Guatemala

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Development Challenge Other Donors FY 2002 Program Activity Data Sheets Summary Tables Program Summary Strategic Objective Summary USAID Search: Guatemala Previous Years' Activities 2001, 2000, 1999, 1998, 1997 07     Introduction USAID/Guatemala is beginning the fifth year of a seven-year strategy (FY 1997-2003). This is a crucial year in the Peace Process. Since the signing of the Peace Accords in 1996, the political, economic and social landscape of Guatemala has changed dramatically; most apparent of all is the end of armed warfare. Education and health reforms, begun under the Arzu Administration and continued under President Portillo, have brought primary health care and primary education to hundreds of isolated indigenous communities. Yet, despite these historic changes, the country continues to face a host of developmental challenges, compounded by pervasive racial and economic inequality. For the largely indigenous rural populations most affected by the war, the prosperity and other "dividends" of the peace process have yet to materialize; for other groups, among them entrenched interests and organized crime, their hope is for a return to past practices and an inwardly-focused nation. Illiteracy, malnutrition, and high rates of infant and maternal mortality are surpassed in the hemisphere only by Haiti and Bolivia. Weak Government of Guatemala (GOG) leadership, unclear policies and frequent turnovers in key ministries, confrontation among major sectors over key reforms, increased fragmentation and polarization among major political parties, growing crime, and unmet goals for economic growth and tax collection have created political instability and delayed progress on key reforms mandated by the Accords. Alongside its special support for the Peace Accords and a more inclusive and responsive democracy, the USAID program in Guatemala focuses on improving people's lives in several key areas. The program seeks to: improve educational access and the quality of primary instruction for rural children; provide better health for women and children, especially in rural areas; increase income and food security for the rural poor through higher-value production practices and expanded financial and technical services for micro-entrepreneurs; and strengthen natural resources management and conserve biodiversity through sound practices and policies, and greater community participation in managing income-generating natural resources. The United States is interested in promoting Guatemalan peace, democracy, and prosperity because it will make Guatemala a strong neighbor, help maintain regional stability, slow rapid population growth and emigration to the United States, and create a stronger trading partner and ally. USAID's objectives in Guatemala also support the Summit of the Americas Action Plan of strengthening democracy, eradicating poverty and discrimination, and conserving the natural environment. The Development Challenge While Guatemala is the most populous Central American country (11 million) and largest economy (2000 Gross Domestic Product (GDP) of $19 billion), its largely rural, Mayan population lives in extremely difficult conditions. Distribution of land, income and other wealth is highly skewed toward a small percentage of Guatemala's Spanish-speaking population. An estimated 57% of Guatemalans live in poverty, and the roughly five million Mayans are isolated socially, economically, and politically due to geographic and language barriers as well as the lack of educational and economic opportunities. Overall, adult literacy is estimated at 65%, but literacy among Mayan women is estimated as low as 30%. Fewer than half of rural Guatemalans have access to running water, electricity reaches only a quarter, and only 16% have access to modern sanitary facilities. Infant, child, and maternal mortality rates are among the highest in Latin America, despite decreases in recent years. These indicators reflect the country's persistent under-investment in social services and basic rural infrastructure, as well as past practices of political and socioeconomic exclusion of the indigenous population. Over the past four years, the U.S. Government has exceeded its pledge of financial and material assistance to the Peace Process and, as of December 2000, had disbursed more than 76% of the over $280 million in resources which were provided. Carefully targeted use of these resources has contributed to improved services and living conditions for thousands of rural Guatemalan families in FY 2000. However, USAID has not achieved all that was planned, due especially to the transition from one Guatemalan administration to another. Yet, we have contributed directly to advancement of some key reforms, especially in health and education. In the pioneering income generation and rural infrastructure activities, where USAID works closely with U.S. private voluntary organization (USPVO) and non-government organization (NGO) partners, we have produced significant economic and social gains in communities most affected by the conflict. USAID's Hurricane Mitch Reconstruction program is another area of measurable progress, where we have fostered a productive partnership between the U.S. Army Corps of Engineers and the Ministry of Agriculture and established an agile mechanism for construction projects, leveraging significant GOG counterpart resources. USAID's partnerships with several U.S. Government agencies, USPVO and NGO partners have strengthened disaster preparedness and mitigation capabilities of communities and, at the national level, institutionalized an increased capacity in Guatemala's National Coordinator for the Reduction of Disasters to respond more effectively to future disasters. Realization of the Peace Accords remains a major challenge for Guatemala. Implementing the modernization plan for the judicial system that lays the foundation for increasing access, fairness, and due process is essential to restore public confidence in the judicial institutions and establish the rule of law. A key element of GOG efforts to address a fundamental source of conflict was the law establishing the Land Fund, providing a market-based mechanism for land purchases and titling. Although slowed by Hurricane Mitch, the GOG's increased budget allocations for social sectors and a comprehensive education reform plan that emphasizes multicultural, multilingual, and multiethnic education are more consistently addressing major disparities in the delivery of social services. With the fall in international prices for coffee and a 5.2% decline in exports, rural services and employment were adversely affected, adding to the overall economic downturn in 2000. Real GDP growth in 2001 will be less than expected, only 3.0%. If the population grows at a rate of 2.9%, the GDP per capita will grow by only 0.1% net, versus the minimum rate of 3.0% per capita most experts see needed to effectively reduce poverty. In 2000, high interest rates (16% in real terms) further hampered private investment; as the GOG could not improve its fiscal performance, the quality of public expenditure and physical infrastructure deteriorated in 2000. Given an uncertain rule of law, limited transparency in economic dealings, and the rising crime rate and generalized public security concerns, the hoped for growth in local and foreign investment has not materialized. This next year is critical to reversing these negative trends. The GOG plans to revive the Fiscal Pact, launch an integrated national security policy, and implement a poverty reduction strategy to advance Peace Accords implementation. We expect continued strong performance on key fronts such as land titling, justice reform, improving indigenous access to education, and expanding social services in indigenous areas. The original four-year timeframe for implementing the profound reforms called for in the Accords was overly ambitious; even complying with the extended 2003 calendar will be difficult. The needs for addressing Guatemala's multiple challenges, in addition to financing the costs associated with the Peace agreements, are enormous and far exceed the country's current revenue-generating capacity. In this environment, donor support and continued significant levels of U.S. assistance, in areas such as justice and intelligence/security reform, continue to be crucial. Other Donors The United States continues to be among the largest bilateral donors supporting the Peace Process. Other important bilateral donors include Spain ($168 million), Germany ($65 million), Norway, and Sweden, with their programs focused mainly on community development, modernization of the state and the judiciary, and infrastructure. Major multi-national donors include the IDB ($945 million), the World Bank ($400 million), Central American Bank for Economic Integration, United Nations agencies, and the European Union with programs supporting sectoral reforms, e.g., education and health, income generation activities, infrastructure, financial sector reform, justice, and municipal strengthening. International donors have pledged approximately $182 million to support Hurricane Mitch relief and reconstruction efforts; in addition to the United States, major Mitch donors include the IDB, Spain, the World Bank, the European Union, and the United Nations. FY 2002 Program U.S. Government support for the Peace Program, extended through FY 2003, will continue to help the GOG implement its social reform program, modernize the justice sector, implement the land bank and titling programs, and provide opportunities and resources to enable Mayans and war-affected communities to participate more fully in democratic development. The Hurricane Mitch Special Objective, under the Central America and Caribbean Emergency Disaster Recovery Fund and in Child Survival and Disease (CSD) funds over two years, has helped the Guatemalan rural economy recover from Mitch and become less vulnerable to future disasters, is expected to end on December 31, 2001. In addition to the Peace Program, which is supported with Economic Support Funds (ESF), USAID provides a range of development activities to Guatemala in five focus areas: democratic development; improved access and quality of education services; improved health for women and children; increased rural incomes and food security; and sustainable natural resource management. USAID programs continue to target the departments most affected by the civil conflict and highest levels of poverty. The proposed mix of Development Assistance, CSD , ESF, and P.L. 480 Title II funds in FY 2002, will enable the USG to pursue these priority objectives, which are essential to addressing the root causes of Guatemala's longstanding armed conflict, i.e. persistent and widespread poverty and social exclusion, and to establishing the foundation for longer-term economic growth. Activity Data Sheets 520-001 More Inclusive and Responsive Democracy 520-002 Better Educated Rural Society 520-003 Better Health for Rural Woman and Children 520-004 Increased Rural Household Income and Food Security 520-005 Improved Natural Resources Management and Conservation of Biodiversity 520-006 Support the Implementation of the Priority Peace Accords 520-007 Rural Economy Recovers from Mitch and is Less Vulnerable to Disasters Country Background Information Resources   CIA Factbook Library of Congress National Geographic Country Maps State Dept. Country Information

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