The Fiscal Covenant in Guatemala: Lessons learned from the negotiations

Guatemala’s recent experience in negotiating a fiscal covenant, together with other efforts –some more successful than others– to achieve social covenants on fiscal policy, may serve as a lesson or suggest key elements for a fiscal covenant. This article analyses the Guatemalan experience in the light of the main determining factors of a number of successful or failed fiscal covenants in countries as diverse as Chile, Indonesia, Poland, the Russian Federation, Sweden, the United Kingdom and the United States. In conclusion, the authors identify 10 key components of a successful fiscal covenant, based on Guatemala’s experience and that of the other countries mentioned above.