Título II · Capítulo II Sección Décima. Régimen económico y social

The economic and social regime of the Republic of Guatemala is founded on principles of social justice.

It is the obligation of the State to guide the national economy to achieve the utilization of natural resources and human potential, to increase wealth and to endeavor to achieve full employment and the equitable distribution of national income.

When necessary, the State shall act supplementing private initiative and activity, for the achievement of the expressed purposes.

The fundamental obligations of the State are:

a)Promote the economic development of the Nation, stimulating initiative in agricultural, livestock, industrial, tourism and other activities;

b)Systematically promote economic-administrative decentralization, in order to achieve adequate regional development of the country;

c)Adopt such measures as are necessary for the conservation, development and utilization of natural resources in an efficient manner;

d)Ensure the raising of the standard of living of all the inhabitants of the country, seeking the well-being of the family;

e)Encourage and protect the creation and operation of cooperatives, providing them with the necessary technical and financial assistance;

f)Grant incentives, in accordance with the law, to industrial enterprises that establish themselves in the interior of the Republic and contribute to decentralization;

g)Give priority to encouraging the construction of low-income housing, through appropriate financing systems to the effect that the greatest number of Guatemalan families enjoy them in ownership. When dealing with emergency housing or cooperative housing, the tenure system may be different;

h)Prevent the operation of excessive practices leading to the concentration of property and means of production to the detriment of the community;

i)The defense of consumers and users with regard to the preservation of the quality of products for domestic consumption and for export in order to guarantee their health, safety and legitimate economic interests;

j)Actively promote rural development programs aimed at increasing and diversifying national production based on the principle of private property and protection of family patrimony. Technical and economic assistance shall be given to peasants and artisans;

k)Protect the formation of capital, savings and investment;

l)Promote the orderly and efficient development of the domestic and foreign trade of the country, fostering markets for national products;

m)Maintain, within economic policy, a congruent relationship between public spending and national production; and

n)Create suitable conditions to promote the investment of national and foreign capital.

The State may, in case of force majeure and for the time strictly necessary, intervene in enterprises providing public services essential to the community, when their operation is obstructed.

The following are property of the State:

a)Those in the public domain;

b)The waters of the maritime zone bordering the coasts of its territory, lakes, navigable rivers and their banks, rivers, springs and streams serving as the international boundary of the Republic, waterfalls and water sources for hydroelectric exploitation, groundwater and other waters susceptible to regulation by law and waters not exploited by private persons to the extent and within the term established by law;

c)Those constituting the patrimony of the State, including those of the municipality and of decentralized or autonomous entities;

d)The maritime-terrestrial zone, the continental shelf and the airspace, to the extent and in the form determined by the laws or the international treaties ratified by Guatemala;

e)The subsoil, hydrocarbon deposits and minerals, as well as any other organic or inorganic substances of the subsoil;

f)Monuments and archaeological relics;

g)Fiscal and municipal revenues, as well as those of a private nature that the laws assign to decentralized and autonomous entities; and

h)Radioelectric frequencies.

The State reserves ownership of a terrestrial strip of three kilometers along the oceans, measured from the upper tide line; of two hundred meters around the shores of the lakes; of one hundred meters on each side of the banks of navigable rivers; of fifty meters around the sources and springs where the waters that supply the towns originate.

The following are exempted from the aforesaid reserves:

a)immovable properties situated in urban areas; and

b)the property over which rights are registered in the Register of Property prior to March 1, 1956.

Foreigners shall require authorization from the Executive to acquire ownership of immovable properties covered by the exceptions in the two preceding subparagraphs. Where properties declared as a national monument are concerned or where they are located in monumental complexes, the State shall have a preferential right in every alienation.

Only Guatemalans by origin, or companies whose members have the same qualifications, may be owners or possessors of immovable property situated in the strip fifteen kilometers wide along the borders, measured from the dividing line. Urban property and rights registered prior to March 1, 1956 are excepted.

National property may only be alienated in the manner determined by law, which shall establish the limitations and formalities to which the transaction shall be subject and its fiscal objectives.

Decentralized or autonomous entities shall be governed by the provisions of their laws and regulations.

The technical and rational exploitation of hydrocarbons, minerals and other non-renewable natural resources is declared of public utility and necessity.

The State shall establish and promote the proper conditions for their exploration, exploitation and commercialization.

The reforestation of the country and the conservation of forests are declared of national urgency and social interest. The law shall determine the form and requirements for the rational exploitation of forest resources and their renewal, including resins, gums, uncultivated wild plant products and other similar products, and shall promote their industrialization. The exploitation of all these resources shall correspond exclusively to Guatemalan persons, individual or juridical.

Forests and vegetation on the banks of rivers and lakes, and in the vicinity of water sources, shall enjoy special protection.

All waters are property of the public domain, inalienable and imprescriptible. Their exploitation, use and enjoyment are granted in the form established by law, in accordance with the social interest. A specific law shall regulate this matter.

The use of the waters of lakes and of rivers, for agricultural, agricultural-and-livestock, tourism or any other purposes, that contributes to the development of the national economy, is at the service of the community and not of any private person, but users are obligated to reforest the corresponding banks and channels, as well as to facilitate the means of access.

The electrification of the country is declared of national urgency, based on plans formulated by the State and the municipalities, in which private initiative may participate.

Monopolies and privileges are prohibited. The State shall limit the operation of enterprises that absorb or tend to absorb, to the detriment of the national economy, production in one or more industrial branches or in the same commercial or agricultural and livestock activity. The laws shall determine matters relating to this subject. The State shall protect the market economy and shall prevent associations that tend to restrict freedom of the market or to harm consumers.

Due to their economic importance in the development of the country, all commercial and tourist transport services, whether land, maritime or air, are recognized as of public utility and, therefore, enjoy the protection of the State, within which vessels, vehicles, facilities and services are included.

Land terminals, airports and commercial seaports are considered property for common public use and, as well as transport services, are subject solely to the jurisdiction of civil authorities. The use of vessels, vehicles and terminals owned by governmental entities and the National Army for commercial purposes is prohibited; this provision is not applicable to decentralized state entities that provide transport service.

For the installation and operation of any national or international transport service, governmental authorization is necessary. For this purpose, once the applicant has fulfilled the corresponding legal requirements, the governmental authority shall issue the authorization immediately.

It is the exclusive power of the State to issue and regulate currency, as well as to formulate and implement the policies that tend to create and maintain exchange and credit conditions favorable to the orderly development of the national economy. Monetary, banking and financial activities shall be organized under the central banking system, which exercises supervision over everything relating to the circulation of money and to the public debt. This system shall be directed by the Monetary Board, on which the Bank of Guatemala depends, an autonomous entity with its own patrimony, which shall be governed by its Organic Law and the Monetary Law.

The Monetary Board is composed of the following members:

a)The President, who shall also be President of the Bank of Guatemala, appointed by the President of the Republic for a period established by law;

b)The Ministers of Public Finance, Economy and Agriculture, Livestock and Food;

c)One member elected by the Congress of the Republic;

d)One member elected by the business associations of commerce, industry and agriculture;

e)One member elected by the presidents of the boards of directors or directive boards of the national private banks; and

f)One member elected by the Superior Council of the University of San Carlos of Guatemala.

These last three members shall hold office for one year.

All members of the Monetary Board shall have alternates, except the President, whom the Vice President substitutes, and the Ministers of State, who shall be substituted by their respective Vice Minister.

The Vice President of the Monetary Board and of the Bank of Guatemala, who shall also be appointed by the President of the Republic, may attend the sessions of the Monetary Board, together with the President, with voice but without vote, except when substituting for the President in his functions, in which case he shall have a vote.

The President, the Vice President and those designated by the University Superior Council and by the Congress of the Republic must be persons of recognized honorability and of well-known preparation and competence in economic and financial matters.

The acts and decisions of the Monetary Board are subject to administrative remedies and to contentious-administrative and cassation remedies.

The Monetary Board shall be responsible for determining the monetary, exchange and credit policy of the country and shall oversee the liquidity and solvency of the national banking system, ensuring the stability and strengthening of national savings.

In order to guarantee the monetary, exchange and credit stability of the country, the Monetary Board shall not authorize the Bank of Guatemala to grant direct or indirect financing, guarantee or aval to the State, to its decentralized or autonomous entities, nor to private non-banking entities. To that same end, the Bank of Guatemala shall not acquire securities issued or traded on the primary market by such entities. Excepted from these prohibitions is financing that may be granted in cases of catastrophes or public disasters, provided that it is approved by two-thirds of the total number of deputies comprising Congress, at the request of the President of the Republic.

The Superintendency of Banks, organized in accordance with the law, is the body that shall exercise supervision and inspection of banks, credit institutions, financial companies, bonding and insurance entities and such others as the law may provide.

The municipality and the autonomous and decentralized entities act by delegation of the State.

Autonomy, apart from the special cases contemplated in the Constitution of the Republic, shall be granted only when deemed indispensable for the greater efficiency of the entity and the better fulfillment of its purposes. To create decentralized and autonomous entities, the favorable vote of two-thirds of the Congress of the Republic shall be necessary.

The following are established as minimum obligations of the municipality and of every decentralized and autonomous entity:

a)To coordinate its policy with the general policy of the State and, where applicable, with the special policy of the Branch to which they correspond;

b)To maintain close coordination with the State planning organ;

c)To remit, for their information, to the Executive Branch and to the Congress of the Republic, their detailed ordinary and extraordinary budgets, specifying programs, projects, activities, income and expenditures. The University of San Carlos of Guatemala is excepted. Such remission shall be for approval purposes when so provided by law;

d)To remit to the same bodies the reports of their work and the specific reports requested of them, with the confidential nature of the operations of private individuals in banks and financial institutions in general remaining protected;

e)To provide the necessary facilities so that the organ in charge of fiscal control may perform its functions broadly and effectively; and

f)In all activities of an international nature, to be subject to the policy laid down by the Executive Branch.

If the functioning of a decentralized entity is deemed inoperative, it shall be abolished by the favorable vote of two-thirds of the Congress of the Republic.