Contacts: Monica Echeverria-Cota (202) 473-1315
Mario del Carril (202) 473-6189
WASHINGTON, August 29, 1997 — The World Bank yesterday approved a US$28.2 million loan to Guatemala to help finance the Tax Administration Technical Assistance Project of the Guatemalan Government aimed to improve the revenue performance by strengthening the tax administration system.
The project will:
- Improve efficiency of tax and customs administration through strengthening collection, audit, and enforcement procedures;
- Increase tax revenues; and
- Achieve stronger revenue performance, in order to increase social sector spending, meet basic infrastructure needs, and implement the December 1996 Peace Accords.
To achieve these goals, the project has four key components:
- The creation of the Superintendency of Tax Administration-which is being considered by Congress-for internal revenue and customs with modern operational, financial, and human resources management;
- The establishment of taxpayer assistance services to improve voluntary taxpayer compliance through the simplification of procedures and modernization of information technology;
- The strengthening of auditing processes, and
- A communication campaign to inform and educate the public about the tax administration reform benefits, changes in law, and taxpayer services and rights.
Guatemala's tax revenue ratio is among the lowest in Latin America. Revenues have averaged between 6 and 9 percent of the GDP over the last decade and registered 8.5 percent in 1996. These low levels severely constrain public investment and social sector spending with a significant impact on poverty alleviation.
Under the terms of the recently signed Peace Accords the Government has undertaken to raise tax revenue to 10 percent of GDP in 1998 and 11.4 percent in 1999, seeing increased revenue as necessary to provide a solid basis for priority spending.
The Bank loan is helping the Government of Guatemala's strategy for increasing tax revenue as well as promoting the transparency of tax and custom collections.
The total project costs are estimated at US$40.3 million. The World Bank US$28.2 million loan will cover 70 percent of the total project cost. The balance will be financed by the US$9.2 million government contribution, by the US$1.5 million USAID grant and the US$1.4 million IDB loan.
The World Bank loan has a 15 years amortization period, three-year grace period at a fixed interest rate US-dollar single currency loan. The commitment fee is 0.75 percent on undisbursed balances. |
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