In 1999, government spending on subsidies was $13 million, a figure which has multiplied 30 times, reaching $471 million in 2012.
Wednesday, July 3, 2013
In an event organized by the Salvadoran Chamber of Consulting Firms (Camsec) and the Union of MSMEs, union president, Jorge Daboub, revealed that while in 1999 the country spent $13 million on payments of subsidies, specifically for liquefied gas oil, by 2012 they had increased to $458 million, which represents an increase of 3523.1%.
The energy subsidy is the category which has had the greatest growth over the last 12 years, going from $8 million in 2000 to $201 million in 2012, growth of 2412.5%. In addition, subsidies for domestic consumption have increased with propane gas subsidies going from $13 million in 1999 to $136 million in 2012 and the public transport subsidy increasing from $9 million in 2005 to $64 million last year.
According to Daboub, the outstanding issue is fiscal policy, which in recent years "has been a populist policy" with "high unproductive current spending and does not solve problems faced by the poor."
El Salvador's public debt up to May 2013 totaled $13.429 billion, representing 53.8% of gross domestic product in the country.
Eleconomista.net reports that "As of May this year the public debt of El Salvador, as a proportion of gross domestic product (GDP) amounted to 53.8%, representing a total of $13.4294 billion. That means that for every dollar the Salvadoran economy produces, slightly more than half is debt. "
The National Association of Private Enterprises in El Salvador said the government is not “going on a diet”, but instead is still increasing public spending.
ANEP President, Jorge Daboub, is accusing the International Monetary Fund of having changed their policies regarding austerity recommendations, now that the government of El Salvador is aware of the extension on the limits of subsidies, which passed initial targets of 3.3% and 3.2% for 2011 and 2012 respectively, up to 4.5% and 3.9% compared to the same period.
The government estimates spending $426 million in grants this year.
Expenditures made by the government by way of state subsidies, such as transfers to energy consumers using less than 99 kilowatt hours per month, are complicating the state of public finances.
While in 2010 $371 million was spent in grants, in 2011 the government estimates that this figure will increase to $55 million.
The business sector will present proposals to solve the fiscal deficit, which may also be the foundation of a social pact.
17 proposals will be presented, aimed at two large areas: reducing spending and increasing revenue.
Jorge Daboub, president of the Salvadoran Chamber of Commerce and Industry, explained: “We understand that the country has a serious fiscal problem, the deficit has worsened due to the country’s negative economic situation. As the private sector, we have produced a document that will give the government tools to correctly address the problem, in a comprehensive and effective way”, reported La Prensa Grafica.
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