WASHINGTON, January 18, 2017 – The World Bank Board of Directors approved two loans totaling US$ 100 million yesterday to improve the transparency and efficiency of the tax administration in Guatemala and to improve urban infrastructure and prevent violence in the Gran Ciudad del Sur Commonwealth in the south.
“These projects are extremely important for Guatemala since they will support two key pillars of the country’s development: to improve the tax administration and to reduce violence, which in turn are crucial for reducing poverty,” said Guatemalan Finance Minister Julio Héctor Estrada.
The “Project for Tax Administration Transparency and Efficiency,” with a loan of US$55 million, will work to increase compliance with tax and customs obligations by individual and corporate contributors. To this end, the project will support the transparency, integrity and institutional development of the Tax Administration Authority (SAT), and will strengthen tax collection mechanisms and customs operations.
Another objective is to strengthen comprehensive fiscal intelligence, control processes and the new tax appeal system, all with a view to improving institutional efficiency and transparency. This will contribute to increasing tax collection. Guatemala has one of the lowest tax-collection rates in Latin America and the world (10.2 percent of GDP, in comparison with an average of 16.9 percent for Latin America and the Caribbean).
Additionally, the “Project for Urban Infrastructure and Violence Prevention,” will allocate US$45 million to better living conditions in the Gran Ciudad del Sur Commonwealth. Specifically, this project seeks to improve access to services and basic infrastructure and to mitigate the key risk factors for crime and violence. According to World Bank statistics, violence cost Guatemala 10 percent of its GDP in 2014.
“While Guatemala faces major challenges such as high rates of poverty and inequality, the country has enormous potential to address its challenges and to offer a better future to its citizens. Projects such as those approved strive to provide better opportunities to vulnerable populations,” said Homa-Zahra Fotouhi, World Bank representative in Guatemala.
Planned activities include small-scale investments in urban and peri-urban infrastructure; capacity-building of municipalities; implementation of baseline surveys to identify the most affected communities; improvement of municipal records offices; strengthening of inter-municipal coordination; and, support to crime and violence observatories.
Contacts:
Washington: Marcela Sánchez-Bender, +1-202-473-5863, msanchezbender@worldbank.org
Guatemala: Àngels Masó, (503) 7860.8019 amaso@worldbank.org
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News Release
2017/147/LAC
