The Salvadoran economy was severely affected by the global economic slowdown. Further strengthening the economy’s growth prospects and reducing poverty will depend on a durable fiscal consolidation effort and improvements in the investment climate through continued commitment to macroeconomic and financial stability. A recent IMF/World Bank Financial System Stability Assessment (FSSA) confirmed that the Salvadoran financial system withstood the global financial crisis well and was well capitalized and liquid. The FSSA recommended enhancements to the legal and regulatory frameworks as well as measures to reduce some remaining vulnerabilities.
International Monetary Fund. External Relations Dept.
IMF economists and researchers from outside the institution gathered at the IMF’s Third Annual Research Conference on November 7-8. The conference had an overarching theme of capital flows and global governance but also dealt with an eclectic array of other issues that economists at the IMF and elsewhere are exploring.
El Salvador’s 2008 Article IV Consultation examines the country's economic developments and policies. In 2007, the fiscal position improved, the public debt-to-GDP ratio declined, and economic growth reached its highest level in a decade. The rise in global commodity prices has also generated substantial inflation pressures. The stock of bank deposits has stagnated relative to end-2007, while deposit rates have increased slightly. Interbank repo rates have also risen recently, reflecting tighter funding conditions, and banks have increased their external borrowing, in part to build up liquidity.