President Bernardo Arévalo celebrated his first year in Government and during these last 12 months his administration has presented plans but there has been little action. His cabinet spent most of the first semester auditing the previous government and forming their teams. Meanwhile, their party in Congress came in strong, but in less than a month, an irregular court order cancelled the party, and they have had trouble maneuvering. 

The year has been marked by the tense relationship between the government and the Public Ministry (MP), led by Attorney General Consuelo Porras, who has spearheaded efforts to cancel the ruling party, annul the 2023 election results and criminalize officials of the current administration. And one of the claims that the electorate reproaches Arevalo for is not having fulfilled his campaign promise to dismiss Prosecutor Porras.  

According to Arevalo himself, during this first year he had to confront corrupt groups in various sectors. Added to this challenge are the growing climatic emergencies in the form of droughts, floods and fires, which threaten food security, infrastructure, health, trade and even tourism, to name a few.

Given this overall picture, Guatemala starts 2025 with a long list of to-do’s on all fronts. However, the government's approval rating in the polls is on the decline.

Below, we review the main milestones of 2024 in Guatemala and the challenges that lie ahead.

Stable Economy 

Guatemala is characterized by its macroeconomic stability. The Gross Domestic Product (GDP) closed 2024 with a slightly higher than expected growth, reaching 3.7%; inflation, at 1.7%, closed with the lowest figure in the last 14 years (although the change of base year of the Consumer Price Index (CPI) has generated doubts and criticism); and the exchange rate with the dollar continues without major variations. On the external side, remittances continue with record figures and reached US$ 21.5 billion.

Finance Minister Jonathan Menkos anticipates even better numbers for 2025. In his opinion, this year will bring a booming economy thanks to the approval of a 26.9% higher budget, which will allow for greater investment in critical areas. 

However, this has also generated doubts among different sectors, which believe that the Q148.5 billion approved for the budget, in addition to lacking some transparency measures, could jeopardize the country's fiscal and macroeconomic sustainability.  

In the coming weeks Fitch Ratings new grade. They visited Guatemala between January 13 and 15, 2025. If the latest ratings are anything to go by, we can expect stability to continue. Moody's and Fitch have kept their forecasts unchanged for Guatemala in 2024. The only one to change its position was Standard & Poor's, which upgraded its outlook from BB stable to BB positive in April 2024.

Despite this, as Moody's recalled in its latest report, poverty, inequality and the low capacity of the State to provide public goods such as infrastructure are Guatemala's main challenges.

Increased Regulatory Pressure

One of the areas of greatest impact of the government is the increase in regulatory pressure on environmental, labor and tax issues. Among the most important events in the environmental area, we can mention the two-year mining moratorium and the closure of the oil company Perenco. In addition, environmental regulations were tightened, the Regulation for the integral management of residues and solid waste came into force, and the parliamentary bench presented an initiative for a Water Law.

On the labor front, efforts have focused on increasing labor inspections of companies to ensure compliance with regulations and opening the way for greater unionization in both the public and private sectors.

Finally, the Superintendency of Tax Administration (SAT), headed by Marco Livio Díaz, has been characterized by exceeding the collection goals of recent years and increasing the pressure on companies that do not comply with their obligations.

This resulted in the uncovering of large cases of alleged tax fraud such as the so-called B410 or the increased tax control of people with properties registered on platforms such as Airbnb.   

Serious Infrastructure Problems 

The country has suffered from road infrastructure problems for decades. This government had its first crisis on June 13, 2024, when a section of the highway linking Palin and Escuintla, one of the country's main commercial routes, collapsed. The challenge is that the repair has taken too long. According to the deadlines provided by the Ministry of Communications, the work will be completed in March 2025.  

The challenges go beyond roads, as the ports and La Aurora International Airport itself suffer from structural problems that must be addressed. All this has taken its toll on the executive and, specifically, on the Communications portfolio, which has already changed ministers three times in the first 12 months. 

On the positive side, on November 12, 2024, Congress approved the Priority Road Infrastructure Law (Decree 29-2024), which seeks to regulate the contracting modality for urgent road projects. Among its principles is to improve legal certainty for all investors. To this end, it establishes mechanisms to ensure the execution of the projects and to improve the process and the collection in due time and form by the companies.   

This area will be one of the most closely monitored this 2025 and it is expected that the stability and execution of the Communications portfolio, which in 2024 was the lowest, with only 70%, will improve, without resorting to the corrupt practices that have historically been linked to infrastructure in the country.  

An active Congress 

Representatives of the official party have been limited in their ability to maneuver in Congress since their party was cancelled by an irregular judge's order and this has limited their participation in leadership in the Board and Committees. This greatly limits their ability to influence the legislative agenda.

Its main achievement has been to obtain the necessary votes to approve the short-term issues that benefited the Government, such as the increase of the 2024 Budget, the 2025 National Budget, the Competition Law and the amendments to the Organized Crime Law. The latter is the one that the official bench is clinging to in order to be reinstated as a political party.

They have also celebrated as their own victories the approval of laws such as Competition, Priority Road Infrastructure, Vaccination or Credit Cards; but the reality is that these were not proposals that the official party put on the table for the first time.

Questionable Justice System 

In 2024, Congress elected the magistrates for the Supreme Court of Justice (CSJ) and the courts of appeals for the next five years. 

Arévalo asked the new Courts to "recover confidence in Justice, respect for human rights and the frontal fight against impunity (...) Never again courts that are not at the service of Democracy, the Rule of Law and the construction of a better future". However, the Executive was left out of the negotiations and did not influence the election of better judges. 

Reports by the Inter-American Court of Human Rights (IACHR), the Vance Center and the United Nations Rapporteur on the Independence of Judges and Magistrates have repeatedly highlighted the lack of judicial independence, the criminalization of people who have fought against corruption and defend human rights, and the co-optation of justice through groups that influence the election of the highest judicial authorities.

The lack of independent judges will remain one of the country's main challenges for the next five years.