Guatemala : economic support fund (ESF)

The program will provide a cash transfer of $10 million, which will be used by the GOG to repay external debt owed to the U.S. government and international financial institutions, thus freeing GOG public funds for new social sector spending. The one-tranche disbursement of funds will be conditioned upon GOG actions to expand the tax base and improve tax collection. No local currency will be generated. Specific conditions precedent include: (1) presidential endorsement of draft laws to improve tax compliance and establish a land tax; (2) nomination of a tax prosecutor and allocation of additional lawyers to work on tax evasion cases; (3) formal initiation of the GOG"s emergency program to augment tax collection (which will, inter alia, increase revenues available for poverty alleviation and human capital investment); and (4) issuance to USAID of a Letter of Intent recording the GOG"s Fiscal Action Plan for CY 1994. In addition, the GOG will covenant to build upon the achievements of the USAID/G Fiscal Administration Project and continue close cooperation with the U.S. in the area of counternarcotics.