El Salvador: Record Debt Levels

From 1990 to 1998 the ratio of public debt to gross domestic product (GDP) decreased to 27%. Since then the ratio began to grow steadily and in 2009 it was once again 50%. Now. the ratio is 51.7%.

An article in Elmundo.com.sv notes that "The outlook for public finances is not encouraging. Spending shows strong growth, says Funde, but much of the resources have been allocated to salaries and the purchase of goods and services and not in investment. The tendency towards debt, as already noted, is growing. "

Most of the debt, 50%, is made up of bonds held by investors, including domestic bonds and Eurobonds. Another 35% is debt with multilateral funding agencies like the Inter-American Development Bank and The World Bank.

Source: elmundo.com.sv

More on this topic

Fiscal Deficit: The Mother of all Evils (2)

February 2012

Two years ago we used the same title to report on the growing trend of the debt / GDP ratio in Costa Rica. Today the news is that this ratio has reached nearly 50%.

The consequences are as you would expect: upward trend in interest rates because the state must meet its cash needs competing for credit with the productive sectors, and reduced state investment, especially in infrastructure, which compromises the ability of the economy to grow.

El Salvador has Fiscal Deficit of $900 million

January 2012

Natural disasters and other factors have influenced the situation in 2011; agreements with the IMF are to be reviewed.

Salvadoran state expenditures were $900 million more than the total revenues in 2011, according to preliminary estimates by the Ministry of Finance in December (MH), reported the online edition of La Prensa Grafica.

Fusades: El Salvador Could Lose the Stand-by Agreement

November 2011

Failure to meet macroeconomic goals set by the IMF for 2011 would jeopardize the precautionary facility that has been negotiated.

The Salvadoran Foundation for Economic and Social Development (Fusades) has recommended the Government on several occasions to adjust the budget and make a fiscal pact.

IMF: Salvadoran Economy to Grow 2.5%

February 2012

"By 2012, economic growth is projected at 2-2.5 percent, supported by increased domestic investment."

From a press release from the International Monetary Fund (IMF):

A mission from the International Monetary Fund (IMF) visited San Salvador from 6th to 15th of February to begin discussions for the fourth revision of the Stand-By Agreement.