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Economy of Guatemala

After the signing of the final peace accord in December 1996, Guatemala was well-positioned for rapid economic growth over the next several years, until a financial crisis in 1998 disrupted the course of improvement. The subsequent collapse of coffee prices left what was once the country's leading export sector in depression and had a severe impact on rural income. On a more positive note, Guatemala's macroeconomic management is sound, preserving stability and mitigating the slowdown in growth brought on by the global economic crisis in late 2008. While Guatemala’s foreign debt levels are modest, recent deficit spending and low tax collection have limited the space for further accumulation of debt. President Colom has continued programs initiated by prior governments to promote foreign investment, enhance competitiveness, and expand investment in the export and tourist sectors. These programs and the implementation of the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) led to increases in foreign direct investment (FDI) inflows from $592 million in 2006 to $753 million in 2008. According to official projections, FDI inflows declined 25.8% in 2009 to $559 million as a result of the global economic crisis. Guatemala's economy is dominated by the private sector, which generates about 90% of GDP. Agriculture contributes 13.4% of GDP and accounts for 26% of exports. Most manufacturing is light assembly and food processing, geared to the domestic, U.S., and Central American markets. Over the past several years, tourism and exports of textiles, apparel, and nontraditional agricultural products such as winter vegetables, fruit, and cut flowers have boomed, while more traditional exports such as sugar, bananas, and coffee continue to represent a large share of the export market. The United States is the country's largest trading partner, providing 36.5% of Guatemala's imports and receiving 40.7% of its exports. The government's involvement is small, with its business activities limited to public utilities--some of which have been privatized--ports and airports, and several development-oriented financial institutions. Guatemala ratified the U.S.-Central America Free Trade Agreement (CAFTA-DR) on March 10, 2005, and the agreement entered into force between Guatemala and the U.S. on July 1, 2006. CAFTA-DR eliminates customs tariffs on as many categories of goods as possible; opens services sectors; and creates clear and readily enforceable rules in areas such as investment, government procurement, intellectual property protection, customs procedures, electronic commerce, the use of sanitary and phyto-sanitary measures to protect public health, and resolution of business disputes. It also provides for protection of internationally recognized labor rights and environmental standards. At only 10.4% of GDP in 2009, Guatemala’s tax collection is low compared to the Latin American average of 14.5%. In addition to raising overall tax revenues, continuing priorities include increasing transparency and accountability in public finances, broadening the tax base, strengthening the enforcement of tax laws, and completing implementation of financial sector reforms. The United States, along with other donor countries--especially France, Italy, Spain, Germany, and Japan--and the international financial institutions, have increased development project financing since the signing of the peace accords. However, donor support remains contingent upon Guatemalan Government reforms and counterpart financing. According to the World Bank, Guatemala has one of the most unequal income distributions in the hemisphere. The wealthiest 20% of the population consumes 51% of Guatemala’s GDP. As a result, about 51% of the population lives on less than $2 a day and 15% on less than $1 a day. Guatemala's social development indicators, such as infant mortality, chronic child malnutrition, and illiteracy, are among the worst in the hemisphere. The United States has provided disaster assistance and food aid in response to natural disasters including Hurricane Stan, which caused extensive mudslides in Guatemala in October 2005, and in response to El Niño-related drought in 2009 and 2010. Real GDP (2009 est.): $23.7 billion. Real GDP growth (2009 est.): 0.6%. Per capita GNI, PPP (2008): $4,690. Natural resources: Oil, timber, nickel, gold. Agriculture (13.4% of GDP): Products--coffee, sugar, bananas, cardamom, vegetables, flowers and plants, timber, rice, rubber. Manufacturing (18.3% of GDP): Types--prepared food, clothing and textiles, construction materials, tires, pharmaceuticals. Trade (2009): Exports--$7.2 billion: coffee, bananas, sugar, crude oil, chemical products, clothing and textiles, vegetables. Major markets--U.S. 40.7%, Central American Common Market (CACM) 27.5%, Mexico 5.9%. Imports--$11.5 billion: machinery and equipment, fuels, mineral products, chemical products, vehicles and transport materials, plastic materials and products. Major suppliers--U.S. 36.5%, CACM 11.4%, Mexico 10.3%, China 5.3%.

Geography of Guatemala

Location: Middle America, bordering the Caribbean Sea, between Honduras and Belize and bordering the North Pacific Ocean, between El Salvador and Mexico Geographic coordinates: 15 30 N, 90 15 W Map references: Central America and the Caribbean Area: total: 108,890 sq km land: 108,430 sq km water: 460 sq km Area-comparative: slightly smaller than Tennessee
Land boundaries:
total: 1,687 km border countries: Belize 266 km, El Salvador 203 km, Honduras 256 km, Mexico 962 km Coastline: 400 km Maritime claims: continental shelf: 200-m depth or to the depth of exploitation exclusive economic zone: 200 nm territorial sea: 12 nm Climate: tropical; hot, humid in lowlands; cooler in highlands Terrain: mostly mountains with narrow coastal plains and rolling limestone plateau (Peten) Elevation extremes: lowest point: Pacific Ocean 0 m highest point: Volcan Tajumulco 4,211 m
Natural resources:
petroleum, nickel, rare woods, fish, chicle Land use: arable land: 12% permanent crops: 5% permanent pastures: 24% forests and woodland: 54% other: 5% (1993 est.) Irrigated land: 1,250 sq km (1993 est.) Natural hazards: numerous volcanoes in mountains, with occasional violent earthquakes; Caribbean coast subject to hurricanes and other tropical storms Environment-current issues: deforestation; soil erosion; water pollution; Hurricane Mitch damage Environment-international agreements: party to: Antarctic Treaty, Biodiversity, Climate Change, Desertication, Endangered Species, Environmental Modification, Hazardous Wastes, Law of the Sea, Marine Dumping, Nuclear Test Ban, Ozone Layer Protection, Ship Pollution, Wetlands signed, but not ratified: Antarctic-Environmental Protocol, Climate Change-Kyoto Protocol Geography-note: no natural harbors on west coast

Government of Guatemala

Guatemala's 1985 constitution provides for a separation of powers among the executive, legislative, and judicial branches of government. The 1993 constitutional reforms included an increase in the number of Supreme Court justices from 9 to 13. The reforms reduced the terms of office for president, vice president, and congressional representatives from 5 years to 4 years, and for Supreme Court justices from 6 years to 5 years; they increased the terms of mayors and city councils from 2-1/2 years to 4 years. The president and vice president are directly elected through universal suffrage and limited to one term. A vice president can run for president after 4 years out of office. The Supreme Court consists of 13 justices who are elected by the Congress from a list of 26 qualifying candidates submitted by the bar association, law school deans, a university rector, and appellate judges. The Supreme Court and local courts handle civil and criminal cases. There also is a separate Constitutional Court. Members of Congress are elected through a modified proportional representation system via the D’Hondt method; 127 members are chosen from lists in 23 electoral districts, and 31 members are chosen from a national list. Guatemala City and 331 other municipalities are governed by similarly elected mayors or councils. Guatemala has 22 administrative subdivisions (departments) administered by governors appointed by the president.

Congressional, municipal, and first-round presidential elections took place on September 9, 2007. The final round of presidential elections took place on November 4, 2007. Inauguration for the new president and the new Congress took place on January 14, 2008. The next presidential elections are scheduled for September 2011. Common and violent crime, aggravated by a legacy of violence and vigilante justice, presents a serious challenge. Impunity remained a major problem, primarily because democratic institutions, including those responsible for the administration of justice, have developed only a limited capacity to cope with this legacy. Guatemala's judiciary is independent; however, it suffers from inefficiency, corruption, and intimidation. In early December 2006, the government and the UN agreed to the creation of the joint International Commission Against Impunity in Guatemala (CICIG). On August 1, 2007, the Guatemalan Congress approved the agreement, and on January 11, 2008, Guatemala and the United Nations inaugurated the work of CICIG. An earlier Guatemala-UN agreement was ruled unconstitutional in 2004 before it was ratified by the Guatemalan Congress. In July 2009, the Guatemalan Congress approved an extension of CICIG’s mandate to September 4, 2011. The UN Verification Mission in Guatemala (MINUGUA) ceased its 10-year project of monitoring peace accord implementation and human rights problems in November 2004 with UN Secretary General Kofi Annan declaring Guatemala had made "enormous progress in managing the country's problems through dialogue and institutions".

Principal Government OfficialsPresident--Álvaro COLOM Caballeros Vice President--Rafael ESPADA Minister of Foreign Affairs--Haroldo RODAS Minister of Government--Francisco JIMENEZ Minister of Defense--Marco Tulio GARCIA Franco Ambassador to the U.S.--Francisco VILLAGRAN de Leon Ambassador to the UN--Gert ROSENTHAL Ambassador to the OAS--Jorge SKINNER-KLEE The Guatemalan embassy is located at 2220 R Street, NW, Washington, DC 20008 (tel. 202-745-4952; email: [email protected]). Consulates are in Washington, New York, Miami, Chicago, Houston, San Francisco, Denver, and Los Angeles, and honorary consuls in Montgomery, San Diego, Ft. Lauderdale, Atlanta, Leavenworth, Lafayette, New Orleans, Minneapolis, Philadelphia, Pittsburgh, San Juan, Providence, Memphis, San Antonio, and Seattle. See the State Department Web page:

Type: Constitutional democratic republic.

Constitution: May 1985; amended November 1993.

Independence: September 15, 1821.

Branches: Executive--president (4-year term; 1 term limit). Legislative--unicameral 158-member Congress (4-year term). Judicial--13-member Supreme Court of Justice (5-year term).

Subdivisions: 22 departments (appointed governors); 331 municipalities with elected mayors and city councils.

Major political parties: National Union for Hope (UNE), Grand National Alliance (GANA), Patriot Party (PP), Guatemalan Republican Front (FRG), National Advancement Party (PAN), , Unionists (Unionistas), Encounter for Guatemala (EG).

Suffrage: Universal for adults 18 and over who are not serving on active duty with the armed forces or police. A variety of procedural obstacles have historically reduced participation by poor, rural, and indigenous people, but implementation in 2007 of voting reform legislation nearly doubled the number of voting tables, resulting in higher participation in rural areas, including among indigenous people.

History of Guatemala

The Mayan civilization flourished throughout much of Guatemala and the surrounding region long before the Spanish arrived, but it was already in decline when the Mayans were defeated by Pedro de Alvarado in 1523-24. The first colonial capital, Ciudad Vieja, was ruined by floods and an earthquake in 1542. Survivors founded Antigua, the second capital, in 1543. Antigua was destroyed by two earthquakes in 1773. The remnants of its Spanish colonial architecture have been preserved as a national monument. The third capital, Guatemala City, was founded in 1776. Guatemala gained independence from Spain on September 15, 1821; it briefly became part of the Mexican Empire, and then for a period belonged to a federation called the United Provinces of Central America. From the mid-19th century until the mid-1980s, the country passed through a series of dictatorships, insurgencies (particularly beginning in the 1960s), coups, and stretches of military rule with only occasional periods of representative government. 1944 to 1986 In 1944, Gen. Jorge Ubico's dictatorship was overthrown by the "October Revolutionaries," a group of dissident military officers, students, and liberal professionals. A civilian President, Juan Jose Arevalo, was elected in 1945 and held the presidency until 1951. Social reforms initiated by Arevalo were continued by his successor, Col. Jacobo Arbenz. Arbenz permitted the communist Guatemalan Labor Party to gain legal status in 1952. The army refused to defend the Arbenz government when a U.S.-backed group led by Col. Carlos Castillo Armas invaded the country from Honduras in 1954 and quickly took over the government. Gen. Miguel Ydigoras Fuentes took power in 1958 following the murder of Colonel Castillo Armas. In response to the increasingly autocratic rule of Ydigoras Fuentes, a group of junior military officers revolted in 1960. When they failed, several went into hiding and established close ties with Cuba. This group became the nucleus of the forces that were in armed insurrection against the government for the next 36 years. Four principal left-wing guerrilla groups--the Guerrilla Army of the Poor (EGP), the Revolutionary Organization of Armed People (ORPA), the Rebel Armed Forces (FAR), and the Guatemalan Labor Party (PGT)--conducted economic sabotage and targeted government installations and members of government security forces in armed attacks. These organizations combined to form the Guatemalan National Revolutionary Unity (URNG) in 1982. Shortly after President Julio Cesar Mendez Montenegro took office in 1966, the army launched a major counterinsurgency campaign that largely broke up the guerrilla movement in the countryside. The guerrillas then concentrated their attacks in Guatemala City, where they assassinated many leading figures, including U.S. Ambassador John Gordon Mein in 1968. Between 1966 and 1982, there were a series of military or military-dominated governments. On March 23, 1982, army troops commanded by junior officers staged a coup to prevent the assumption of power by Gen. Angel Anibal Guevara, the hand-picked candidate of outgoing President and Gen. Romeo Lucas Garcia. They denounced Guevara's electoral victory as fraudulent. The coup leaders asked retired Gen. Efrain Rios Montt to negotiate the departure of Lucas and Guevara. Rios Montt was at this time a lay pastor in the evangelical protestant "Church of the Word." He formed a three-member military junta that annulled the 1965 constitution, dissolved Congress, suspended political parties, and canceled the electoral law. After a few months, Rios Montt dismissed his junta colleagues and assumed the de facto title of "President of the Republic." Guerrilla forces and their leftist allies denounced Rios Montt. Rios Montt sought to defeat the guerrillas with military actions and economic reforms; in his words, "rifles and beans." The government began to form local civilian defense patrols (PACs). Participation was in theory voluntary, but in reality, many Guatemalans, especially in the heavily indigenous northwest, had no choice but to join either the PACs or the guerrillas. Rios Montt's conscript army and PACs recaptured essentially all guerrilla territory--guerrilla activity lessened and was largely limited to hit-and-run operations. However, Rios Montt won this partial victory at an enormous cost in civilian deaths, in what was probably the most violent period of the 36-year internal conflict, resulting in about 200,000 deaths of mostly unarmed indigenous civilians. On August 8, 1983, Rios Montt was deposed by his own Minister of Defense, Gen. Oscar Humberto Mejia Victores, who succeeded him as de facto President of Guatemala. Rios Montt survived to found a political party (the Guatemalan Republic Front) and to be elected President of Congress in 1995 and 2000. Awareness in the United States of the conflict in Guatemala, and its ethnic dimension, increased with the 1983 publication of the book I, Rigoberta Menchu, An Indian Woman in Guatemala. General Mejia allowed a managed return to democracy in Guatemala, starting with a July 1, 1984 election for a Constituent Assembly to draft a democratic constitution. On May 30, 1985, after 9 months of debate, the Constituent Assembly finished drafting a new constitution, which took effect immediately. Vinicio Cerezo, a civilian politician and the presidential candidate of the Christian Democracy Party, won the first election held under the new constitution with almost 70% of the vote, and took office on January 14, 1986. 1986 to 2007 Upon its inauguration in January 1986, President Cerezo's civilian government announced that its top priorities would be to end the political violence and establish the rule of law. Reforms included new laws of habeas corpus and amparo (court-ordered protection), the creation of a legislative human rights committee, and the establishment in 1987 of the Office of Human Rights Ombudsman. Cerezo survived coup attempts in 1988 and 1989, and the final 2 years of Cerezo's government were also marked by a failing economy, strikes, protest marches, and allegations of widespread corruption. Presidential and congressional elections were held on November 11, 1990. After a runoff ballot, Jorge Serrano was inaugurated on January 14, 1991, thus completing the first transition from one democratically elected civilian government to another. The Serrano administration's record was mixed. It had some success in consolidating civilian control over the army, replacing a number of senior officers and persuading the military to participate in peace talks with the URNG. Serrano took the politically unpopular step of recognizing the sovereignty of Belize. The Serrano government reversed the economic slide it inherited, reducing inflation and boosting real growth. On May 25, 1993, Serrano illegally dissolved Congress and the Supreme Court and tried to restrict civil freedoms, allegedly to fight corruption. The "autogolpe" (or self-initiated coup) failed due to unified, strong protests by most elements of Guatemalan society, international pressure, and the army's enforcement of the decisions of the Court of Constitutionality, which ruled against the attempted takeover. Serrano fled the country. On June 5, 1993, the Congress, pursuant to the 1985 constitution, elected the Human Rights Ombudsman, Ramiro De Leon Carpio, to complete Serrano's presidential term. De Leon, not a member of any political party and lacking a political base but with strong popular support, launched an ambitious anticorruption campaign to "purify" Congress and the Supreme Court, demanding the resignations of all members of the two bodies. Despite considerable congressional resistance, presidential and popular pressure led to a November 1993 agreement brokered by the Catholic Church between the administration and Congress. This package of constitutional reforms was approved by popular referendum on January 30, 1994. In August 1994, a new Congress was elected to complete the unexpired term. Under De Leon, the peace process, now brokered by the United Nations, took on new life. The government and the URNG signed agreements on human rights (March 1994), resettlement of displaced persons (June 1994), historical clarification (June 1994), and indigenous rights (March 1995). They also made significant progress on a socioeconomic and agrarian agreement. National elections for president, the Congress, and municipal offices were held in November 1995. With almost 20 parties competing in the first round, the presidential election came down to a January 7, 1996 runoff in which National Advancement Party (PAN) candidate Alvaro Arzu defeated Alfonso Portillo of the Guatemalan Republican Front (FRG) by just over 2% of the vote. Under the Arzu administration, peace negotiations were concluded, and the government signed peace accords ending the 36-year internal conflict in December 1996. The human rights situation also improved during Arzu's tenure, and steps were taken to reduce the influence of the military in national affairs. In a December 1999 presidential runoff, Alfonso Portillo (FRG) won 68% of the vote to 32% for Oscar Berger (PAN). Portillo's impressive electoral triumph, with two-thirds of the vote in the second round, gave him a claim to a mandate from the people to carry out his reform program. Oscar Berger of the Grand National Alliance (GANA) party won the November 9, 2003 presidential election, receiving 54.1% of the vote. His opponent, Alvarado Colom Caballeros of the National Unity for Hope (UNE) party, received 45.9% of the vote. Álvaro Colom of the National Unity for Hope (UNE) party won the November 4, 2007 presidential election against retired General Otto Perez Molina with 52.8% of the vote versus 47.2%.

People of Guatemala

More than half of Guatemalans are descendants of indigenous Mayan peoples. Westernized Mayans and mestizos (mixed European and indigenous ancestry) are known as Ladinos. Most of Guatemala's population is rural, though urbanization is accelerating. The predominant religion is Roman Catholicism, into which many indigenous Guatemalans have incorporated traditional forms of worship. Protestantism and traditional Mayan religions are practiced by an estimated 40% and 1% of the population, respectively. Though the official language is Spanish, it is not universally understood among the indigenous population. The peace accords signed in December 1996 provide for the translation of some official documents and voting materials into several indigenous languages. Nationality: Noun and adjective--Guatemalan(s). Population (2009 est.): 14.36 million. Annual population growth rate (2009 est.): 2.4%. Ethnic groups: Mestizo (mixed Spanish-Indian), indigenous. Religions: Roman Catholic, Protestant, traditional Mayan. Languages: Spanish, 24 indigenous languages (principally Kiche, Kaqchikel, Q'eqchi, and Mam). Education: Years compulsory--6. Attendance--41%. Literacy--70.6%. Health: Infant mortality rate (2008/2009)--30/1,000. Life expectancy (2005)--69 yrs. Work force salaried breakdown: Services--42%; industry and commerce--37%; agriculture--14%; construction, mining, utilities, transportation, and communications--7%. Fifty percent of the population engages in some form of agriculture, often at the subsistence level outside the monetized economy.