On February 25, Guatemala’s Constitutional Court ordered the removal of Education Minister Bienvenido Argueta for failing to provide the court with complete information regarding the beneficiaries of President Álvaro Colóm’s flagship social program, Mi Familia Progresa.  This latest development in a months-old political drama augurs poorly for Guatemala’s fragile education system and President Colóm’s claims to be supporting transparency measures in this notoriously corrupt nation.

Mi Familia Progresa (MFP) is Guatemala’s conditional cash transfer (CCT) program, which provides cash payments to poor mothers, conditional upon them sending their children to school and for health check-ups.  CCT programs have become increasingly popular in Latin America, as they have shown demonstrably positive results on school enrolment and child health. 

President Colóm has hailed MFP as the cornerstone of his anti-poverty platform in Guatemala, but critics have argued that Colóm has used the program to reward voters who supported him in the 2007 elections.  Colóm’s critics also worry that the president has been transferring funds from other ministries to the program to use it as a campaign tool for his wife, Sandra Torres de Colóm, the coordinator and face of the Council of Social Cohesion that oversees MFP.

The global economic decline has hit Central America hard. Unemployment has increased, remittances from emigrants have declined and governments face rising deficits and debt that jeopardize their ability to meet increased social demands. The story is similar in much of the world, but the situation is particularly precarious in these countries, because they are among the poorest nations in the Americas and have weak economic and social safety nets.

Governments in the region have responded to the economic decline by promoting fiscal adjustments to improve their balance sheets. El Salvador recently passed a gasoline tax and revised its value-added tax, and President Mauricio Funes hopes to pass tax increases on liquor, tobacco and luxury goods. In Honduras, de facto President Roberto Micheletti proposed sweeping reforms, before withdrawing the media-dubbed paquetazo due to pressure from Congress and president-elect Porfirio Lobo to put off major legislation until the new government assumes power. Meanwhile, Guatemala has witnessed the fiercest budget fight of all. Supporters of President Álvaro Colóm’s proposed reform have taken to the streets and threatened opposition legislators, but these efforts have failed to keep Colóm’s opponents from obstructing congressional proceedings. Thus far, Colóm appears to be losing the legislative battle.

Taxation is a contentious issue in every country in the world, but the topic is especially fraught in Guatemala. Guatemala has long had the lowest tax ratio—tax revenue as a percentage of gross domestic product—in Latin America, a region notorious for weak tax collection. The low tax ratio is part of a legacy of a racist, extractive Guatemalan state, predicated on making profits for economic elites through the cheap (for many decades, forced) labor of a predominantly indigenous majority. Since the state cared little about the needs of most Guatemalan citizens throughout most of the country’s history, social spending was minimal and taxes remained negligible.