Guatemala Money Transfer Guide

Cailin is an economic analyst and contributor to both FXcompared Intelligence and Magazine, analysing trends in monetary and foreign exchange policy. Cailin has over four years experience in emerging market analysis and has worked throughout Europe, the Middle East and Africa the Economist Intelligence Unit and Oxford Business Group. Cailin has a degree in International Affairs from Georgetown University and a Master’s in International Security from Sciences Po Paris.

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Summary

Officially the Republic of Guatemala (Guatemala), the most populous country in Central America (with an estimated population of 15.8 million residents) also has the largest economy, with a GDP worth USD $58.7 billion in 2014. Guatemalas government has put policies in place to increase foreign direct investment in the country, enhance competitiveness, and promote a favorable business and investment climate. Currently, the United States is Guatemalas largest economic partner, and direct investment from US dollars into the country are generally directed towards the energy and mining sectors, as well as agriculture. Making an international funds transfer into or out of the country is easy and safe, thanks to a well-regulated banking and financial system.

Guatemalas economy has benefited from its membership in a number of global trade agreements, including the US Dominican Republic Central America Free Trade Agreement (CAFTA-DR). Today, the US State Department estimates that over 200 US and international firms have active investments in Guatemala.

Guatemala’s money transfer regulations

Sending money into or out of Guatemala is generally easy and safe. US dollars are freely available through the countrys banking system, and there are no restrictions on converting or transferring funds for investment or personal use. In 2010, Guatemalan monetary authorities approved new regulation to establish limits on foreign currency transactions in an effort to help reduce risk of terrorism financing or money laundering. Currently, monthly deposits that are over USD $3,000 are subject to additional requirements and the depositor must provide to authorities a sworn statement attesting that the funds come from legitimate sources.

Many of Guatemalas citizens rely on remittances from abroad, many of them coming from the United States. In 2014 the total amount of remittances into the country grew by 8.6 percent and equaled 9.4 percent of the countrys GDP. Guatemalas central bank, the Bank of Guatemala, oversees all money transfers into and out of the country. The country became a member of the Financial Action Task Force of South America in 2013, and is also a member of the Caribbean Financial Action Task Force.

Foreign investment in Guatemala

Guatemalas economy has benefited from foreign direct investment (FDI), especially from the United States, for a number of years. According to the US State Department, in 2014 FDI in stock grew by 18 percent over the previous year, to total approximately USD $12.1 billion, and overall FDI increased by 7.7 percent for the same time period, totaling USD $1.4 billion. Most of this money went into the energy, mining, agriculture, manufacturing, commerce, and banking sectors.

Although Guatemala has taken steps to provide an open and well-regulated investment environment, there are still challenges for international investors interested in investing in Guatemala. The countrys sometimes-confusing laws and regulations, bureaucratic inefficiencies, inconsistent judiciary reviews and decisions, and ongoing corruption can be discouraging.

Despite its struggles, however, the country continues to see some progress. In 2014 it improved its OECD (Organization for Economic Cooperation and Development) Country Risk Classification rating from a category 5 to a category 4. It was one of only five countries in the world to improve its ranking. In a Doing Business 2015 report issued by the World Bank, Guatemala was cited as improving in three areas: starting a business, access to electricity, and paying taxes. Still, the country has much work to do to resolve ongoing corruption, protect investors, and transparency.

Guatemala’s monetary and regulatory authority

The Guatemalan government and the central bank, the Bank of Guatemala, oversee the countrys fiscal and economic policies and financial systems. The central bank ensures adherence to domestic and international financing regulations by establishing policies and guidelines followed by the countrys financial institutions. The quetzal (GTQ), Guatemalas official currency, is not pegged to any currencies and is allowed to float in the currency markets. The central banks policy has been to intervene in the foreign exchange markets only to prevent extreme fluctuations in the quetzals performance.

Currency

Guatemalas official currency, the quetzal, was introduced in 1925 during President Jose Maria Orellanas term. Today the currency still shows his image. Its name is derived from the national bird of Guatemala, the Quetzal, whose tail feathers were used as currency during ancient Mayan culture. The quetzal was pegged to the US dollar until 1987, and for a time before that, to the French franc.

The quetzal is based on a system of hundredths and can be divided into 100 centavos, its subunit. Quetzal coins in circulation today include the 1, 5, 10, 25, and 50 centavo coins, and the 1 quetzal coin. Banknotes circulating include the 50 centavos note, and 1, 5, 10, 20, 50, 100, and 200 quetzal banknotes.