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International Monetary Fund

revenue effort through further reductions in tax evasion and controlling pension costs, while creating space for priority infrastructure and social spending. Executive Board Assessment Executive Directors commended the continued progress made by the Salvadorian authorities in implementing their outward-oriented growth strategy, which has already helped bring about strong growth based on a solid export performance, rising investment, and robust workers’ remittances. Looking ahead, Directors observed that the main policy challenge for El Salvador is to place the

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

, increasing social and infrastructure investment, safeguarding the stability of the financial system and curbing the fiscal deficit. On December 22, the IMF issued a press release announcing that agreement had been reached, in principle, on a program that could be supported by an amount in the equivalent of SDR 513.9 million (about US$800 million), under a 15-month Stand-By Arrangement (SBA). This press release goes on to say that the Salvadorian authorities intend to treat the arrangement as precautionary and do not intend to draw on it. I share the general principles

International Monetary Fund

The Executive Board of the International Monetary Fund today approved a 14½ month SDR 513.9 million (about US$800 million) precautionary Stand-By Arrangement for El Salvador to support the country’s economic strategy to cope with the adverse effects of the global financial crisis. The Salvadorian authorities do not intend to draw on the funds. As El Salvador is not facing any immediate balance of payment needs, the authorities’ program supported by the Fund is a precautionary measure that forms part of an overall strategy to strengthen the country

International Monetary Fund. Western Hemisphere Dept.

the International Commission Against Impunity for El Salvador (CICIES) of the Organization of American States (OAS) to join efforts with the Salvadorian Court of Audits to oversee accountability and the transparent use of financial resources allocated to fight COVID19. The government is committed to transparency and accountability and to using effective mechanisms and controls for the disbursement of funds, including through the Recovery Fund. Commitments of the Salvadorian Authority The expected deterioration of the 2020 fiscal deficit beyond 8.0 percent of

International Monetary Fund

), under a 15-month Stand-By Arrangement (SBA). This press release goes on to say that the Salvadorian authorities intend to treat the arrangement as precautionary and do not intend to draw on it. I share the general principles underpinning this agreement, especially those having to do with preserving macroeconomic stability, maintaining dollarization, and ensuring prudent fiscal management. Moreover, I wish to express my satisfaction at the inclusion of measures to increase social spending and investment in infrastructure as well as efforts to strengthen the domestic

International Monetary Fund. Western Hemisphere Dept.

registered economic growth of 2.5 percent, low yearly average inflation of 0.4 percent for the same period, a moderate fiscal deficit of 2.9 percent of GDP, and a current account deficit of 2.0 percent of GDP. At the end of 2019, its debt-to-GDP ratio was 71.3 percent, which included a significant liability from the private pension scheme. During the pandemic, the accommodative fiscal policy protected businesses and households . The swift policy measures adopted by the Salvadorian authorities during the first year of the pandemic were instrumental not only in fighting

International Monetary Fund. Western Hemisphere Dept.

help government cash flow in the medium term. El Salvador: Main Parameters of the Pension System (Percent of payroll, unless otherwise noted) Prior to 2017 reform After 2017 reform Social contributions 13 15 Pension funds commissions 2.2 1.9 Individual accounts 1/ 10.8 8.1 Collective fund 1/ 5 Longevity benefits 2 Payment of DBs 1/ 3 Retirement age (years) 2/ 55/60 55/60 Source: Salvadorian authorities. 1/ 3 percent of payroll would

International Monetary Fund. Western Hemisphere Dept.
This paper discusses El Salvador’s IMF Staff report on Request for Purchase Under the Rapid Financing Instrument (RCI). This assistance is expected to help El Salvador direct funds swiftly to the country’s most affected sectors, including the healthcare system. El Salvador has adopted strict measures to prevent and contain the pandemic since early February—even before the first case was diagnosed—including travel restrictions, mandatory quarantine for exposed citizens, suspension of nonessential public and private sector operations, and a nationwide shelter-in-place order. The authorities’ emergency response also comprises measures to mitigate the economic impact of the pandemic on the population, including through targeted cash transfers to vulnerable households and tax relief in the most affected economic sectors. IMF financing will help preserve fiscal space and catalyze significant funding from other multilateral institutions. The IMF continues to closely monitor El Salvador’s situation and stands ready to provide policy advice and further support as needed.
International Monetary Fund

financial system and curbing the fiscal deficit. On December 22, the IMF issued a press release announcing that agreement had been reached, in principle, on a program that could be supported by an amount in the equivalent of SDR 513.9 million (about US$800 million), under a 15-month Stand-By Arrangement (SBA). This press release goes on to say that the Salvadorian authorities intend to treat the arrangement as precautionary and do not intend to draw on it. I share the general principles underpinning this agreement, especially those having to do with preserving