El Salvador Loses Access to IMF funds

The IMF has temporarily suspended the availability of emergency funds for El Salvador because it has not met agreed targets, having exceeded government spending.

Friday, April 27, 2012

The IMF reported that the Salvadoran government may not use a precautionary loan (SBA) of $750 million, said Carlos Acevedo, president of Banco Central de Reserva (BCR).

The Fund based its decision on the breach of public spending targets, since the balance of public finances was one of the requirements for keeping the SBA for three years.

"The government closed with a balance of $906 million deficit, that is, expenditures exceeded revenue by more than $900 million at the end of 2011. It's $200 million more than expected," reported Laprensagrafica.com.

"If El Salvador needs emergency liquidity in the financial system ... it will not be able to access funds," said the head of the BCR, adding that the agreement has not been broken but" has been 'switched-off'."

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