The 1999 presidential and legislative elections were considered by international observers to have been free and fair. Participation by women and indigenous voters was higher than in the recent past, although concerns remained regarding the accessibility of polling places in rural areas.

Portillo's landslide victory combined with an FRG majority in congress suggested possibilities for rapid legislative action. However, under the Guatemalan Constitution of 1985, passage of many kinds of legislation requires a two-thirds vote. Passage of such legislation is not possible, therefore, with FRG votes alone.

The political balance was disrupted in 2000 when allegations surfaced that the FRG had illegally altered legislation. Following an investigation, the Supreme Court stripped those involved, including President of Congress and FRG chief Rios Montt, of their legislative immunity to face charges in the case. At roughly the same time, the PAN opposition suffered an internal split and broke into factions; the same occurred in the ANN. Reforms essential to peace implementation still await legislative action.

Violent harassment of human rights workers presented a serious challenge in 2002 and 2003. Common crime, aggravated by a legacy of violence and vigilante justice, presents another serious challenge. Impunity remains a major problem, primarily because democratic institutions, including those responsible for the administration of justice, have developed only a limited capacity to cope with this legacy. The government increased several tax rates in 2001 in an attempt to meet the target of increasing its tax burden (at about 10.7% of GDP, currently the lowest in the region) to 12% of GDP. However, protestors took to the streets massively when the government sought further increases in August 2001, declaring their opposition to any new taxes until the Portillo administration provided better accountability for the taxes it already received.