This article reviews the formal institutional framework forimplementing rural development policies in Guatemala, which originatedin the State modernization process promoted through the Peace Accords.The main thesis is that rural development policies will be more efficientif they are based on the institutional framework that the Peace Accordsprovided, which distinguishes between three levels of government: central,deconcentrated and decentralized. While the two sub-national levelsexecute 43% of total public investment, central government needs to targetthe budget on poor zones, cut subsidies to the private sector and increasethe supply of public goods. At the deconcentrated and decentralizedlevels, the territorial approach has proven effective in generating policies,but land-use planning needs to be based on political-social covenantsbetween local stakeholders.