Selected Issues Papers

Public Investment Efficiency, Growth and Debt Sustainability in Guatemala

By Andrea Paloschi

September 25, 2025

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Format: Chicago

Andrea Paloschi. "Public Investment Efficiency, Growth and Debt Sustainability in Guatemala", Selected Issues Papers 2025, 129 (2025), accessed September 26, 2025, https://doi.org/10.5089/9798229025805.018

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Summary

Despite having moderate levels of public debt sovereign spreads, Guatemala is a country with limited levels of public investment efficiency (PIE) that actively constrain much needed infrastructure and social investment. This Selected Issues Paper (SIP) analyzes the effects of improving PIE on key real, fiscal and external macroeconomic indicators and finds that higher PIE would allow Guatemala to sustain higher levels of external debt, weaker fiscal balances and current account balances without worsening sovereign risk premia. The overall effect amplifies the welfare benefits of higher PIE for households through higher private consumption.

Subject: Balance of payments, Consumption, Current account balance, Debt default, Debt sustainability, Expenditure, Expenditure efficiency, External debt, Financial markets, Fiscal policy, Fiscal stance, International capital markets, National accounts, Private investment, Public debt, Public investment spending

Keywords: Consumption, Current account balance, Debt default, Debt sustainability, Expenditure, Expenditure efficiency, Fiscal stance, International capital markets, Private consumption, Private investment, Public Debt, Public Investment Efficiency, Public investment spending, Sovereign Risk

Publication Details

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