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International Monetary Fund
In 2007, imports of consumer, intermediate, and capital goods grew at annual rates slightly exceeding 10 percent. Export growth lagged behind that of imports, as buoyant nontraditional exports, rising at a 16 percent annual rate, were offset by stagnant exports of the maquila sector. In particular, the discussions centered on (i) spillovers from the United States to El Salvador and the associated risks; (ii) the short-term fiscal stance and its consistency with medium-term fiscal objectives; and (iii) the internationalization of the Salvadoran banking system.
International Monetary Fund. Western Hemisphere Dept.
The pandemic interrupted ten years of growth, but El Salvador is rebounding quickly. Robust external demand, resilient remittances, and a sound management of the pandemic—with the help of a disbursement under the Rapid Financing Instrument (RFI) (SDR287.2 million or US$389 million) approved in April 2020—are supporting a strong recovery. Persistent fiscal deficits and high debt service are leading to large and increasing gross fiscal financing needs.
International Monetary Fund

.1 20.5 Source: El Salvador authorities, World Economic Outlook, and IMF staff estimates. Table 4. Debt Ratios in Earlier and Newly Approved Exceptional Access Cases 1/ (In percent of GDP) Total External Debt Public External Debt Total Public Debt Debt to IMF A. Earlier arrangements, 2003-05: Argentina (2003) 129.0 82.5 149.4 12.2 Brazil (2003) 38.6 21.5 85.9 5.1 Turkey (2005) 35.0 17.8 71.6 3.0 Uruguay (2005) 82.0 60.8 75.8 13.8 B. Newly approved

Mr. Dong He, Annamaria Kokenyne, Xavier Lavayssière, Ms. Inutu Lukonga, Nadine Schwarz, Nobuyasu Sugimoto, and Jeanne Verrier

associated fiscal contingent liabilities. They urged the El Salvador authorities to narrow the scope of the Bitcoin law by removing Bitcoin’s legal tender status. 10 Regulators in several jurisdictions (such as Nigeria, South Africa, Kenya, Zimbabwe) have directed commercial banks to avoid processing transactions involving trade in crypto assets, thereby severing potential links with financial intermediaries. 11 In South Africa, the Exchange Control Regulation 10(1)(c) prohibits transactions where capital or the right to capital is, without permission from

International Monetary Fund
The staff report for El Salvador’s request for a Stand-By Arrangement is examined. Fiscal consolidation led to a reduction in the public debt-to-GDP ratio, and the country has experienced the highest growth rates in a decade. Real GDP growth is projected to slow to 3.2 percent in 2008, reflecting lower growth in remittances, a tightening of external financing conditions, and a decline in investment. Exports, however, have remained buoyant despite weaker external demand. The banking system remains liquid and well capitalized, although nonperforming loans have increased and profitability is declining.
International Monetary Fund. Western Hemisphere Dept.

included the acceleration of capital spending within a tighter budget, temporary tax relief to hotel and guest houses (to support the tourism industry and limit job losses), and targeted social spending (for example, a road maintenance program). Among other commodity importing countries , Costa Rica announced a number of measures, including increased spending on education and labor-intensive infrastructure projects, an increase in public sector employment (through the hiring of teachers and police officers), and strengthening of cash transfer programs. In El Salvador

International Monetary Fund. Western Hemisphere Dept.

(percent change, end-of-period) 2.6 −1.5 −0.8 0.5 0.0 0.0 0.0 Sources: Central Reserve Bank of El Salvador, Ministry of Finance, Financial System Superintendency, and Fund staff estimates. 1/ Includes gross debt of the nonfinancial public sector and external debt of the central bank. 2/ In 2011, includes rollover of a maturing external bond. Table 7. El Salvador: Authorities’ Recent Key Growth-Promoting Steps Key growth-promoting steps Status Assessment/effects Public Private Partnerships (2013

Mr. Alfred Schipke

reforms. The experience of Panama and El Salvador, in turn, demonstrates how public opposition can lead to weaker reforms. In Panama, a strong parametric reform to address the system’s actuarial imbalance was ultimately withdrawn as a result of public opposition, despite passage by the assembly in mid-2005. To address public concerns, the government engaged in a five-month consultative process with civil society, which ultimately resulted in passage of a revised but somewhat weakened reform in December 2005. In El Salvador, authorities tried to ensure popular support of

Mr. Dong He, Annamaria Kokenyne, Xavier Lavayssière, Ms. Inutu Lukonga, Nadine Schwarz, Nobuyasu Sugimoto, and Jeanne Verrier
Capital flow management measures (CFMs) can be part of the broader policy toolkit to help countries reap the benefits of capital flows while managing the associated risks. Their implementation typically requires that financial intermediaries verify the nature of transactions and the identities of transacting parties but is facing the rising challenge of crypto assets. Indeed, crypto assets have become a significant instrument for payments and speculative investments in some countries. They can be traded pseudonymously and held without identification of the residency of the asset holder. Many crypto service providers operate across borders, making supervision and enforcement by national authorities more difficult. The challenges posed by the attributes of crypto assets are compounded by gaps in the legal and regulatory frameworks. This paper aims to discuss how crypto assets could impact the effectiveness of CFMs from a structural and longer-term perspective. To preserve the effectiveness of CFMs against crypto-related challenges, policymakers need to consider a multifaceted strategy whose essential elements include clarifying the legal status of crypto assets and ensuring that CFM laws and regulations cover them; devising a comprehensive, consistent, and coordinated regulatory approach to crypto assets and applying it effectively to CFMs; establishing international collaborative arrangements for supervision of crypto assets; addressing data gaps and leveraging technology (regtech and suptech) to create anomaly-detection models and red-flag indicators that will allow for timely risk monitoring and CFM implementation.
International Monetary Fund. Western Hemisphere Dept.
This paper focuses on policies to raise growth; underpin fiscal sustainability while enhancing social safety nets; and strengthen financial sector stability, deepening, and inclusiveness. GDP growth has averaged 2 percent during 2000–14, well below the Central American regional average of 4½ percent. While the underlying causes of the low growth are complex, a key channel through which they are expressed appears to be low investment. Given the need to increase growth, revenue-raising measures should be accompanied by cuts in distortionary taxation. Stress tests suggest that financial buffers are adequate to contain most risks. The financial deepening and advancing financial inclusion could have a meaningful impact on both growth and poverty.