El Salvador: Complaints Over Fiscal Discipline
The governments cash-strapped position is reflected by delays in payments, while it increases short-term public debt and the IMF has suspended the precautionary agreement.
Thursday, May 17, 2012
"Public debt in El Salvador between March 2011 and March 2012 increased by $450 million (+4.3%) to $13,232,000. More than half of this increase ($281.6 million) was generated in the first quarter of this year. Because of the debt, the Government has had to resort to issuing short-term debt which has already reached $710.9 million, while the interest rate of Treasury Bills (LETES) has already reached its maximum rate, 4.25%, from the 0.4% it was before", says a report by the Salvadoran Foundation for Economic and Social Development (FUSADES).
Failure to meet macroeconomic goals set by the IMF for 2011 would jeopardize the precautionary facility that has been negotiated.
Projections by the Ministry of Finance are that the fiscal deficit of El Salvador will be $958 million at the end of the year, or 4% of GDP.
The aim is to discipline and put limits on discretionary fiscal policy, leading to credibility in the management of public finances.
FUSADES has released a Situation Report for the period April to June 2011.
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