Second Integrated Financial Management Program for Guatemala

Contact:  Mario del Carril (202) 473 6189 

WASHINGTON, December 24, 1997 — The World Bank yesterday approved a US$ 15.7 million loan for the Integrated Financial Management Project II (total project costs are US$18 million) for Guatemala. The project expands reforms initiated under the current Financial Management Program, also financed by the World Bank, that are increasing the efficiency and transparency of the public sector and improving the delivery of public services.

Financial management is a crucial ingredient of development economics and a basic component of the modernization of the state because it enables the public sector to efficiently handle resources and improve services in areas such as health and education.

Guatemalan social indicators are among the lowest in Latin America and the Caribbean and efforts of past administrations to improve these indicators have been hampered by serious institutional weaknesses within the public sector.

Even when the Guatemalan Government has had the resources to invest in the alleviation of poverty and to improve social conditions, inadequate human resources and personnel management policies in government institutions and a traditionally weak tax administration, in addition to over-centralized financial management practice, have often undermined the implementation of its investment programs.

The second Financial Management program builds and extends the extremely successful project which began in 1996 and is already 80 percent disbursed. "The program extends reforms to all central government ministries and agencies enabling the government to better handles its resources and provide better service to improve the lives of its people. Furthermore, the successful implementation of this program is also an important part of the Guatemalan government’s leadership in the fight against corruption," said Ronald Myers, Project Task Manager.

The loan is a Libor-based single currency loan with a maturity of 20 years and a has a 5 year grace period. The project is also financed by US$2.3 from the government of Guatemala.