ABSTRACT
Guatemala's 1992 tax reform was prompted by an economic crisis. Throughout the decade of the 1980s, the macroeconomic situation was one of relative disequilibrium and instability, with low rates of real economic growth, rates of inflation that were very high by Guatemalan standards, devaluation of the quetzal, chronic deficits in the balance of payments, and continually growing difficulties in servicing external debt. Economic policies during this period were characterized by growing fiscal deficits, frequently financed by increases in the money supply and, toward the end of the period, by the introduction of multiple exchange rates. The Cerezo administration began with positive economic growth in 1986. However, Guatemala's central government economic policies experienced a continuous deterioration after the first year of Cerezo's administration. In the early 1990s, the general economic conditions faced by the Serrano administration were similar to those faced by the Cerezo administration early in 1986.
