IMF Sees Shrinking Guatemala Deficit

The IMF expects Guatemala’s current account deficit to shrink to 1.6% of GDP in 2009 from 4.8% of GDP in 2008. The fund says the reduction comes as a decrease in imports offsets the fall in exports, tourism receipts, and remittances. JPMorgan forecasts suggest remittances to Guatemala should slide to about $4.1bn in 2009 from around $4.3bn in 2008. The IMF also says that as a result of reduced tax revenue, imports and increased public capital spending, the fiscal deficit of the central government could reach 3.4% of GDP in 2009 and drop to 3.0% of GDP in 2010. Also, the deficit of the consolidated public sector will reach 3.0% of GDP in 2009, and 2.6% of GDP in 2010, says JPM. The IMF notes that the Guatemalan authorities have reiterated their intention to continue treating the $935m stand-by arrangement announced in April as precautionary.