufficient in beef, and exports a moderate quantity of frozen hamburger and other pro- cessed meats. There are good prospects for a continuing growth in these exports with the recent expansion in freezing capacity. Dairy herds have also been expanding and the production of milk has been rising. 2/ According to data published by the International Cotton Advisory Com- mittee, production was 791,000 quintals in 1961-62. Again the difference may be due to a failure to distinguish consistently between calendar and crop years.  - 9 - 34. The Government has played a limited but vital role in promoting the growth of agricultural output. Price stabilization and the expansion of storage facilities have stimulated the production of corn; the process- ing of agricultural products has been encouraged by the imposition of im- port duties notably on flour and textiles; and the provision of agricultural credit through the state banks has been extremely important in the growth of cotton and beef production. 35. Land reform has long been a highly controversial area of agri- cultural policy because of the concentration of about half the arable land in approximately 1,000 holdings, and the existence of tens of thousands of small plots whose owners find it extremely difficult to earn a bare liveli- hood. There are also many thousands of landless peasants. Land reform has thus been viewed by its supporters primarily as a means of redistri- buting wealth and income, rather than as a means of increasing agricultural production. 36. Under the Agrarian Reform Law enacted by the Arbenz Administra- tion in 1952, some 865,000 acres of private land were expropriated and allegedly given to small holders and landless peasants. Most of the land, however, is believed to have gone to supporters of the Arbenz Administra- tion. When the Government was overthrowfn, the Agrarian Reform Law was suspended and the expropriated lands were returned to their former owmers. Under the land reform program of the new Government, titles were given to about 9,000 families on Government-owned lands and lands donated to the Government by private owners. 37. Since 1956, a modest program of land settlement and rural devel- opment has been under way, jointly financed by the Guatemalan and U.S. Governments. Under this program, which has included land clearing, and the building of access roads, water and sewage facilities, housing, and supervised credit, about 5,000 families have been settled on farms of about 50 acres each. The lands have come mostly from the public domain and some have been purchased from private owners. The U.S. Government has recently decided to discontinue its assistance to the program. But the Guatemalan Government plans to continue it on an enlarged scale, and has applied for a loan from the Inter-American Bank. Industry and Mining 38. Since 1950, industrial and mining production has risen at approxi- mately the same rate as the gross domestic product. But during the past five years, it has grown by 37% compared to an increase of 10% in GDP, and its share of the GDP has gone up from 16% to 20%. 39. According to the most recent census of manufactures taken in 1958, the value added by manufactures amounted to 13% of the GDP, of which nearly half was handicrafts; and the production of manufactured goods employed 28,000 workers in 2,lh0 plants. As in most underdeveloped coun- tries, food, beverages and tobacco products were the principal items, accounting for about half the total. Other industries of importance were building materials (mainly cement), chemicals (mainly soap and candles), textiles, clothing, and wood products.  - 10 - Manufacturing By Industry, 1953 - 58 (mJ3?ion quetzales) AnLnual Rates V;Jus A;0dded o, Crowth in Percent 1953 _9_8 .7 Manufacturing - Total 57.0 81.2 703 Establishments wfith 3 or More Persons - Total 25.6 43.6 11.1 Food, Beverages & Tobacco 1104 21 9 1460 Textiles, Shoes & Clothing 51., 6. 53 LumIber & F-urnit-ure 1C6 2r,S 1i8 Pulp, Paper & Printing 1.i 2,2 ll19 Leather Products 04 1.2 2b.6 Rubber - 0>3 Chemicals 2.5 2, ~5 Non-Metallic IIinerals 1.4 3,9 22.7 Metals, Mach., Transp. Eqpt. 1.8 1B8 _ Other 0.1 0.5 35.0 Handicraft 31.1h 37.6 3.7 Food 11,00 1T Textiles, Clothing, Other 2O0,4 25.0 Source: Bank of Guatemala 4o0 Since 1958, a number of nri-; manufactur-ng operstions have been established: a mill for producing k2naf bags as a substitute for imported jute bags; a paper mill using imported pui.p, a tire plant; several cotton- seed oil mills and pLastic fa-tories; and an oil refinery. Much of this development, which has been financed by foreign and Guatemalan capital, was stimulated by the higher tariffs introduced in 1958 and the industrial de- velopment law of 1960 which exempts most new manunfacturing operations from taxes and imiport duties, The recent ratificat-i.on of the Investment Guaran- tee Treaty with the UDSO by the Guatemal:an Congress after prolonged debate will remove certain deterrents to p.ivate I investment in Guatemala, The Treaty enables UtS. investors to cbtain insurance against the risks of currency inconvertibility, expropriation, and war. hl4. lhile there are serious limitations on import substitution be- cause of the smallness of the internal market, there is still considerable scope for further import substitution in view of the recent origin of Guate- malats industrial development. This, together with the emergence of the Central American Common Market should provide sufficient stimulus for a continuation of the vigorous industrial growth of the past few years.  - 11 - 42. The only minerals produced on a commercial scale in Guatemala are lead and zinc. The production and exports of these minerals have varied widely during the past five years as a consequence of sharp fluctuations in world prices. Exports fell from 31,000 metric tons in 1957 to 6,000 in 1959 and then rose to 23,000 tons in 1961. There are also nickel deposits in the Lake Izabal region. The International Nickel Company is studying a large project for exploiting them and has already made substantial outlays on ex- ploration. Transport 43. Guatemala had approximately 6,000 kms. of roads in 1960, of which about 1,300 kms. were paved. Most of the latter consist of four main routes: i) the Atlantic Highway from Guatemala to Puerto Barrios on the Caribbean, ii) the Pacific Highway which extends from the Mexican to the El Salvadorian border on the Pacific slope, iii) the Inter-American Highway which also ex- tends from the Piexican to the El Salvadorian border in the central part of the country, and iv) a highway from Guatemala City to the port of San Jose on the Pacific Coast. The section of the Pacific Highway to Coatepeque and Retalhuleu is now being paved while several sections of the Inter-American highway remain uncompleted. 44. Most of these highwrays were built during 1955-1960. The only IBRD loan of $18,2 million to Guatemala in 1955 helped finance the Atlantic and Pacifi; highways, as well as general maintenance. These two highlways were included among the transport investments recommended by the IBRD Survey Mission in 1951 While it is still too early to judge the merits of the large road-building effort, partly because the main highway network has not yet been completed, the results have been rather meager, as evidenced by the light traffic on most of the main highways. The only available index of re- cent traffic trends is the growth in the number of motor vehicles registered. From 1955 to 1960, the total number of vehicles increased from 22,100 to 33,400, or a little over 50%. Passenger cars increased from 12,600 to 21,200 and commercial vehicles from 9,500 to 12,200. A larger increase in the latter might have been expected in view of the rapid expansion of the highway net- work, but the modest growth of commercial traffic reflects the relative stag- nation of the Guatemalan economy in recent years. 45. The failure to realize more of the benefits of the highway program has been attributed to the lack of feeder roads and the failure of the Guate- malan Government to take the necessary measures to stimulate agricultural production. To avoid the uneconomic use of public funds, future investment in highways should be based on a careful study of Guatemalats overall trans- port needs. Much of the past investment in highways will be wasted unless maintenance is greatly improved.  - 12 - 46. Guatemala's railway system consists of 850 kms. of public service lines and 300 kms. of United Fruit Company plantation lines. Most of the public lines are owned by the International Railways of Central America (IRCA), a U.S. company. The other public service line is the government- owned Verapaz Railroad which has only about 45 kms. of track. Mvlost of Guatemalats freight traffic moves by rail, though truck traffic has been increasing. The IRCA which has consistently earned a profit until re- cently, has applied for a U.S. Government loan to help finance a diesel- ization program. Power 47. The total consumption of electrical energy from public sources has risen from 78 million kwh. in 1950 to 228 kwh. in 1961. lHost of this energy is consumed in Guatemala City and vicinity, and is supplied by the Empresa Electrica de Guatemala, S.A., a wholly owned subsidiary of American and Foreign Power Company. About 60% of its capacity is thermal and the rest hydro. The only other major plant is the government-owned Empresa Hidroelectrica de Santa Maria which serves Quezaltenango and vicinity. 48. The National Electrification Institute (INDE) which was created in 1959 is the public power agency with exclusive authority for building ar.d operating new power plants. Provisions have also been made for the construction and expansion of private plants with the approval of the Con- gress and under specific controls by INDE. 490 Although the consumption of electricity has been rising at a rapid rate, generating capacity has been lagging behind demand, especially outside of Guatemala City. An intensive study of Guatemalats long-term power requlrements has recently been completed under the joint sponsorship of the U.N. Special Fund and the Guatemalan Government, with the IBRD as the executing agency. It will shortly be followed by a feasibility study of a hydro project on Lake Atitlan, whose foreign exchange costs are es- timated at $13-15 million. III. INTERNAL FINANCES AND PUBLIC INVESTMENT Iioney and Credit 5o. In Guatemala, as in the other Central American Republics, mone- tary policy is strongly influenced by the countryts foreign exchange position because of the close relationship between internal liquidity on the one hand and the demand for imports and short-term capital movements on the other. This close relationship is due to the high propensity to im- port, which has been reinforced by the absence of import or exchange restric- tions, and the free convertibility of the quetzal which has been at par with the U.S. dollar since 1922. 51. Guatemala's banking system consists of three state banks and eight private banks. The state banks are the Credito Hipotecario Nacional which operates as a commercial bank, the Instituto Nacional de Fomento  - 13 - de la Produccion (INFOP) which has been increasingly operating as a com- mercial bank, and the Banco Nacional Agrario which extends credit to small farmers. The Bank of Guatemala exercises its control over the money supply mainly through its credit operations with the public sector and loans and discounts to the commercial banks. On a few occasions, it has also employed its authority to alter the legal reserve requirements of the commercial banks. 52. The Bank of Guatemala has followed responsible monetary poli- cies during the past decade. These policies have been based on the credit needs of the public and private sectors, and the capacity of the country's foreign exchange position to withstand monetary expansion. IIonetary policy has neither impeded economic growth nor has it allowed the balance of pay- ments to get out of hand. The steady and rapid rise in saving deposits since 1954 is an indication of public confidence in the willingness and ability of the monetary authorities to exercise the necessary restraint for the prevention of either rising prices or a foreign exchange crisis. 53. From 1950 to 1961, the money supply increased by slightly more than the GIA'P at current prices, and the price level, as measured by con- sumer prices in Guatemala City, rose only 8.7%, with the entire increase occurring between 1951 and 1956. High export earnings and heavy capital inflows provided the basis for a rapid expansion of credit to the private sector during 1955-58. However, as a consequence of the sharp reduction in exchange reserves in 1958, the Central Bank shifted from an easy to a tight credit policy. Legal reserve requirements were raised in 1959 and again in 1960; and ceilings were imposed on loans and rediscounts to the banking system and on credit to the public sector. This stabilization program led to a $15 million standby credit from the II-F. 54. The cessation of U.S. budget support, the large government floating debt, and the growing credit needs of the private sector, have recently brought strong pressure on the monetary authorities for the ex- pansion of credit. But in view of the country's weak foreign exchange position, the Bank of Guatemala has been obliged to set a ceiling on the total volume of credit at approximately its mid-1962 level, and to draw on the credits obtained from private U.S. banks. 54 (a). In mid-October, 1962, the Government introduced a system of multiple exchange rates to curtail non-essential imports and capital flight. This action was taken against the advice of the R1 which felt that it was an unnecessary departure from the free exchange market and unitary rate, and that it might accelerate rather than curtail capital flight. The new exchange system maintains the par value for essential transactions (80% of the total); and establishes an auction market for non-essential imports and a parallel free market for capital transactions. The legal basis for the new exchange regulations is a provision in the Monetary Law which authorizes the Government to invoke the "Emergency Regime of International Transfers" when net exchange reserves fall to less than 40% of the annual average sale of foreign exchange in the previous three years.  - 13 (a) - 55. While there is no reliable estimate of the quantity and quality of the unsatisfied credit needs of the private sector, there has been a widespread view that the commercial banks were not meeting the demand for medium and long-term industrial credit, and that the Government Develop- ment Bank (INFOP) was not doing a satisfactory job. This led to the ne- gotiation at the end of 1959 of a $5 million credit from the Export-Import Bank to the Bank of Guatemala, and a $5 million credit in 1962 from the Inter-American Bank. The proceeds of the Export-Import Bank credit were to be lent through the commercial banks for the purchase of industrial equipment in the U.S., but by the middle of 1962, only $0.6 million of the credit had been drawn.  - 14 - 56. The two reasons most often advanced to explain the slow use of the Export-Import Bank credit are first, that it is relatively unattrac- tive for the commercial banks becuase they have to pay the Central Bank 6% for the funds and can charge only 8%, which is the legal maxinum on bank loans. Second, the requirements that the proceeds of the loans be spent in the U.S. and that a portion of the goods be transported in U.S. ships make the credit less attractive and less usable to potential bor- rowers. These latter conditions do not apply to the Inter-American Bank credit and it remains to be seen whether it will be used more rapidly. A small portion of thle $8 million credits obtained by the Bank of Guate- mala from private U.S. banks have been used to finance medium-term in- dustrial credit through the banking system. This money is more attractive to the commercial banks than the Export-Import Bank credit because they pay the Bank of Guatemala only 41,2JQ to 54%. 57. While the narrow interest rate differential and the purchase and shipping conditions of the Export-Import Bank credit undoubtedly reduced its appeal, the most serious limitations on its use may be the scarcity of loan applications of the type that would induce private lending institutions to assume the necessary risks, and the commercial bankst lack of experience and confidence in appraising industrial loan pronosals. In an effort to expand and improve industrial and agricultural credit facilities, a group of experts under the auspices of the Inter- American Bank is conducting an intensive study of the organization and operation of the three state banks. GoverLnment Finances 58,, As noted earlier, public saving which averaged a little less than 5% of GNP during 1956-58, fell to a little over 2% in 1960 and was probably even lower in 1961, This sharp do,Jmturn was due to the continu- ing rise in current expenditures while tax receipts were shrinking. At the s-,me time, the abrupt decline in U.S. grants and other external capibal inflows produced a deep cut in public investment expenditures. Wiith exchange holdings severely depleted, the Government has virtually exhausted its possibilities for additional borrowing from foreign and domestic suppliers and the Central Bank. These developments underlie the central fiscal problem facing Guatemala: how to adjust to the ter- mination of U.S. grants and lower tax receipts in the face of growing pressures to expand expenditures to meet the growing needs for public investment and social services. 59. Total government expendituresL/ rose rapidly during the early 1/ The public sector, as defined in the national accounts, includes the Central Government, the municipalities, the Social Security Institute, and the University of San Carlos. However, only the Central Government which accounts for the great bulk of public expenditures, publishes de- tailed information on its finances. Thus, government expenditures in this section of the report cover only Central Government expenditures.  - 15 - years of the past decade from Q61 mdillion in fiscal 1952-53 to a peak of Qllh million in 1956-57, or from 14% to 18% of GNP. This growth in ex- penditures was financed almost entirely from non-inflationary sources. Of the Q53 million increase, higher revenues financed Q27 million and U.S. grants Q17 million, with the remaining Q9 million coming from external and internal borrowing. Between 1956-57 and 1960-61, expenditures were re- duced, as both tax revenues and U.S. grants declined. 60. Since 1957-58, the Governmentts cash positionl/ has been unfavor- able, as evidenced by the cash deficits and/or increases in the floating debt incurred in each year. The cash deficits from 1957-58 to 1961-62 totalled Q19 million and were financed almost entirely by foreign borrow- ing0 The Central Government's net indebtedness to the Banc of Guatemala increased by only Q1.4 million during this period, but the floating debt, which rose from Q5.3 million to Q22 million, has been the fiscal safety valve. Though the Government is considering the conversion of some of this short-term debt into 15-year obligations, the floating debt has probably reached its prudent limit. 61. The 1962-63 budget calls for total expenditures of Q96 million compared to Q103 million in 1961-62. The revenue estimates do not include any U.S. grant aid but contemplate net foreign borrowing of Q3 million and Q3 million of net borrowing from the Bank of Guatemala, and project a Q5 million increase in tax receipts, which will require greatly improved tax adirTnistration unless new taxes are imposed. The modest amount of Central Bank borrowing may be excessive in view of the shaky exchange position. Expenditures 62. The allocation of the Central Government's financial resources betw,en current and investment expenditures has varied more widely than the level of its total expenditures. During the period of rapidly rising expenditures from 1952-53 to 1956-57, investment accounted for two-thirds of the total increase and rose from a little over 3% of GNP to more than 8%. However, when total expenditures dropped, current expenditures rose and investment fell once more to 3% of GNP. Part of the sharp fluctuation in nublic investment expenditures was due to the variations in the amounts of external grants and loans that were earmarked for investment projects. During the past two years, the trend in the composition of Central Govern- ment expenditures has been reversed, with current expenditures declining and investment expenditures increasing. 63. The composition of current expenditures in terms of broad cate- gories has not changed significantly in recent years. In 1960-61, admin- istrative expenditures accounted for about half the total; education, health and welfare for 30%; and national defense about 12%. Sharp cuts have been made in some administrative items, notably in the budget of the Office of the President, which was reduced from Q5.5 million in 1958-59 to an estimated Q3.3 million in 1961-62. But there is both scope and need for further cuts in administrative expenditures at least sufficient to offset the growth in education, health, and other social expenditures. 1/ Cash payments include payments on past budgets as well as the current budget. Changes in the floating debt reflect the difference between authorized expenditures recorded during a fiscal year and total cash pay- ments during that year.  - 16 - Taxes 64. Tax receipts !/4 which produce about 90% of the Central Govern- mentts total revenues, have consistently exceeded current expenditures. But Central Government saving wlhich reached a peak of 6% of GNP in 1954-55 dropped to 2% of GNP in 1961-62. Tax receipts have amounted to a rather stable 12-13% of GNP during the past decade. Their failure to rise as a percentage of GNP is not surprising since the tax structure relies heavily on import duties and export taxes, and foreign trade has remained a con- stant fraction of GNP. Nearly all the revenue from export taxes comes from the coffee tax which varies with the world price. 65. Direct taxes, as conventionally defined, produce about 12% of ordinary tax receipts. The profits tax, which applies to enterprises whose capital investment exceeds Q2,500, is the most important of the direct taxes. Its yield, which amounted to Q6.3 million in 1960-61, could be increased by an estimated Q1.5 million to Q2 million a year with more efficient adminis- tration. This is especially true of the Industrial Development Law wihich is supposed to exempt new and expanding industries from all taxes, but has been loosely applied to enterprises whose eligibility for exemption is highly doubtful. 66. The property tax, which produced Q1.4 million in 1960-61, is the only other direct tax of any consequence. The rate is Q3 a year per Ql,000 of appraised value. But even at this low rate, more efficient collection and a reasscssment of propert- values would increase the annual yield by Qh to Q5 million, according to conservative estimates. The Congress recently failed to approve a government proposal to raise the property tax rate to Q6 per thousand and recommended a cadastral survey instead. This survey, which would presumably lead to a reassessment of property values, will take several years even under the most optimistic expectations, though the urban areas can be covered in a relatively short time. 67. There is no personal income tax in Guatemala. During the past decade, eight unsuccessful attempts have been made to enact an income tax law. The latest proposal, which would have produced an estimated Q1.5 mil- lion a year, wias recently withdrawn from Congress ostensibly for modification and improvement. The Government is also considering the imposition of a tax on cotton exports. 2,/ In addition, to ordinary tax receipts, certain revenues are earmarked for servicing bonded debt. These earmarked receipts which amount to 11-12% of total tax mceipts, include taxes on alcoholic beverages and cigarettes, telephone service, 10% of the import and export tax revenues, and rebates from the national pawnshop. Data on the amounts produced by these sources are not published.  - 17 - 68. The fiscal squeeze in which the Government currently finds itself can be attributed in large part to its accommodation to political pressures for expanding current expenditures4 At best, this accommodation makes a disproportionately small, indirect contribution to economic growth by helping to preserve political tranquillity. At worst, it jeopardizes monetary sta- bility, drains resources from public investment, and fosters public cynicism, which makes it more difficult to secure popular acceptance of needed fiscal reforms. However, even without imposing any new taxes or raising existing ones, the Governmuent could substantially improve its fiscal position and pro- vide additional resources for public investment within a year or two, by keeping total current expenditures at their 1961-62 level and increasing tax receipts by Q5 to Q6 million a year through bettor collection and stricter enforcement of the tax laws. Public Investment 69. The first serious effort to undertake a public investment program was an outgrowth of recommendations made by an IBRD Survey Mission in 1951. The mission recommended an "optimum" investment program of Q60 million for the six years 1951-52 to 1956-57, in addition to expected "normal" invest- ment of Q102 million. The mission program emphasized transport (44%) and power (20%), with smaller amounts for agriculture and irrigation (17%), health (14%), and telecommunications (5%). 70, Following the general lines of the mission's recommendations, the newJly established National Ec-riomic Planning Council prepared a five-year public investment program for the period 1955-56 to 1959-60. The program called for total investment of Q251 million, of which 52% would be for high- ways, 4% for other transport and communications, 17% for the development of agriculture and livestock, 11% for electric power, 8% for health and educa- tion, and 8% for public buildings and social welfare. The Planning Council's program assumed the following: GNP would grow at an annual average rate of 5% during the five-year period; domestic savings would average 12.5-13% of GNP; and external inflows would average about Q20 million a year. 71. Public investment fell Qh7 million short of the Q251 million pro- grammed although the amount of external financing approximated the expected levels. I^hile the expenditure targets for transport and social welfare were exceeded by about 5%, only about a million quetzales were invested in electric power, compared with the Q28 million in the program. Outlays in agriculture, education, and health also fell far short of the planned levels. Expendi- tures on projects that were not included in the program totalled Q7.5 million. Highway expenditures absorbed two-thirds of the public investment funds and exceeded the planned level, but the highway program was not fulfilled because unforeseen difficulties and delays in construction produced substantially higher costs than had been anticipated. This meant that a number of highway projects that had been included in the program were either abandoned or not completed.  - 18 - 72. In 1960, the Government initiated a new 4-year public investment program which was somewhat less ambitious than the previous one. It aimed at achieving an annual growth rate of only 3% and called for total invest- ment of Q170.5 million. The modest objectives of the program were based on the expectation that stagnant export earnings from coffee and bananas would limit the investment effort. As in the previous program, the main emphasis was placed on road-building which accounted for about 40% of the total. Other major components of the program were agriculture and live- stock, health, education and welfare, and electric power. 73. Public investment outlays during the past two fiscal years totalled Q65 million, compared with a programmed level of Q87 million. The failure to meet the highway investment targets accounted for some Q14 million of the shortfall. This was mainly due to poor administration and insufficient local funds, thoucrh substantial external credits were avail- able. 74. The principal economic centers of the country are or soon will be linked by paved roads. Though it is still too early to judge the merits of the heavy emphasis on road-building, the generally light traffic on the new highways suggests that the agricultural and other investments necessary to produce the full economnic benefits of the large highway in- vestments have not yet been made. As in many underdeveloped countries, public investment in Guatemala is all too often viewed primarily as a source of employment and income, rather than a means of expanding the productive capacity of' the economy. This may partly explain the deficient planning and execution of public projects. 74(a) The size and compo3ition of the public investment outlays that would be required to facilitate fairly rapid increases in output will have to be worked out carefully because many of the needs, particularly in the transport field, have been or are being met. A compi-ehensive study of Guate- malats public investment requirements would probably recommend that steps be taken to expand agricultural output, and also that high priority be given to improving education and other social services even though the economic return on such investments might not become evident for a generation or more. 75. The Planning Council is now completing the draft of a public in- vestment program for the next two years which will be followed bya long- term program covering the subsequent eight years. The new program will aim at an annual growth rate of 5.5% (2.5% per capita) and will set considerably higher investment targets than those in the present program. But in 1962-63, the Government plans to cut public investment below the 1961-62 level because of the difficult fiscal position.  - 19 - Administration of the Public Sector 76. The Economic Planning Council, which lacks both adequate staff and status in the Government, has done a reasonably adequate job in pre- paring public investment programs. But the main problem is proper imple- mentation, which requires that funds be used by each public agency in accordance with the program. But this would represent a sharp departure from present practice whereby each ministry has considerable freedom in the allocation of its funds. Thus, while the distribution of public out- lays by broad functional categories or ministries may not deviate too much from the program, the composition of expenditures within each minis- try has often been dictated by sporadic political pressures rather than economic and social priorities. 77. To make more effective use of public resources, the staff and status of the Planning Council should be strengthened. There is a need for improving the overall programming process, and an even more urgent need for better formulation and execution of public investment projects where serious deficiencies have caused long delays in the utilization of external credits. These deficiencies are bound to limit the volume of new credits. 78. Without the strong and consistent support of the President of the Republic, the Planning Council is unlikely to achieve the necessary discipline for the expenditure of public funds in accordance with a sound public inv(stment program. A closer administrative and working relation- shio between the President and the Council would be a useful step towards improving the planning and execution of public investment programs. The recent creation of a Budgetary Commission to maintain continuing vigil over the budget is a step in the right direction, but its effectiveness in achieving better planning and coordination of expenditures and improv- ing tax administration remains to be demonstrated. IV. EXTERNAL FINANCES AND TRADE 79. Fluctuations in coffee prices and variations in the volume of capital inflows on both public and private account have been the two pre- dominant influences on Guatemalals balance of payments during the past decade. The ups and downs in these two factors coincided during several years and produced wide swings in exchange reserves. Between 1954 and 1956 when coffee prices were high and capital inflows heavy, reserves jumped from $39 million to $69 million despite a sharp deterioration in the trade balance. The increase in reserves was almost exactly equal to the U.S. grants, but this was due more to coincidence than design.  - 20 - Balance of Payments T7illion) 1955 1958 1961 Exports (f.o.b.) lo4.6 107.7 114.4 Imports (f.o.b.) - 96.4 -138.1 -120.6 Other current items - 13.8 - 20.0 - 22.4 Current balance _ 5e6 - 50.4 - 2976 U.S. Grants 106 12.6 12.3 Capital inflows 13.3 21e5 14.1 Errors and omissions - 4.0 - 8.2 - 3.3 Change in reserves 14.3 - 24.5 - 5.5 80. The deficits that emerged in 1958-59 as a consequence of falling coffee prices and higher imports were financed out of accumulated reserves without any restrictive measures being taken. However, the Central Bank tightened credit in 1959-60 to halt the decline in reserves. 81. The exchange position worsened inthe first half of 1962 after being virtually stable during the previous two years. The loss in reserves during 1962 may amount to as much as $10 million largely as a result of a special $3 million redemption of dollar bonds and a reduction in U.S. grant aid. This would bring reserves down to $30 million which is the equivalent of about three months' imports. This level is probably inadequate in the light of the recent trends in Guatemala's balance of payments and the fairly heavy short-term obligations, which make additional short-term borrowing both difficult and unwise. The termination of U.S. grants, together with the depletion of reserve holdings willtest the Government's willingness and ability to exercise the necessary monetary and fiscal restraint to protect the country's foreign exchange position. In November, the Bank of Guatemala obtained a 90-day non-renewable loan of $10 million from the Federal Reserve Bank of New York against full gold collateral. Exports 82. Until 1959, changes in the level of Guatemalafs exports miainly reflected fluctuations in coffee prices. Since then, the relative importance of coffee has declined from 70% of total exports to 58% in 1961, and this trend is expected to continue in 1962. The growing diversification in Guate- mala's export trade has been due not only to the decline in coffee receipts, but also to an expansion of cotton exports from $4 million to $10 million and the appearance of new exports such as soluble coffee, meat, and rubber pro- ducts which totalled nearly $4 million in 1961. 83. The value of coffee exports fell steadily from a peak of $92 million in 1956 to $76 million in 1959, as higher volume partly offset the 38% decline in prices. In 1960, coffee receipts rose slightly, despite a 3% reduction in volume which was more than offset by the higher prices received for Guatemalan premium coffee in the German market, However, in 1961, coffee exports fell due to a 6% decline in volume and a substantial drop in prices.  - 21 - 84. Bananas have been Guatemala's second largest export. For several years prior to 1958, there was a steady decline in the production of bananas due to Panama and other diseases. Hownever, in 1960, an excep- tional crop raised exports to the record level of $20 million; but in 1961, exports were only $14 million as a consequence of lower quantities and prices. The withdrawal of Standard Fruit will further reduce exports in 1962. The 1961 shipments of United Fruit contributed about $2 million less than expected to Guatemala's exchange receipts because the company used the proceeds of its land sales to meet a portion of its normal pay- ments in Guatemala. This export of capital is expected to amount to $3-4 million a year during the next three years. 85. Cotton exports have been growing at a spectacular rate during the past few years from $3 million in 1959 to $10 million in 1961 and probably $15 million in 1962, surpassing bananas as the second largest export. Imports 86. Imports increased very rapidly between 1954 and 1956 from $86 million to $127 million (f.o.b.). The sharp rise in the level of imports was accompanied by a pronounced shift in composition, with capital goodsl/ accounting for 70% of the increase and the share of capital goods in total imports going from 34% to 46%, Much of the heavy increase in capital goods imports was directly financed by U.S. grants and external capital. The more rap-id expansion in capital goods imports was also a reflection of the fact that inv-stment was growing faster than consumption. 87. Total imports continued to expand in 1957 and 1958 at a much slower rate, but practically all of the $12 million increase (c.i.f.) was consumer goods which appeared to have lagged during the previous two years. In 1959, imports fell by $16 million (c.i.f.) due to a slowdown in the rate of economic growTnh, a tight monetary policy, and higher import duties. They recovered somewJhat in 1960 as a result of higher imports of rawT materials but declined to their 1959 level in 1961, almost entirely due to lowver capital goods imports. 88. The most striking import trends have been the growth of machin- ery imports from $6 million (f.o.b.) in 1952 to $17.4 million in 1958; tractors and trucks from $4.2 million to $12.7 million; and petroleum products from $5.5 million to $11.1 million. Since 1958, the slowdown in economic growith has been reflected in the decline in capital goods imports from $49 million to $38 million in 1961, though imports of 1/ The classification of imports into capital and consumer goods is arbitrary in many instances. The classification presented in Table is nrit avl, fi-.1able for years prior to 1956, Estimates of the changes in the (cjmposllioLn ci imperts for earlier years are based on data published in the Boletin Estadistico.  - 22 - industrial machinery have been maintained. 89. In consumer goods, the stability of textile and apparel im- ports between 1952 and 1959 despite an increase of 55% in total consumer goods imports is worthy of note. Wilhile there has been a moderate increase in textile imports since 1959, domestic production is meeting a growing share of internal demands There has also been considerable import sub- stitution in foodstuffs, even though imports have grown substantially. V. ECONOMIC PROSPECTS AND CREDI'IORTHINESS 90. With a reasonable degree of political tranquilJlity, Gu8teMala should achieve an annual growth rate of about 4% over the next few years. In the commercial sector of the economy per capita income should rise gradually, whereas the large subsistence sector will do well to maintain per capita income even with a slackening of population growth as IndianJ are graduaLly assimilated into the rest of the economy. 91. Guatemala's growth prospects arm heavily dependent on what happens to exports, which consist aLmost entirely of agricultural pro- ducts. In the industrial ector, there are still considerable possibili- ties for imloort substitution in textiles, processed foods, chemicals and other products. While the role of the Central Pmerican Common Market in stimulating industrial production has been exaggerated by some of its supporters, the wider market should give adbed impetus to Guatemala's in. dustrial growth. But the main stimulus to manufacturing over the next few years will come from import substitutioit and the growth of the inter- nal market partly because Guatemala does not have any strong economic advantages vis-a-vis other Central American countries, for producing manufactured goods. 92. On the basis of current trends and expectations, exports should increase from 114 million in 1961 to at least $138 million in 1966, or about 4% a year. This projection assumes a slight decline in coffee receipts due to the virtual elimination of soluble coffee exports, which amounted to $2 million in 1961, and a stable level of green coffee exports, resulting from a moderate decline in prices and compensating increases in volume. Somewhat lower banana exports are expected because of the with- drawal of Standard Fruit and the inability of United Fruit to fill the gap completely. Export Projections, 1961-66 ($ million) 1961 1966 Coffee 69.1.V 68 Bananas 13.9 11 Cotton 10.2 25 Others 21.2 3 Total 114.4 138 if Includes :?2 million of soluble coffee.  - 23 - 93. Much of the expansion in exports is expected to come from the continued growth of cotton exports which should reach about $20 million in 1963, and level off at $25 million. They could go substantially higher, especially if the long staple cotton is produced on a large scale. "Other exports" should rise from $21 million in 1961 to $34 million. Some of the items that are expected to produce this increase are meat products which will reach an estimated $3.7 million in 1962 compared with $0.8 mil- lion in 1961, sugar now that Guatemala has a 20,000 ton U.S. quota, rubber products, and fruits and vegetables. 94. A 1966 export projection of $138 million is conservative. A moderately optlniitic one wou!L.d be $145 million or more on the basis of reasonably stable coffee pri,es, somewhat higher cotton exports than the projected $25 million, and the early completion of plans for the produc- tion of nickel. 95. The balance of payments adjustment to the termination of U.S. grant aid will create some difficulties but need not impose a serious brake on economic growth. Exchange receipts from exports, private capital inflows, and the uAe of undisbursed foreign loans should be adequate to finance a level of imports that does not fall more than $5-6 million below the $134 million (c.i.f.) level of 1961. The composition would have to be somewhat different in that it would contain a smaller proportion of con- sumer durables and more capital goods and raw materials and should enable the economy to at least maintain per capita income during the transition period. 96. A growth in per capita income may call for a large public in- vestment program which would require substantial external financing, al- though reliable estimates have not yet been prepared. Inthe past, ex- ternal resources have financed a substantial share of public investment, but the proportion could be reduced in fe future. As noted earlier, public savings could be increased by $5-6 million a year by improving tax administration without cutting current expenditures. As the economy expands and the tax structure is modified, this might be raised to $10 million a year within a few years, without appreciably diminishing pri- vate savings that would otherwise flow into productive investment. Creditworthiness 97. At the end of 1961, Guatemalats external public debt totalled $68.8 million of which $31.2 million was undisbursed. Most of the latter are U.S. Government loans for road-building and industrial equipment. In 1962, loans of $3.5 million for water supply, and $5.3 million for housing, were authorized by the Inter-American Bank out of the Social Progress Trust Fund. Both these loans are repayable in local currency; the water supply loan bears interest at 3-2% with an amortization period of 22 years, and the housing loan 2% for 27 years.  - 24 - 98. A disturbing recent trend in the external debt situation is the rapid growth in short-term borrowing by the Bank of Guatemala from private U.S. banks. While it may be possible to extend these obligations when they fall due, they are chiefly responsible for the heavy service payments scheduled over the next few years, which average over $10 million a year during 1962-64, or about 8% of projected export earnings. In 1966, service payments decline to $5.8 million or 4.2% of projected export earnings, and steadily diminish to $2.6 million in 1971. 99. On the basis of her economic prospects and relatively low pro- spective debt-service ratio, Guatemala should be able to service a modest amounts of additional debt on conventional terms for high priority projects providing short-term obligations are kept within manageable proportions.  STATISTICAL APPENDIX: TABLES 1 - 21  LIST CF TABLES Table Nwi, Title 1. Summary of External Public Debt, December 1961 2. Service on External Public Debt, 1961 3. Gross National Product at 1950 Prices, 1950-1961 4. Gross National Product at Current Prices, 1950-1961 5. Composition of Gross Private Investment, 1950-1961 6. Gross National Product and The Financing of Gross Investment, 1953-1961 7. Gross Domestic Product by Sectors, 1956-1961 8. Agricultural Production, 1950/51-1961/62 9. Summary Accounts of the Banking System 10. Bank Loans and Discounts by Destination 11. Price Movements, 1950-1961 12. Government Finances, 1957/58-1961/62 13. Composition of Central Government Expenditures, 1953/54-1960/61 1h0 Central Government Revenues, 1952/53-1960/61 15. Public Investment - Actual and Programmed, 1955/56-1959/60 16. Public Investment - Actual and Programmed, 1960/61-1961/62 17. 3alance of Payments, 1950-1961 18, Principal Exports, Value and Volume, 1950-1961 19. Imports by Categories, C.I.F. 20. Prices of Exports and Imports and Terms of Trade, 1950-1961 21, Direction of Foreign Trade, 1950-1961  TABLE I GUATEMALA: EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS CF DECEMBER 31, 1961 / Debt Repayable in Foreign Currencies (In thousands of U.S. dollar equivalents) Debt outstanding December 31. 1961 Net of Including Undisbursed Undisbursed TOTAL EXTERNAL PUBLIC DEBT 37,576 68,769 Privately-placed debt 19,153 23,55o IBRD loan 14,538 14,538 IDB loan - 4,250 U.S. Government loans 3,554 26,100 Export-Import Bank 354 15,500 AID 3,200 10,600 Debt to Central American governments 331 331 / Does not include principal and interest on unredeemed external bonds of 1895, 1913, and 1928, whose face value totals L 426,980. Source: IBRD - Economic Staff.  TABLE 2 GUATTh,3At: ESTIMATED CONTRACTUAL SERVICE PArYENTS ON EDXTERN1-L PUBLIC DEBT OUTSTANDING ~~~~~Il DIGNISUEDAS OFDE2Du s 191Li Debt Repayable in Foreigni Currencies (In thousands of U.S. dollar equivalents) Year Debt out- Payments during year ____ Service Pa. ents T e of Loan standing Amorti- In- Suppliers' and Pri- IERD IAD Export- January 1 zation terest Total vate Bank Credits Loans Loans Import Bank AID 1962 63,438 10,002 1,598 11,600 9,491 1994 - - 115 1963 53,436 7,641 2,297 9,938 6,883 1,994 183 442 436 1964 45,795 7,60? 2,188 9,795 5,312 1,994 499 1,327 663 1965 38,188 5,801 1,823 7,624 2,894 1,994 528 1,4ol 807 1966 32,387 4,211 1,579 5,790 974 1,994 552 1,352 918 1967 28,176 3,392 1,389 4,781 1,994 576 1,304 907 1968 z4,784 3,18 1,224 4,742 1,994 597 1,256 895 1969 21,266 3,648 1,049 4,697 1,994 614 1,206 883 1970 17,618 3,771 871 4,642 1,982 630 1,158 872 1971 13,84? 1,860 709 2,.569 6oo 1,110 859 1972 11,987 3,383 594 3,977 593 1,o61 2,323 1973 8,604 3,478 4o6 3,884 561 1,012 2,311 1974 5,126 3,047 219 3,266 964 2,302 1975 2,079 1346 78 1,424 903 521 1976 733 430 25 455 249 2o6 Zl Includes all debt except the following for which repa ;eTI te-rms are not available: Item Net of Undisbursed Ilncu(linp Uncldibbursed (in thousand;) Export-Import Bank 354 5,000 Debt to Central American governments 331 331 685 51331 Source: IBRD - Economic Staff.  TABLE 3 GUATEf!iALA: CRO'S INT.TI0NAL- PRCDUCT AT 1950 PRICLS, 1950-1961 (million quetzales) 1950 1951 1952 1953 1954 1955 1956 1957 1958 1959 1960 195 -ivate Consumption 320.4 334.9 347.1 347,6 354.8 411L5 446.8 4591 474A,4 479.G6 505,,L.4 5044 iblic Consunption 53.2 39.8 55.1 51.3 54.3 57.6 66.3 77.7 74.4 83x1 83c2 93, ross Domestic Investment 40.1 40.8 29.6 36.1 39.0 48.4 69.6 71.1 71.5 6o.4 58,6 53. Public Investment 2.7 13.8 20.0 25.5 15.9 25.6 36.4 40.3 32.8 26,8 20.7 17, Private Investment 37.4 27.0 9.6 10.6 23.1 22.8 33.2 30.8 38.7 33.6 37,9 36, Kports of Goods and Services 34.0 76.2 85.9 98.2 78.5 87.8 91.6 95.6 116.1 140,3 148.2 153. Bss:. Lrports of Goods and Services 76.7 80.7 77.4 84.5 93.5 102.9 131.4 138.7 140.2 125J1 128.1 129, 1.02S DOMESTIC PRODUCT 421.0 411.0 440.4 448.6 433.1 502,3 542.9 564.8 596.1 638,4 667.3 675, Lt Income Transfers Abroad -4.0 +1,9 +1.8 -16.1 -8.7 -5.8 -5.0 -6.1 -7.4 -6.3 -8.8 -10, ZOSS NATIONAL PRODUCT A/ 417,0 412.9 442e2 424 14 4T!r,4 496G6 537.9 558.7 5P8,,8 632-o 65835 665, I0SS 1NATIGCiTAL INCOIvE 2 - - - 3V.0 393.0 452>0 499.0 504.0 517.0 532.0 557.0 557, At n':xket pricoo. / Oross ;Tational Income = Real GNTP at factor cost + changes in the import value of exports. The latter have been calculate, by the I1jF. )urce. Bank of Guatemala.  TABLE 4 GUATEi4ALA: GROS,- NATIONAL PRODUCT AT CURRENT PRICES, 1950-1961 (million quetzales) 1950 1951 1952 1953 1954 1955 31956 1957 1958 1959 1960 196 Lvate Consumption 320.4 356.5 343.9 354.9 390.2 446.8 479.3 506.9 513.0 511.6 534.3 536., blic Consumption 53.2 41.9 57.5 53.7 59.7 61.1 70.2 81.7 79,1 89.0 88.1 97. Dss Domestic Investment 40.1 45.4 33.0 41.4 45.2 60.0 93.6 97.5 97.4 84.1 81.7 74, Public Investment 2.7 15.4 22.3 29.3 18.4 31.7 49.0 55.3 44.7 37.3 28.8 24. Private Investment 37.4 30.0 10.7 12.1 26.8 28,3 44.6 42.2 52.7 46.8 52.9 50. Dorts of Goods and Services 83.9 89.2 99.2 112.3 108,4 112.5 132.8 126.3 121.7 122.5 132,8 128. ss: Imports of Goods and Services 76.5 89e7 83.9 90.7 101.2 111,6 147.6 159.9 164.1 148.1 152.2 146. DSS DOMESTIC PRODUCT 421.0 443.4 449.7 471.6 502.3 568.8 628.3 652.5 647.0 659.1 684.7 690. t Income Transfers Abroad -4.0 +2.1 +2.0 -17.3 -9.3 -6.2 -5.4 -6.9 -8.7 -7.9 -10.4 -12. )SS NATIONAL PRODUCT 417.0 445.5 451.7 454.3 493.0 562.6 622.9 645.6 638.3 651.2 674,3 678.. xrce: Bank of Guatemala.  TABLE 5 GUATEMALA: COMPOSITION OF GROS' PRIVATE IOIESTMENT, 195O-61 (million quetzales) Total Construction Imports of Changes in Capital Goods Inventories 1950 37.4 11.7 18.5 7.2 1951 30.0 6.8 14.8 8.4 1952 10.7 7.9 5.3 _ 2.5 1953 12.1 9.0 6.o - 2.9 1954 26.8 10.0 13.2 3.6 1955 28.3 12.6 14.0 1.7 1956 44.6 18.2 22.0 4.4 1957 42.2 22.8 20.8 - 1.4 1958 52.7 21.6 26.0 5.1 1959 46.8 18.3 23.1 5.4 1960 52.9 21.5 26.1 5.3 1961 50.1 20.8 24.7 4.6 Source: Bank of Guatemala.  TABLE 6 GUATEMALA: GRIjSS NATIOfAL itjUDU1' i AUD HE) LINAWO OFS GO SS S 1953-61 (million quetzales) Gross Financing of Gross Investment National Inest.unt Pblic Gross External Product nvestment Savings 1/ Private Finance 2/ Savings J 1953 1454.3 4N.h 22.3 23,4 -4.3 1954 493.0 45.2 24.3 18.8 2.1 1955 562.6 6o.o 24.5 30.2 5.3 1956 622.9 93.6 28.8 44.6 2o.2 1957 64I5.6 97.5 31.0 26,0 40O5 1958 638.3 97.4 27.2 19.0 51.2 1959 651.2 84.1 18.0 32.6 33.5 1960 674.3 B1.7 15.0 36.9 29.8 1961 678.5 7t.7 4-4D, 4/ 29,9 1/ Estimated on the basis of Central Government budget data for fiscal years, together with data for the city of Guatemala and the Social Seuurity Institute. 2/ This is the residual after deducting public savings from total savings. j/ Includes changes in foreign exchange reserves. i,/ Dta for estimnzt:Lng public savings riot available. Soulrce: Bank of Guatemala and TBFD staff ectimates.  TABIE 7 (million quetzales at current prices) 1956 1957 1958 1959 1960 19612/ Agriculture 235.1 219.2 210.2 212.0 213.1 220.9 Industry and Mining 101.8 112.2 124.9 128.8 130.0 139.1 Construction 23.0 28.8 27.3 23.1 27.2 26.3 Electricity, Water and Sanitation 3.7 4.2 4.9 6.2 6.1 6.9 Trans)ort and Communications 35.5 38.7 42.5 45.3 48.2 52.2 Commerce 51.1 57.9 59.8 53.7 54.5 55.6 Banking and Insurance 13.6 15.6 17.1 19.1 18.9 17.5 Public Administration 74.2 85.4 77.7 78.3 72.3 76.4 Other Services 90.3 90.5 82.6 92.6 114.4 96.0 GROSS DOMESTIC PRODUCT 628.3 652.5 647.0 659.1 684.7 690.9 I/ Preliminary. Source: Bank of Guatemala.  TABLE 8 GUATEMALA: AGRICULTURAL PRODUCTION. 150/51 - 1961/62 (thousand quintals /) 1950/51 1951/52 1952/53 1953/54 1954/55 1955/56 1956/57 1957/58 1958/59 1959/60 1960/61 1961/62 a/ Mainly for Domestic Use Corn 11,643 10,711 9,408 8,698 7,998 7,929 9,781 9,327 10,193 10,874 10,997 12,508 Rice 197 247 214 236 212 198 224 243 254 318 296 386 Beans 533 400 578 555 512 485 607 532 659 666 664 924 Wheat 477 638 485 431 400 318 434 400 469 487 461 634 Sugar 525 588 813 992 1,048 1,140 1,318 1,354 1,303 1,486 1,748 2,202 Mainly for Export Cotton - 43 75 132 175 209 219 302 352 322 446 675 Coffee 1,178 1,369 1,267 1,318 1,320 1,500 1,600 1,860 1,818 2,278 2,616 v Chicle 20 8 8 9 10 13 15 17 16 36 32 32 PnAn%ar L 5.3 3.9 7.2 6.3 5.3 5.2 5.2 5.3 4.7 5.5 7.3 6.4 J One quintal equals 101.48 lbs. / Export figures for calendar year preceding crop year in millions of stems. a/ Preliminary. Source: Direccion General de Estadistica, Asociacion Nacional del Cafe, INFOP.  TABLE 9 GUATEM4ALA: SUM,MARY ACCOUNTS OF THE BANKING SYSTEM (million quetzales) End of Period June June June 1954 1955 1956 1957 1958 1959 1960 1961 1960 _1961 1962 A. International reserves (net) 39.2 54.1 68.8 72.6 48.1 40.1 45.6 40.1 47.5 54.7 36.9 B. Gold and foreign currency subscrip- tions to international organizations 1.3 1.3 1.3 1.3 1.3 3.8 4.5 5.4 4.0 5.3 5.4 C. Domestic credit 1. To public sector (net) 2303 9.7 10.0 7,0 11.6 23.4 10.5 10.2 1341 0,9 12.8 2. To private sector / 52.1 56,2 65.0 82.1 98.2 97.2 104.2 108.8 93.6 100.0 105.5 3. Official capital -24.2 -23,4 -25.7 -25.5 -26.4 -27.5 -25.6 -22.3 -27*4 -25.5 -26.3 4. Interbank float 0.8 1.4 1.2 1.0 1.3 2.2 0.9 1.8 1.6 3.0 -0.2 5. Unclassified assets 2.3 %i6 -Q 14.9 16.7 18.5 217.9 18.7 21.0 _2_2 27.7 Total 54.3 53.5 65.4 79.5 101.4 113.8 107.9 117.2 101.9 100,5 119.5 D. Monetary liabilities to private sector 1. Currency in circulation 54.0 52.0 58.9 64,6 61.5 62.7 61.5 62.2 56.4 57.0 57.1 2, Monetary deposits 22.9 34.9 44.4/ 98 42- 44.5 41.0 40.9 4414 131 Total 76.9 86,9 103.3 114.4 104.4 107,2 102.5 103.1 100.8 100,1 99.6 E. Non-monetary liabilities to private sector 1. Quasi-monetary deposits 8.3 11.1 18,2 23.3 27.9 30.6 35.6 40.6 33.5 41.2 46.4 2. Bonds 5.0 5.9 5.3 6.3 7.9 8.2 8.1 7.2 7.8 7.4 3.4 3. Capital and reserves 4.6 5.0 8.7 9,4 10.6 11.7 11.8 11.8 11.3 11.8 12.4 Total 17.9 22.0 32.2 39,0 45.4 50.5 55.5 59.6 52.6 60.4 62.2 / Composed of loans, discounts, and shares in private companies. Source: Bank of Guatemala, ILi'.  TABLE 10 GUATEMALA: BANK LOANS AND DISCOUNTS B3Y DESTINATION (rnillion quetzales) Industry End Agriculture Mining Purchase Cancellation of and and of Fixed of Public Period Livestock Transport Construction Assets li'ortgages Commerce Consumption Sector Other Total 1950 7.3 3.2 3.5 1.4 2.7 4.9 2.1 3.8 1.2 30.1 1951 9.5 3.6 3.2 1.6 2.9 6.6 2.4 4.0 0.6 34.4 1952 10.7 3.2 3.1 1.4 2,6 o.3 2.2 4.3 0.2 34.1 1953 13.0 3.2 3.4 1.4 3.0 7.3 2.1 2.4 2.2 38.0 1954 19.1 2.9 3.0 1.5 3.1 7.8 2.8 4.5 0.5 45.3 1955 16.4 4.0 3.5 1.2 3.6 7.2 3.2 1.6 1.1 41.9 1956 g/ 22.9 5.3 4.7 1.3 2.1 9.5 1.2 6.3 6.5 59.7 1957 28.9 7.8 6.0 1.4 5.6 14.2 1.2 10.2 4.4 79.7 1958 38.3 9.8 7.3 1.5 6.3 17.5 1.3 8.7 4.7 95.5 1959 36.3 10.7 8.5 2.4 6.2 14.9 2.8 7.2 6.2 95.2 1960 38.9 11.4 9.5 1.2 7.2 16.5 2.5 7.7 6.5 101.4 1