Guatemala - Financial Sector Structural Adjustment Loan Project : release of second tranche - waiver of one condition
Brown, Ellie
This report proposes a waiver of one condition for the release of a second tranche in the amount of US$50.0 million to continue supporting Guatemala's financial sector reform program. The Bank loan supports actions to: (1) reform the legal framework for the conduct of monetary and financial policy; (2) reform the financial sector legal framework aimed at strengthening the regulation of financial groups, creating an orderly market exit mechanism, and enhancing credit risk management; (3) strengthen the legal framework for bank supervision, including consolidated supervision of financial groups; (4) enact legislation to prevent money laundering to reduce illegal activities; and (5) consolidate the banking system through the restructuring or closure of insolvent banks, mergers, and acquisitions. Progress in implementing the reform program supported by this loan has been impressive and, as a result, there has been a significant strengthening of the banking sector. A waiver is sought for condition 2, "Capitalization of the Central Bank completed through the issuing of bonds to settle past fiscal losses", on the grounds set forth in paragraphs 21 and 22 of the Tranche Release Document.
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