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Guatemala
The Development Challenge: Guatemala has passed a critical juncture by holding the most participatory
election in its democratic history. Both presidential candidates in the run-off election were individuals of
character, who figure prominently in social reform. Business sector leaders are energetically engaged in
initiatives to meet Millennium Challenge Account Goals, such as extending education and achieving
universal access to basic health care. The new administration of Oscar Berger will enjoy strong popular
support and a mandate to clean up government. Moreover, it will be able to count on United Nations and
donor backing for a special commission to investigate organized crime and free Guatemala from its
dreadful influence. Guatemala, as one of the strongest supporters of CAFTA during negotiations and as
Central America’s largest economy, will take full advantage of its unprecedented opportunities for
investments to spur economic growth. The change of government affords an important opportunity to
reverse negative trends in the country. Donor support will remain essential, however, to keep Guatemala
on the positive democratic path and avoid any fall towards a failing state so near to U.S. borders.
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Guatemala’s $23.3 billion economy and population of 12 million are the largest in the region, yet it has a
highly unequal distribution of income and pervasive poverty. Despite a per capita gross national income
of $1,740, its lower-middle income classification is deceiving, masking extreme inequalities between
urban, largely ladino (non-indigenous) and rural, indigenous populations. Over half (56%) of its
population lives in poverty, and 21.5% of its people are extremely poor. Guatemala ranks among the
worst in the region for life expectancy, infant mortality (39 per 1,000 live births), maternal mortality (153
per 100,000 live births), and chronic malnutrition (49%). Only three out of every 10 school-age children
graduate from the sixth grade, and only one in 20 enters high school. Guatemala’s complex topography
and its 23 languages hugely complicate efforts to expand education and health services, and contribute to
an extremely low rate of labor productivity. Agriculture, which employs the majority of the poor, was
particularly hard hit from the combined impacts of the worldwide economic downturn and crises in the
world coffee and cardamom markets.
On the positive side, the United States is Guatemala’s most important trading partner, accounting for 30%
of its exports and providing 36% of its imports. Remittances ($1.5 billion) from Guatemalans in the United
States are the second leading source of foreign exchange. Guatemala’s rich natural resource base and
location on Mexico’s southern border position the country to benefit significantly from an expansion of
trade--both within the region and with the United States and Mexico. Guatemala is currently classified as
a noncooperating country under the Financial Action Task Force (FATF) criteria because of vulnerability
to money-laundering. However, the country has made substantial progress in all areas and could be
found to be fully compliant by the next FATF meeting in February 2004.
U.S. national interests in Guatemala include the containment of illegal migration, organized crime, and
narcotrafficking; strengthening of democracy; fulfillment of the Peace Accords; and building trade
capacity. Strengthening Guatemala’s weak governmental institutions and fostering broad-based
economic growth are essential to effective collaboration in containing illegal migration, combating
organized crime and drug trafficking, and addressing other potential threats to homeland security. A free
and fair national election in 2003, leading to a peaceful transition in power, is a major step in this
direction. Following decertification in 2002 for failing to cooperate fully to combat narcotrafficking,
Guatemala made significant efforts during 2003 and was recertified in September 2003. While
cooperation on combating drug trafficking has improved significantly, Guatemala remains the region’s
main transit point for illegal migrants and narcotics en route to the United States.
The USAID Program: The Data Sheets provided below cover the three new objectives for which USAID
is requesting FY 2005 funds. These objectives are part of the new regional strategy for Central America
and Mexico and support institutional changes that reinforce democracy and the rule of law, improve the
quality of basic education and the health of rural families, and increase trade, rural incomes, and food
security while improving natural resource management and conservation. The objectives are described in
more detail in the following Data Sheets.
Other Program Elements: USAID's Central America Regional Program provides technical assistance to
strengthen Guatemala’s understanding of trade issues, to control and contain HIV/AIDS, and to promote
rural diversification and support environmental conservation and clean production.
USAID’s Office of Regional Sustainable Development within the Latin America and Caribbean Bureau
(LAC/RSD) manages several democracy and governance activities that provide technical assistance,
training and membership to regional networks of nongovernmental organizations (NGOs), human rights
ombudsmen, and municipalities. These activities involve the Inter-American Democracy Network, the
Inter-American Institute of Human Rights, the Federation of Municipalities of Central America, the
Americas Anti-Corruption and Accountability project, the Inter-American Coalition for the Prevention of
Violence, the Justice Studies Center of the Americas, the U.S. Department of Justice’s ICITAP police
training, as well as municipal development. In addition, LAC/RSD supports clean production and
activities to preserve biological diversity. LAC/RSD’s regional health initiatives for maternal child
health/family planning, health sector reform, and HIV/AIDS and infectious diseases work through the Pan
American Health Organization, a health NGO strengthening program. LAC/RSD funds several activities
to increase access to and the quality of primary education, including the Program for Educational Reform
in the Americas, the Civic Engagement for Education Reform in Central America program, and the Center
for Excellence in Teacher Training in Honduras.
The Bureau for Democracy, Conflict and Humanitarian Assistance manages a Matching Grants Program,
which, through Project Hope, Curamericas, and Habitat for Humanity International, leverages financial
resources to improve primary health care, support institutional strengthening of non-profit housing
organizations, and alleviate poverty through microenterprise development. The Global Health Bureau’s
Child Survival Program funds activities that provide technical assistance to reduce infant, child and
maternal mortality and morbidity.
The Bureau for Economic Growth, Agriculture, and Trade (EGAT) manages Partnerships for Food
Industry Development, which, through Michigan State University and private sector partners, is assisting
fruit and vegetable producers to meet developed market requirements for their products. EGAT also
funds the Farmer-to-Farmer Program, which provides short-term, U.S. volunteer technical assistance to
increase farm and agribusiness productivity. Finally, EGAT runs the Integrated Pest
Management/Collaborative Research Support Program.
Other Donors: USAID has successfully encouraged other donors to build upon its pioneering pilot
programs in education and health, and has played a pivotal role in the Consultative Group on Guatemala,
which involves all the major donors. Overall development assistance to Guatemala totals about $998
million per year, excluding debt relief. The United States and Japan (health, education, and agriculture)
are Guatemala’s first and second largest bilateral partners, respectively. Other major bilateral donors
(listed in order of program size) and their principal areas of focus include Germany (education and
health), Canada (rural development), Sweden (social sectors), the Netherlands (Peace Accords and the
environment), and Norway (social sectors).
Multilateral donors, listed in order of program size, include the Inter-American Development Bank
(infrastructure, social sectors, and financial reform); the Central American Bank for Economic Integration
(infrastructure); the World Bank (financial reform and physical infrastructure); the European Union (Peace
Accords implementation and decentralization); and the United Nations system/agencies, including the
World Food Program, the United Nations Development Program, the United Nations Children’s Fund, the
World Health Organization, and the Food and Agriculture Organization.
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