GT Fiscal and Institutional DPL

closed

Guatemala has made considerable development progress since the signing of the peace accords in 1996. Particularly, improvements have been made in consolidating peace and building democratic institutions. The process of consolidating democratic institutions was strengthened most recently with the peaceful transition to the new government of Alvaro Colom of the Union Nacional de la Esperanza (UNE) party in January 2008, following the administration of Oscar Berger of the Gran Alianza Nacional (GANA) party. While UNE won the largest number of congressional seats (51 out of 158), the lack of a simple majority has made the new administration's focus on social cohesion and building strategic alliances particularly relevant. Building a broad consensus is important for the successful implementation of its ambitious development plan in promoting inclusive growth and reducing poverty and inequality. This Development Policy Loan (DPL) is designed to assist the government in improving fiscal and institutional policies. The government has initiated a program to enhance transparent and efficient priority public spending and investment for growth and poverty reduction, including a targeted conditional cash transfer program. The DPL will contribute to the government's main policy objectives by: a) supporting enhanced governance, transparency, and monitoring and evaluation of increased public expenditure and investment; and b) supporting macroeconomic stability and greater fiscal space for priority spending.