The interest rate rise in the US and the perceived risk of the Salvadoran economy have taken their toll on foreign debt bonds, whose yields have risen by about 2% in recent weeks.
This increase in yield of debt securities traded on the international market will be reflected in the forthcoming issues made by the government, which, according to economic analyst Mauricio Choussy, "... 'will no longer be sold for seven percent or six point five, which was the levels achieved previously, but rather will go for a higher interest rate, at eight percent. '"
$500 million is the estimated amount that has not been invested due to bad business climate, poor image and lack of institutional credit, which frightens investors away.
These are the indications of the economist and former president of the Central Reserve Bank, Mauritius Choussy: "In four years, the amount lost adds up to $2 billion, which could have generated more than 150,000 jobs. Choussy made this calculation based on the idea that one job is generated for every $20,000 invested, approximately ", reported Elsalvador.com.
Academics and politicians are proposing an intersectoral agreement from which comprehensive tax reforms can arise in order to make public finances sustainable.
According to an article in Elmundo.com.sv, "The forum called 'Are Public Finances sustainable?', brings together economists and two deputies from the Special Committee on Finance and Budget of the Legislative Assembly to discuss and present their proposals for solutions to the current fiscal situation.
Guatemala´s BB+ sovereign risk rating and stable perspective, which is so close to the desired “Investment Grade,” is facing four threats.
According to an article by C.Véliz and J. Gramajo in Sigloxxi.com, Mauricio Choussy, the director of Fitch Central America, notes that four weaknesses persist in the country: “Low tax revenue, weak social indicators, social instability, and high levels of delinquency.”
On April 23 and 24, El Salvador will host the Second Latin American and Caribbean Meeting of Trade and Investment.
Among the topics to be discussed at the meeting organized by the Salvadoran Commission for the Promotion of Exports and Investments (PROESA and EXPORTA) are: the impacts of the global crisis on developing countries and the measures that have been taken to mitigate it; an analysis of the Latin American and Caribbean competitive situation in infrastructure and trade services and the situation of the tourism sector, including its current challenges and opportunities.
Fitch warns that credit restrictions will stop private investment and, with that, economic activity will decline.
Elsalvador.com publishes in its website: "The executive director of the risk assessors, Fitch Ratings, Mauricio Choussy, calculated that the crisis will have a transfer delay of some three quarters from the United States to the Central American region, a forecast that was confirmed by the former minister of the Salvadorian Economy, Yolanda de Gavidia, ´I believe that El Salvador has not yet felt the worse part and my perception is that it is going to be in the upcoming second semester that we are going to feel it,´ she affirmed."
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