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IMF Country Report No. 19/143
EL SALVADOR
2019 ARTICLE IV CONSULTATION—PRESS RELEASE; STAFF REPORT; AND STATEMENT BY THE EXECUTIVE DIRECTOR FOR EL SALVADOR
May 2019
Under Article IV of the IMF’s Articles of Agreement, the IMF holds bilateral discussions
with members, usually every year. In the context of the 2019 Article IV consultation with
El Salvador, the following documents have been released and are included in this package:
A Press Release summarizing the views of the Executive Board as expressed during its May 22, 2019, consideration of the staff report that concluded the Article IV consultation with El Salvador.
The Staff Report prepared by a staff team of the IMF for the Executive Board’s consideration on May 22, 2019, following discussions that ended on March 22, 2019, with the officials of El Salvador on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on May 7, 2019.
An Informational Annex prepared by the IMF staff.
A Statement by the Executive Director for El Salvador.
The IMF’s transparency policy allows for the deletion of market-sensitive information and premature disclosure of the authorities’ policy intentions in published staff reports and other documents.
Copies of this report are available to the public from
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PO Box 92780 • Washington, D.C. 20090
Telephone: (202) 623–7430 • Fax: (202) 623–7201
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Price: $18.00 per printed copy
International Monetary Fund
Washington, D.C.
© 2019 International Monetary Fund
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EL SALVADOR
STAFF REPORT FOR THE 2019 ARTICLE IV CONSULTATION
May 7, 2019
Key Issues
Context. Structural reforms, strengthened policy frameworks and the ongoing smooth political transition have laid the foundations for sustained growth. Surging remittances pushed real GDP growth above potential in 2018, adding to tax revenues and raising the primary fiscal surplus to about 1 percent of GDP. Nevertheless, public debt at about 70 percent of GDP is high, expensive to roll over, and leaves little room for funding new initiatives unless structural measures are implemented. It remains the main vulnerability of the economy.
Focus. Discussions focused on policies that build on these achievements and address fiscal vulnerabilities, boost long-term growth, and strengthen the governance, anticorruption and AML/CFT frameworks.
Main Policy Recommendations:
1. Frontload fiscal consolidation measures of about 2 percent of GDP over 2019–20;
2. Adopt policies that raise long-term output, and reduce crime and informality;
3. Improve the governance and anticorruption frameworks by increasing the fiscal transparency of the 2020 budget laws, strengthening audit and spending controls, and promptly implementing electronic invoicing.
Approved by:
Aasim M. Husain (WHD) and María Gonzalez (SPR)
Discussions took place in San Salvador during March 11–22. The staff team comprised A. Carare (head), F. Di Vittorio, A. Lariau, Y. Yakhshilikov (all WHD), and R. Giri (SPR). Ms. Del Cid-Bonilla (OED) also participated in the meetings. The team met with President Mr. Sánchez Cerén, President-elect Mr. Bukele, Vice President Mr. Ortíz, Secretary of Communications and Governance Mr. Lorenzana, Minister of Finance Mr. Fuentes, Minister of Economy Ms. Rodríguez, Central Bank President Mr. Cabrera, members of Congress, other senior officials and representatives of the private sector and civil society.
Contents
ECONOMIC AND SOCIAL CONTEXT
ECONOMIC PERFORMANCE
OUTLOOK AND RISKS
FRONTLOAD THE FISCAL ADJUSTMENT
RAISE LONG-TERM GROWTH
ENHANCE FINANCIAL SECTOR STABILITY
STRENGTHEN THE GOVERNANCE FRAMEWORKS
STATISTICS
STAFF APPRAISAL
BOXES
1. Timing and Composition of the Fiscal Adjustment
2. The Fight Against Crime in El Salvador and Lessons from International Experience
3. Financial Inclusion in El Salvador
4. Implementation of Fund Advice
FIGURES
1. Long-term Growth and Poverty
2. Balance of Payments Developments
3. Fiscal Developments
4. Financial Sector Developments
TABLES
1. Selected Economic Indicators
2. Medium-term Baseline Scenario
3. Balance of Payments
4. External Financing Requirements and Sources
5. Operations of the Nonfinancial Public Sector
6. Summary Accounts of the Financial System
7. Selected Vulnerability Indicators
8. Public Sector Financing Requirements and Sources
9. Financial Soundness Indicators Heatmap
ANNEXES
I. Public Debt Sustainability Analysis
II. External Sector Assessment
III. Liquidity Management and Emergency Liquidity Assistance
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EL SALVADOR
STAFF REPORT FOR THE 2019 ARTICLE IV CONSULTATION—INFORMATIONAL ANNEX
May 7, 2019
Prepared by:
The Western Hemisphere Department
Contents
FUND RELATIONS
RELATIONS WITH OTHER FINANCIAL INSTITUTIONS
STATISTICAL ISSUES
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Press Release No. 19/181
FOR IMMEDIATE RELEASE
May 24, 2019
International Monetary Fund
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Washington, D. C. 20431 USA
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Fax 202–623–6772
