IMF: Salvadoran Government Must Reduce Expenses

If there are no reductions in state subsidies and wages no type of fiscal reform will allow the country to achieve sustainability.

Tuesday, June 3, 2014

Since 2013 and via an Article IV report for El Salvador, the International Monetary Fund (IMF) has been warning the government about the need to take action to moderate wages in the public sector and correct poorly targeted subsidies, establishing strict controls over costs, which for the current year increased by $281 million.

In its report, the directors "... stressed that fiscal consolidation should include income and expenses, including improving the targeting of subsidies, reduction of the allocation of income, tax expense reduction and avoidance, and increasing the rate of value added tax. Directors also emphasized the need for pension reform to ensure sustainability and the reduction of inequalities in the system. "

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