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.
The fiscal deficit is equivalent to 4.2% of the gross domestic product (GDP), said the head of the ministry, Carlos Caceres. "The adjustment has been very large. We hope to reduce it to 4% when the information from December is consolidated, " said Caceres.
The figure exceeds that originally agreed with the International Monetary Fund (IMF) as part of the conditions of maintaining precautionary agreement with the entity, but the targets have been revised. "We have asked the board of the fund to adjust the year 2011, because with the storm and other expenses, we really exceeded the fiscal deficit," Caceres said. He referred to Tropical Depression 12-E that brought 10 days of continuous rain and several million dollars in losses.
The budget is being modified by almost $2 billion in 2011. The government is preparing a more severe savings plan. "Throughout the year we will be thinking about rationalizing expenditure, and that's exactly why we are in a large austerity program," said Caceres."This year we have no extra-budgetary demands from the ministries."
Source: laprensagrafica.com
More on this topic
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.
December 2011
As of September 2011, Salvadoran government debt hit a new record, surpassing that of 1990, when it came to represent 50% of GDP.
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%.
May 2011
The fiscal deficit increased by 26.5% in the first 4 months of the year and has reached $733.3 million.
The amount is equivalent to 1.8% of Gross Domestic Product (GDP). In the same period in 2010, the amount was $579.8 million.
"We are seeing a larger financial deficit than the previous year in terms of GDP, which is consistent with the current projection that the deficit in 2011 would exceed 5% of GDP, " said the Finance Minister in office, Randall Garcia in an article publishes by ADN.es, "He reiterated the need for the country to adopt a tax reform ..."
July 2011
In June, the national debt reached $11,900 million and although it remains stable, it might become unsustainable.
Several private sector analysts believe that the current level of debt, equivalent to half the Gross Domestic Product (GDP) could become unmanageable if fiscal measures are not taken to control its growth.
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